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States Warn of Band-Aid Fixes If Road Funds Run Dry

Across the nation, state transportation agencies are warning that public safety is at risk if lawmakers don’t overhaul how road maintenance gets funded. Some states are proposing new taxes and fees.

As winter weather began arriving in mountain passes, the Oregon Department of Transportation issued a warning: The state was running out of money to plow roads and could “no longer maintain the state’s transportation system at the same level as we have in the past.” Drivers would need to anticipate delays and prepare to be stranded in poor weather.

The outcry was swift, particularly in the snowiest parts of Oregon.

Among those skeptical of the agency’s approach was state Sen. Lynn Findley, a Republican who represents a sprawling, sparsely populated district that covers the entire southeast quadrant of the state. The warning reminded him of scare tactics the National Park Service used when budget cuts loomed, threatening to shut down popular tourist attractions, he told transportation officials at a November public hearing.

“You’ve ‘Washington Monumented’ your budget problems, and the public does not trust it,” Findley said. “And it’s a major problem to deal with, and I’m not sure how you’re going to pull out of it.”

The public may have been “snow plowed,” but the tactic worked. By early December, Oregon Gov. Tina Kotek and legislative leaders, all Democrats, announced plans to boost the Oregon Department of Transportation budget by $19 million to pay for winter maintenance service. Next up? Revamping how the state pays for all its transportation needs.

“If I believe that there’s a credible safety threat, then you’ve got to fund it,” Oregon House Speaker Dan Rayfield said in an interview. “Safety on the road is paramount and that has to be done.”

Across the country, state transportation departments are warning that public safety is at risk if lawmakers don’t overhaul how road maintenance gets funded. Like other states facing shortfalls in their transportation maintenance budgets, Oregon blames declining gas tax revenues from more efficient cars and the wider adoption of electric vehicles, structural funding issues that limit how federal and state highway money can be spent, and inflation-driven cost increases.

States are trying creative new ways to fill the gap, from road use charges to delivery fees. And critics say states must stop prioritizing major new projects over basic maintenance needs.

In Maryland, transportation officials putting together their six-year transportation plan warned recently that construction projects, commuter bus service and road maintenance face severe cuts. The state has a $3 billion shortfall for the plan, blamed on higher costs and reduced tax and fee collections. Beyond maintenance cuts, the state may consider pulling back on several planned highway expansion projects, officials said.

Maryland also has seen the effects of inflation on labor and materials, and a decline in gas tax revenues, said Maryland Transportation Secretary Paul Wiedefeld.

“This is not a new problem for our state,” Wiedefeld said when announcing the state’s updated budget plan in December. “Ultimately, we know a long-term solution is going to take everyone working together to redefine how the state pays for transportation projects.”

Budget Priorities


Experts who scrutinize state transportation budgets say that many transportation departments are shortchanging maintenance to launch new projects, and that gas tax collections haven’t yet plummeted.

In Oregon, the state has diverted operations and maintenance funds to highway widening projects, said Joe Cortright, an economist in Oregon who runs the think tank City Observatory.

“The real issue here is not the aggregate amount of money that they have, but the decisions that they’re making to spend money on these giant construction projects,” said Cortright, who is critical of freeway expansion projects in his state. “We have these maintenance needs we’re neglecting because we’re throwing so much money into giant projects.”

Rep. Khanh Pham, a Democratic state lawmaker in Oregon who sits on the legislature’s Joint Committee on Transportation, has proposed a bill called “Fix it First” that would require the state’s Department of Transportation to prioritize maintenance. The agency would have to demonstrate before beginning new capital projects that they wouldn’t endanger the state’s ability to maintain the current system.

“Ultimately the reason that we can’t afford frequent snowplowing service is not because the gas tax is declining, but it is because we’re spending so much of our revenue on these large freeway projects,” Pham said. “And that is something not unique to Oregon.”

In Washington state, both Democratic Gov. Jay Inslee and Secretary of Transportation Roger Millar have urged lawmakers to prioritize existing infrastructure over new projects.

