State Transportation Funding Efforts

1. State Transportation Funding Efforts Ohio Senate Ways & Means Committee May 31, 2017

2. The Council of State Governments

3. Agenda • CSG on transportation funding • State transportation funding trends • State transportation funding efforts in 2017 • Efforts since 2015 • Future of state and federal transportation funding

4. Statement of Principles on the Federal-State-Local Transportation Partnership • Long-term solvency of the Highway Trust Fund • Support for state experimentation with funding mechanisms • Opposition to efforts to eliminate federal tax exemption on municipal bonds

5. State Transportation Funding Trends 2017 • Seven states have approved new recurring revenue; one state (Idaho) approved one-time revenue. • 22 states have initiatives pending. • Four states had measures that failed earlier this year. • Missouri and Utah have created task forces to study project funding needs. Source: ARTBA Transportation Investment Advocacy Center

6. State Transportation Funding Trends 2017 • Six states have raised gas taxes • One state authorized bonds • One state increased license, registration and weight fees • At least 11 more states are considering or have already considered gas tax increases • An internet sales tax in Mississippi and sales taxes in Arkansas and Colorado were unsuccessful. Source: ARTBA Transportation Investment Advocacy Center

7. “I think in the short and medium term the gas tax is the best option that states have available. … It’s easy to administer and there’s a traditional linkage there between gas taxes and transportation funding…” --Carl Davis, Research Director “Fueling Transportation Revenues,” Capitol Ideas, May-June 2017

8. “If all you’re doing is boosting a tax by a flat amount, you set up a situation that’s going to be unsustainable in the long term…” --Carl Davis, Research Director “Fueling Transportation Revenues,” Capitol Ideas, May-June 2017

9. “We have good models from other states like Georgia or Utah or Maryland showing how a gas tax can be better designed with a longer-term outlook and an aim toward funding infrastructure long term.” --Carl Davis, Research Director “Fueling Transportation Revenues,” Capitol Ideas, May-June 2017

10. Georgia (2015) • Increased fuel excise taxes by 6.7 cents per gallon. • Indexed tax rates to average vehicle fleet efficiency and CPI. • Established new registration fees for EVs and heavy vehicles. • Established hotel-motel fee.

11. Greg Hughes (R) • “Raising taxes is not what Republican legislatures do in red states.” Utah Speaker of the House Infrastructure Week Kick-Off May 15, 2017 Washington, DC

12. “Like most taxes on consumption, state gas taxes are inevitably regressive—impacting low-income families far more heavily than any other group.” “State Gasoline Taxes: Built to Fail, But Fixable,” February 9, 2017

13. State Transportation Funding Trends 2017 • 27 states have considered increasing fees on electric, hybrid and other vehicles powered by alternative fuels • Last year, Michigan became the 10th state to impose an additional registration fee on electric or hybrid vehicles. CA, IN, SC joined them in ‘17. • They range from $50 to $200 annually

14. “Even though the number of electric vehicles or hybrid vehicles is relatively modest right now … we know that’s going to be a fast-growing area in terms of those vehicle purchases and sales.” --Alison Premo Black, Chief Economist “Fueling Transportation Revenues,” Capitol Ideas, May-June 2017

15. “I think states are really smart to look at that right now and get those dynamics in place so they can have some equity and parity with (other) vehicles.” --Alison Premo Black, Chief Economist “Fueling Transportation Revenues,” Capitol Ideas, May-June 2017

16. California (2017) • $52 billion plan to repair roads and bridges • Increases excise taxes on gasoline by 12 cents and on diesel by 20 cents • Adjusted for inflation after 2020 • Increase in diesel fuel sales tax • New road improvement fee • New $100 zero emission vehicle fee

17. Indiana (2017) • 10 cent gas tax increase in two steps of 5 cents each • 6 cent diesel fuel tax increase • Indexing starting in 2019 (up to 1 cent annually) • Increases vehicle registration fees (50% on decal fee for alternative fuel vehicles) • $150 fee on electric vehicles • $75 fee for alternative fuel vehicles

18. Indiana (2017) • Increases fee on sale of new vehicle tires • 10 cent increase in aviation fuel tax • Allows INDOT to seek federal waiver on interstate tolling • INDOT tolling feasibility study • $328 million for the state highway fund in year one, $43 million for local roads, $1.7 million for airports • $552 million state, $85 million local by year two

19. Montana (2017) • Increases gas tax by 4.5 cents a gallon, then 1.5 • Increases diesel tax by 1.5 cents, then 0.5 • Increase in vehicle registration fee • New tax on cars, recreational vehicles worth more than $150K • $37 million in year one, $49 million by 2023

20. South Carolina (2017) • Veto override • Increases gas tax 2 cents a year for six years • Increases license and registration fees • Increases vehicle sales taxes

21. South Carolina (2017) • New one-time fee for vehicles purchased out-of-state • New fees on electric and hydrogen-powered cars • New hybrid fees • New fee on large commercial vehicles • $630 million a year for road repairs

22. Tennessee (2017) • Increases gas tax by 6 cents over 3 years • Increases diesel tax by 10 cents over 3 years • Increases vehicle registration and other fees • $350 million annually for state’s dedicated highway fund • Also cuts taxes

23. Utah (2017) • Allows $1 billion to be bonded over the next 4 years to speed up high priority transportation projects across the state • Modifies the variable-rate gas tax formula enacted in 2015 to allow for more robust revenue growth. It will result in a roughly 0.6-cent-per-gallon increase in 2019 and a 1.2-cent increase in 2020.

24. Wyoming (2017) • Increased vehicle registration fees • Increased commercial vehicle weight fees • Increased DMV license fees

25. State Transportation Funding Activities Since 2015 • In 2015, 11 states either increased gas taxes or adjusted them to prevent steeper reductions in revenue. The increases ranged from .95 cents (Alaska) to 11.9 cents (Washington). • In 2016, New Jersey raised its gas tax by 23 cents.

26. Future of State Transportation Funding • Five states and two multi-state collaboratives received funding in 2016 under the FAST Act to pilot alternative revenue approaches, including mileage-based user fees. • Expanded tolling has been on the table this year in states like Connecticut, Indiana, Oregon and Wisconsin.

27. “This administration wants to retain the primacy of state and local spending and use federal funding as leverage to increase the total amount of funding available for infrastructure.” Elaine Chao, U.S. Secretary of Transportation Infrastructure Week Kick-Off May 15, 2017

28. “States and localities that have secured some funding or financing of their own for infrastructure projects will be given higher priority access to new federal funds.” Elaine Chao, U.S. Secretary of Transportation Infrastructure Week Kick-Off May 15, 2017

29. “The days of a state or a city showing up here with an empty hat and thinking you’re going to have a single dollar in that hat when you leave are over.” Eric Garcetti, Mayor of Los Angeles Infrastructure Week Kick-Off May 15, 2017

30. CSG Autonomous & Connected Vehicle Policy Academy • Detroit, Michigan • June 12-14 • 20 state legislators • James Barna, Ohio Dept. of Transportation • Carla Bailo, Ohio State University • Sessions on key issues, visit to Mcity

33. Questions? Sean Slone: sslone@csg.org On Twitter: @CSGTransport