CHICAGO - A sales tax hike to bolster transportation funding in Missouri to is headed to the November ballot.
The state House followed the Senate's lead and on Wednesday voted to put a three-fourths of a cent sales tax hike on Nov. 4 ballot. The House previously had approved asking voters to consider a one-cent increase but the Senate approved the smaller measure sending it back to the House.
The latest House vote came ahead of the Legislature's scheduled Friday adjournment. In both chambers, the proposal had a mix of Democratic and Republican support and opposition. The GOP holds a majority.
If voters approve it, the tax hike would take effect on Jan. 1, 2015 and is projected to generate more than $500 million annually for roads, bridges railroads, ports, airport and other transportation related projects. It would remain in place for 10 years and could be extended with another vote. The proposal earmarks 90% of the new revenue for state projects and 10% for local ones.
"Today is a great day for the future of transportation in Missouri," Department of Transportation director Dave Nichols said in a statement. Officials are expected to produce a list of proposed projects for voter review before the referendum.
If approved, the sales tax would expand the current revenue sources now used to fund transportation projects. The state's road bonds are secured by the department's primary sources of revenues including state motor fuel taxes, sales taxes on motor vehicles, and motor license fees.
The legislative vote came ahead of the Missouri Highways and Transportation Commission's planned sale of $900 million refunding of state road bonds the week of May 19.
The commission is heading to the market primarily to save on interest costs but is also doing some restructuring. It is accelerating some debt service to open up new borrowing capacity, said the commission's chief financial officer, Roberta Broeker.
Ahead of the sale, all three rating agencies affirmed triple-A ratings for the first lien bonds and Standard & Poor's affirmed the AAA rating it also applies to the second lien bonds. Fitch Ratings affirmed its AA-plus rating on the second lien bonds and Moody's Investors Service affirmed its Aa1 rating.
Legislative opposition last year was too great to place a similar measure on the ballot, but the proposal gained traction amid warnings from transportation officials over the state's dire funding needs.
Funding challenges in recent years have driven a shift in the commission's strategy to one that's focused on maintenance instead of expansion and enhancements. The commission, which oversees the MoDOT, warned that its construction budget will soon fall below the $485 million needed to keep state roads and bridges in at least their current condition.
The agency has blamed a myriad of reasons for its lack of funding including dwindling gas tax revenue, as vehicles become more fuel efficient and people drive less. Construction costs are rising and the state's gas tax has long been held steady at 17 cents per gallon.
The commission has a total of $2.8 billion of outstanding debt including all of its state road bonds under various liens and its bonds that leverage federal grants.
