States Aren’t Waiting for Trump to Seek Funds for Infrastructure
Republican leaders from at least six states are pushing to raise gasoline taxes or other fees to pay for upgrading roads and bridges, saying they can’t count on President Donald Trump’s $1 trillion infrastructure plan to deliver what they need.
“If a giant golden goose with a red and white and blue flag on it flies over Indiana and drops a golden egg, first we’re going to make sure it’s a golden egg and not some other dropping,” said state Representative Ed Soliday, a Republican who is helping to lead an effort that would raise the state gas tax in Indiana to 28 cents per gallon (from 18 cents), increase registration fees and explore tolling.
Note: The 15 states that are considering raising their gas taxes were identified because they have had legislation pass at least one chamber or the governor has sought or supports an increase in taxes or fees for transportation.
Some Republicans, such as Soliday, are in the unusual position of battling members of their own party who, in some cases, say they won’t support any tax increase and are using Trump’s infrastructure proposal as another reason to oppose them. Responsibility for infrastructure spending has increasingly fallen to the states during the past decade, and revenues aren't keeping pace with rising costs and needs.
“President Trump has said he’s for a big infrastructure plan, so there’s no question that some people say, ‘Well, let’s wait and see what that is,”’ Tennessee Governor Bill Haslam, a two-term Republican, said in an interview about his plan to generate $278 million for projects. “I haven’t heard them say they’re going to do anything that addresses ongoing annual needs around the maintenance of our roads and bridges.”
Haslam has proposed raising the state gas tax of 21.4 cents per gallon by 7 cents, increasing car registration fees by $5 for the average vehicle and placing an annual road user fee on electric vehicles. The state’s gas tax was last raised in 1989 and now is worth about half as much because of inflation, the governor said.
The federal gas tax is 18.4 cents per gallon, while state rates range from 8 cents per gallon in Alaska to 58.2 cents in Pennsylvania, according to the Federation of Tax Administrators.
Combined state and federal transportation spending increased by about $44 billion from 2006 to 2016, according to a January report by Moody’s. States accounted for $31.1 billion — roughly 71 percent — of that amount. There’s been little growth in federal highway aid since 2009, and it’s projected to remain relatively flat through 2020, Moody’s said.
Meanwhile, states’ funding sources have languished. Many states haven’t increased their gas taxes to keep pace with inflation. While 40 states have raised their levies since 1993, Moody's said, just 19 states and the District of Columbia have increased them since 2013, according to the National Conference of State Legislatures. At the same time, rising fuel economy and the proliferation of hybrid and electric cars has cut into fuel tax proceeds. Federal gas tax revenues, which are distributed to states, are facing the same problems, and Congress hasn't approved an increase since 1993. And, while aggregated state proceeds have been growing since 2013, they still haven't recovered to levels from 2007, before the housing market collapsed.
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The Trump administration held its first government-wide meeting last week with 15 cabinet members and other agency leaders to solicit feedback for the president’s $1 trillion plan. The meeting followed Trump’s speech to a joint session of Congress, at which he said he wants to leverage private and public capital to upgrade roads, bridges, airports, tunnels and other infrastructure. A senior White House official said that all funding options were on the table.
Republicans are leading efforts to raises taxes or fees for transportation in Arkansas, Indiana, Oklahoma, South Carolina, Tennessee and Utah, and there are active proposals in at least nine other states to increase revenues. Measures have passed one legislative chamber in Indiana, South Carolina, New Mexico and Utah, and governors are leading or supporting initiatives in 11 states to take care of their own needs.
“With the federal help, we can do much more than we can on our own, obviously,” said Alaska Governor Bill Walker, an independent who is seeking to triple his state fuel taxes over two years. “But as far as us banking on that, we typically don’t do that just because it’s a risk that we really can’t take at this point.”
Among the groups lined up against tax increases are Americans for Prosperity, backed by billionaire industrialists Charles and David Koch, and Americans for Tax Reform, led by conservative activist Grover Norquist. They argue that states should make budget cuts if they want to spend more on infrastructure, not raise taxes. Americans for Prosperity is making similar arguments in a memo released March 3 that suggests Trump’s infrastructure plan could become a “spending boondoggle.”
During a subcommittee hearing on March 1 on the Tennessee transportation bill in Nashville, opponents, including a protester dressed as a large, red gas can holding a sign that read “Tank the Tax”, spilled out of a meeting room where a bill to raise the gas tax was forwarded to another committee on a 5-4 vote.
Andrew Ogles, AFP’s director for Tennessee, said he had spent the past month hosting about 20 town hall meetings around the state to oppose the hike. Instead of raising taxes, Tennessee should dip into its surplus of almost $2 billion to pay for any infrastructure spending, Ogles said.
“We already have the money,” Ogles said. “Why use your credit card when you have cash.”
Haslam said it’s better to raise taxes on the drivers who use the roads and bridges than to tap the general surplus money from all Tennessee taxpayers. “The good news is, everybody understands the need,” he said.
* Includes state general funds, non-highway purposes and tax and fee collection.
Soliday, who chairs the Indiana House Roads and Transportation Committee, said his state needs an additional $1 billion a year for its roads and bridges. Yet Republican Governor Eric Holcomb wouldn't commit to the measure when asked about it Feb. 25, and opposition remains in the party.
Indiana Representative Timothy Wesco, one of seven Republicans to vote against the bill that passed the House on Feb. 16, said he couldn't support the tax increase because it was not offset by reductions in other spending.
“I recognize the need,” Wesco said. “As a conservative, though, I think we are best to approach these things by using it as an opportunity to control spending elsewhere.”
Colorado needs voter approval to raise state taxes, and Democratic Governor John Hickenlooper has called on the legislature to place an issue on the November ballot. Waiting for action from the federal government isn’t an option, said Shailen Bhatt, executive director for the state’s Department of Transportation.
“Particularly in Colorado, there’s a sense of, ‘Colorado needs to take care of Colorado’, like a lot of other states have done,” Bhatt said. “If the federal government is able to come up with something, that’s great. But we need to take care of our own problems right now.”