New taxes under consideration for state transportation

New taxes under consideration for state transportation
An advisory group may recommend new taxes or increased rates on existing revenue sources to cover a massive transportation funding gap. Photo: freepik.com

Prior to the state-ordered shutdown due to COVID-19 and the passage of Initiative 976, the state transportation infrastructure was already suffering from a significant funding gap between revenue and costs to preserve and maintain roads. The Joint Transportation Committee (JTC) is now looking at how to address that funding gap. A state advisory panel later this year will decide whether to recommend new taxes to help meet those needs, as well as whether to amend the state’s transportation goals as one legislative bill proposed to do during this year’s session.

Warnings about the transportation funding gap were raised in September during a state JTC meeting by WSDOT Deputy Secretary Keith Metcalf, who said “the prosperity of our state is at risk.” According to a new assessment by BERK Consulting, the state’s highways will require between $21-26 billion for preservation and improvement through 2031.

BERK Senior Analyst Andrew Bjorn told the JTC at its June 23 meeting that “it’s essentially a debt that we’ve incurred,” through deferred maintenance. Starting next year, WSDOT will no longer pave highway ramps or sections of the freeway where the speed limit is 40 miles per hour (MPH) or less. The state agency estimates over the next decade its highway safety investments will be $1.7 billion underfunded.

“There are active backlogs in maintenance and preservation projects that have been larger than before and across all modes and infrastructure types,” Bjorn said.

In addition to a $700 million annual funding gap for maintenance and preservation, the state also is expected to shoulder a significant financial burden for numerous state, local and interstate transportation-related projects that include:

  • The I-5 Columbia River Bridge;
  • $1.56 billion for the I-5 carpool lane extension to Joint Base Lewis-McChord;
  • $260 million for State Route 18 widening between Issaquah-Hobart Road and Raging River; and
  • $1.4 billion for the US 2 Trestle in Everett.

Additionally, the state estimates it will cost $3.1 billion to remove 415 fish barriers on WSDOT property by 2030 due to a federal court injunction. Although city and county culverts weren’t affected by the injunction, Bjorn said there is the “implication that they will be legally required to comply with requests.”

Overall, funding for the state transportation system is less than half of what is need, according to the BERK Consulting assessment. Local and county governments are also in a similar situation. Often those projects, such as the Duportail Bridge in Richland, rely heavily on state funding and provide economic benefits as well as improved traffic conditions and greater access for emergency services.

A 2020 study of the Duportail Bridge found that “it was challenging to assemble the total funding required for the project, which far outstripped local funding ability,” with the state contributing 86 percent of the total funding.

Among the state revenue options on the table generating the most revenue through 2031 are:

  • Cap and trade ($3.5 billion);
  • Employee excise tax ($828 million);
  • Transportation benefit assessment ($922 million); and
  • A road usage charge (RUC at$2.5 billion).

However, BERK Consulting Associate Maidt noted that many of these potential new revenue sources such as an RUC would be difficult to implement, while an employee payroll tax would be easy to implement and “widely applicable, but not equitable.”

Following a pilot program and recommendations from the Washington State Transportation Commission, state lawmakers this session introduced SB 6586 setting up an RUC program for electric vehicles and hybrids. Although it cleared the Senate Transportation Committee, it did not advance to the Senate floor for a vote.

Aside from new taxes, the state advisory committee may also recommend increasing existing revenue sources such as

  • Freight project fees;
  • Personal trailer fees;
  • Passenger weight fees; and
  • Motor vehicle filing fees.

Another possibility is increasing the state gas tax, which the legislature did in 2003 and 2015. The 2003 nickel tax provided almost $4 billion over a 10-year period, funding 158 projects. The current state gas tax is $.49 per gallon. A 10-year transportation package introduced last year would have included a small gas tax increase to help pay for fish barrier removal. That package is likely to be voted on during the 2021 session.

Maidt said the advantages of a gas tax increase is that it is already collected by the seller and constitutional restrictions ensure the money would be spent on state highways. “It could generate a fair amount of revenue. It incentives resource efficiency.”

The advisory group must meet by July 1 and conclude by Dec. 31 with recommendations delivered to the state legislature for the 2021 session. The JTC will meet next on Sept. 17.

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