A draft version of the state’s 2024 Highway System Plan overseen by Millar’s department calls on the state to shift from the construction of new and bigger highways over the next 20 years and toward “investing in preservation, safety, and efficiency strategies.” Doing so, the plan suggests, “would provide more positive economic, safety, and equity benefits to more Washingtonians across the state.” If lawmakers don’t act, “you’re going to see more and more of the Band-Aids and duct tape,” Millar said last summer. (The state was recently ranked the worst in the nation for potholes.)

Finding Funding


Fuel taxes still represent the biggest source of state transportation budgets, according to the National Conference of State Legislatures. But gas tax collections are down as a proportion of states’ overall state transportation revenue, according to the National Association of State Budget Officers. Gas taxes made up 41.1 percent of state transportation revenue in 2016, the association said. By 2023, they made up 37.6 percent.

Currently, electric vehicles are a small portion of the overall vehicle mix in most states, but as consumers and businesses adopt greener options, gas tax collections will decline. Tax collections also are affected by post-pandemic commuting patterns that led to less driving, and increasingly fuel-efficient conventional automobiles.

Among the options states are considering to supplement or replace gas taxes are road use charges, which are based on the miles driven in a vehicle, not the amount of fuel consumed. States also are beginning to enact per-kilowatt hour fees at electric vehicle charging stations: Georgia, Iowa, Kentucky, Montana, Oklahoma, Pennsylvania and Utah all tax electricity consumed at public charging stations, according to the National Conference of State Legislatures.

States also are doing creative accounting to shift more money to maintenance. In Pennsylvania, the state relies on state and federal gas taxes for around 75 percent of its highway and bridge funding, said Alexis Campbell, a spokesperson for PennDOT. Until 2023, the Pennsylvania State Police also drew from gas tax revenues.

The state’s General Assembly in 2023 shifted $125 million in funding for the State Police away from the Motor License Fund, instead opting to pay for the law enforcement agency from its general fund. That’s expected to result in an increase of $1.25 billion for transportation over five years, Campbell said.

In Minnesota, Democratic Gov. Tim Walz signed a law that indexes the gas tax to inflation as well as imposes a 50-cent fee on deliveries valued at more than $100. The state is the second in the nation after Colorado to impose such a delivery fee, which will raise an estimated $59 million in its first year. Small businesses do not have to collect the fee, but it applies to retailers such as Amazon.

“We’ve kicked that can down the proverbial pothole road for decades,” Walz said after lawmakers passed the tax increases. “I’m really proud the legislature’s decided to come up with a means to fix this.”

Oregon state leaders acknowledge that their snowplow and winter maintenance budget is a small slice of the $4 billion devoted to road maintenance in the current two-year budget cycle. The money will come from the state’s general fund, not the usual transportation funding sources; it’s a budgetary patch until lawmakers take up a new transportation funding measure in their 2025 session.

In 2023, Oregon lawmakers increased vehicle registration fees to stave off additional DMV office closures and service reductions. But the direct impacts to winter maintenance “were not known” at the time, said Anca Matica, a spokesperson for the governor’s office.

The state is at the end of a transportation funding package passed in 2017. Lawmakers will take up a new one in the 2025 legislative session; alternative funding structures are on the table. Among the fixes are raising vehicle registration fees or indexing gas taxes to inflation — the same approach Minnesota took. If nothing is done, though, the state Department of Transportation says it faces a $720 million transportation deficit by 2027.

While maintenance may not be as eye-catching or exciting as new projects, it is critical, Pham said.

“As a legislator, it’s my job to make sure that we are prioritizing investments in our basic services. And maintaining our streets is one of the government’s basic responsibilities,” Pham said. “It is about so much more than just snowplows.”



Stateline is part of States Newsroom, a national nonprofit news organization focused on state policy. ©2024 States Newsroom. Distributed by Tribune Content Agency, LLC.
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