In Cash-Strapped States, Voters Protect Transportation Funds

Illinois and New Jersey are joining the growing number of states that restrict how transportation money can be spent.
by | November 9, 2016

Read all of our coverage on 2016 ballot measures at governing.com/ballotmeasures.

Should transportation revenues -- things like gas taxes and vehicle registration fees -- be set aside and used only to fund transportation expenses? Most states say yes. And ballot initiatives on Tuesday added two more to the list: Illinois and New Jersey.

Voters in the two states supported constitutional amendments to keep money raised from transportation-related activities from going into the general budget. The amendments passed with 54 percent support in New Jersey and 79 percent in Illinois.

The Illinois amendment will create a so-called lockbox, while New Jersey’s measure will expand the types of revenue that are designated for transportation purposes.

Both states had gone more than 25 years without raising their fuel taxes, the primary source of transportation funds. Political gridlock in the two states had stymied other attempts to raise more money for infrastructure improvements.

In Illinois, new transportation revenue is nowhere on the horizon because the Republican governor and Democratic legislature have barely been able to pass a budget to keep the state government open.

But in New Jersey, Republican Gov. Chris Christie and Democratic legislators agreed in October to raise the state's gas tax by 23 cents a gallon in a package that also included some tax breaks. The amendment had been placed on the ballot last year, before any gas tax was passed. But the two issues became intertwined. Christie's own lieutenant governor was one of the voices calling for the defeat of the constitutional amendment because of the gas tax controversy.

But the legislative breakthrough on a gas tax came only after years of stalemate on transportation funding that drained the pool of transportation money nearly dry. Things got so bad that Christie ordered a statewide shutdown of construction projects in July.

Lawmakers in both states overwhelmingly sent the lockbox measures to voters, even though the measures would tie the hands of legislators in the future.

“Illinois politicians have wasted millions of tax dollars on bureaucracy and mismanagement,” said Frank Manzo of the Illinois Economic Policy Institute, pointing to $6.8 billion of transportation money lawmakers diverted since 2002. That cost the state 4,700 jobs, he says. “Requiring transportation money to be spent on transportation would improve the Illinois economy.”

Although the Illinois amendment didn't get a lot of publicity, a broad array of groups supported it, including labor unions, business groups and transportation advocates.

The strongest criticism of the proposal came from Chicago’s two largest newspapers.

“No one doubts that transportation projects are in a sorry state in Illinois, with roads and highways in need of billions of dollars of repairs even as money collected from a gas tax, tolls and license fees is spent elsewhere. But the solution is a budget, not a shell game,” wrote the editorial board of the Chicago Sun-Times. “A lockbox is nothing but an admission of failure, and we urge you to vote the idea down in November.”

The Chicago Tribune said the measure should have been called “The Illinois Crony Protection Amendment of 2016.” Its editorial board argued, “The diabolical effect is that contractors, and the unions whose members they employ, would have constitutionally guaranteed dibs on future billions of state and local revenue dollars.”

The debate had been more subdued in New Jersey until the gas tax hike. Christie pushed the amendment, even as he negotiated with lawmakers on a tax deal.

“Vote yes on that because otherwise that increase will be able to be spent on anything, and if you leave an unguarded pot of money in Trenton -- bad move, everybody. Bad move,” the governor said in a radio interview.

Thirty states have constitutional restrictions on how the revenues in transportation funds can be spent, according to the Council of State Governments. Maryland and Wisconsin became the most recent two to add those restrictions, when voters in those states added lockbox protections in 2014. Maryland voters approved the new rules shortly after lawmakers there passed a major transportation funding package. Wisconsin passed its amendment amid a long search for new transportation revenues, an issue that continues to divide its Republican governor and GOP-led legislature.

Read all of our coverage on 2016 ballot measures at governing.com/ballotmeasures.