New Tax Hikes Eyed for Roads, Transit
States are scrambling to find taxes to pay for highway repairs and their public transit systems, including payroll and sales taxes, and raising taxes paid by gasoline stations.
The proposals, being kicked around in at least 13 states as governors lay out their legislative agendas for the year, come as states find revenue from stagnant federal and state gasoline taxes isn't keeping up with highways, bridges and urban transit systems that increasingly are falling into disrepair.
"We're seeing a wide variety of funding and financing proposals being put forward to address funding transportation crises," says Jaime Rall, transportation senior policy specialist at the National Conference of State Legislatures (NCSL).
Among them:
Massachusetts Gov. Deval Patrick, a Democrat, is considering several options to raise about $1 billion a year, including raising the state's 21-cents-a-gallon gasoline tax, raising the sales tax, increasing the income tax or imposing a tax based on the miles a vehicle travels.
Virginia Gov. Bob McDonnell, a Republican, wants to scrap the 17.5-cents-a-gallon state gasoline tax and increase the state's 5% sales tax to 5.8%, with the additional money going to transportation. If passed by the Legislature, Virginia would become the only state without a gas tax paid at the pump.
Pennsylvania Gov. Tom Corbett, a Republican, wants to remove a cap on the oil company franchise tax paid by gas stations to raise an estimated $1.9 billion a year.
Funding transportation has reached a point of national crisis, says the American Society of Engineers, which estimates the country needs to spend $2.7 trillion on total infrastructure between now and 2020, but is falling more than $1 trillion short of that.
A big reason for the hustle for new taxes: Federal and state gasoline taxes, the primary way of funding transportation, aren't keeping up with demands as automobiles become more fuel-efficient, people drive less, and electric and hybrid vehicles increase in number.
Compounding the situation: The federal gasoline tax, which goes back to the states to pay for transportation, has been set at 18.4 cents a gallon for two decades. Some states haven't raised gasoline taxes in a quarter-century.
During the same time, construction costs have soared. That has diminished the purchasing power of the federal gasoline tax by 33% since 1993 when it was last raised, according to the National Surface Transportation Infrastructure Finance Commission, which issued a report in 2009.
On average, the value of state gasoline taxes has effectively fallen 20% because of inflation for a nationwide total of $10 billion a year, according to a report last year by the NCSL.
That's left states looking for a way out of the funding crunch, and many are keeping an eye on what happens in Virginia.
"The gas tax is inherently a shrinking revenue source for all states," says Jeff Caldwell, McDonnell's press secretary. "We've already heard from other states interested in this proposal and looking for more information."
