States revamp transportation funding
What is the connection between Amazon.com book sales and transportation funding? With gas tax revenues on the decline, states have explored a variety of ways to boost funding for transportation projects. Virginia recently approved legislation overhauling its transportation funding system and Maryland now is poised to do the same. The plans share some similarities, including the intention to use a portion of internet sales tax revenue for transportation funding if the U.S. Congress passes the Marketplace Fairness Act. If passage fails, both states would increase wholesale fuel tax to compensate.
Virginia approved the legislation — drafted by Gov. Bob McDonnell — on Feb. 23. "This is a historic day in Virginia," McDonnell said. "We have worked together across party lines to find common ground and pass the first sustainable long-term transportation funding plan in 27 years." The plan eliminates Virginia's at-the-pump tax of 17.5 cents per gallon and instead adds taxes on and wholesale gas and diesel. It also raises the general sales and use tax in certain areas of the state and implements a $100 registration fee for hybrid, electric and alternative-fuel vehicles. The governor's office said it anticipates increasing revenue for road, bridge and highway repairs by $3.5 billion during the next 5 years. In announcing passage of the legislation, McDonnell added that during the past 3 years, the state has tried to address transportation funding by issuing public-private partnerships for toll roads, creating a state transportation infrastructure bank and dedicating two-thirds of undesignated surplus funds to transportation.
On the heels of the Virginia legislation passing, Maryland Gov. Martin O'Malley, Senate President Thomas Mike Miller, Jr. and House Speaker Michael Busch introduced a set of changes that also would transition the state away from reliance on the gas tax charged at the pump. The proposal would reduce the gas tax from 23.5 to 18.5 cents per gallon; add a 2 percent wholesale fuel tax for gas and diesel and subsequently increase it to 4 percent in July 2014; and index both the state tax on gas and the Maryland Transit Administration transit fares to the Consumer Price Index. According to a Reuters article, the proposal is likely to pass. Unlike Virginia, Maryland won't add the fuel efficient vehicle fees or increase its sales tax. O'Malley's office says the proposal would result in $3.4 billion more for transportation over 5 years. The gas tax in Maryland hasn't been raised since 1992.
For additional details, O'Malley's website provides a side-by-side comparison of the two plans: http://www.governor.maryland.gov/documents/2013TransRevPkgCompare.pdf
According to the U.S. Department of Energy, between 2008 and 2035, the number of vehicle miles traveled is expected to increase 49.9 percent, while fuel use is projected to rise only 15.4 percent. The main source of highway funding comes from a motor vehicle fuel tax in nearly half of the states, according to the National Conference of State Legislatures.