DALLAS — After struggling to develop alternatives to fuel-tax financing of highways, officials from states with the biggest transportation problems warily eyed a proposal to jack up the national gas tax to cover the growing funding gap.
“Raising taxes is a surefire way to stifle growth, and limiting states’ freedom to innovate will only make it worse,” Texas Gov. Rick Perry wrote in a response to the proposal from the National Surface Transportation Policy and Revenue Commission. “The federal commission further shows a weak grasp of economic theory by encouraging states to not only accept their proposed massive federal tax increases, but to follow suit and simultaneously raise our own gas taxes at an even higher rate.”
In Pennsylvania, where Gov. Ed Rendell has led efforts to convert Interstate 80 into a turnpike to raise revenues for other needed projects, raising fuel taxes is just as hard to sell as it is in Texas.
“Fuel taxes have been rising so fast that that has been a tough proposition,” said Rich Kirkpatrick, spokesman for the Pennsylvania Department of Transportation.
“The commission put together a number of proposals, and the most important thing coming out of the report is the fact that transportation needs are very significant,” he said. “We don’t see anything wrong with having all those options on the table for discussion.”
California Gov. Arnold Schwarzenegger recently stated his opposition to tax increases in his state of the state address but spoke out in favor of public-private partnerships to build infrastructure.
“I have stressed that we have to get into public-private partnerships, because public-private partnerships is really where the action is,” he told the Los Angeles Economic Development Corp. last week. “We have seen it in British Columbia, we have seen it in other places all over the world, and the people are happy. So this is what we want to encourage our political leaders in Sacramento, and our elected officials, to get more into.”
In Arizona, higher federal fuel tax and an increase in the state tax could provide funding for Gov. Janet Napolitano’s plan for a massive transportation package. She called on the state Legislature to develop the plan and identify a funding source.
“It will not be cheap, but we are already lagging, and to continue to wait — to play catch-up — as opposed to planning ahead will only make the whole thing cost more,” Napolitano said in a speech to open the Legislature Monday.
Arizona Sen. Thayer Verschoor, R-Gilbert, called for toll roads or using private companies to build the roads rather than assume that a new tax will pay for everything.
That use of P3 financing is the center of a stalemate in Texas. While Perry favors the use of privately funded and operated toll roads as an alternative to increased taxes, the Texas Legislature last May passed a two-year moratorium on privately funded tollways, with existing projects exempted.
“There have been calls from some quarters to abandon the forward-thinking initiatives we championed to meet our state’s current and future transportation needs,” Perry wrote. “That would be a big mistake. The federal commission’s short-sighted recommendation to curtail our ability to partner with the private sector shows that Washington is still mired in old-school bureaucratic thinking. Washington may not want to change, but fast-growing states like ours simply don’t have the luxury of waiting on the federal government to save the day.”
Texas officials have long complained about the fact that the state pays more into the Federal Highway Trust Fund than it receives, despite rapidly increasing traffic on overburdened highways.
“Among U.S. states, Texas is the second-largest donor to the federal Highway Trust Fund and ranks 50th in rate of return for our federal gas tax dollar,” Perry noted. “For every dollar we send to Washington, only eight cents in federal transit program funds and 70 cents in federal highway program funds make it back to Texas.
“It’s tough to get comfortable with sending even more of Texans’ hard-earned dollars to Washington, D.C., knowing they’ll only be earmarked, redistributed to other states and locked into programs that won’t do much to relieve crowding on our roads.”
Michigan Gov. Jennifer Granholm, whose state suffers one of the worst economies in the nation, told the Associated Press: “I think raising a gas tax now is impossible, because people are hurting. I think we have to look at other ways to fund transportation.”
Florida officials, who have identified $53.2 billion of unfunded multi-modal transportation needs through 2030, were not available to comment on the commission’s recommendations. Of those unfunded needs, $45.1 billion is for highways.
While the state Department of Transportation is working on two major public-private partnership projects, Gov. Charlie Crist has urged the agency to step up reliance on P3s to get more projects done.
Crist and other state officials are also considering the issuance of new bonds and toll structures to finance transportation projects as a way to bolster the state’s economy, which is lagging because of the hard-hit real estate market.