taxes

Running on fumes: Lack of will imperils fund that keeps Maine roads, bridges safe

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Last May, the Legislature’s Taxation Committee spent hours hearing testimony on a number of bills. One of them, to increase the state’s top corporate income tax rate to 12.4 percent, drew impassioned arguments from citizens and businesses, but ultimately failed. Another, to establish a refundable income tax credit for paper manufacturers, passed and eventually became law.

Tucked in among the others was “An Act to Invest in Maine’s Roads and Bridges,” a short bill that would have raised the state’s fuel tax by 12 cents per gallon over four years, with a refundable tax credit for people with incomes below the poverty line. 

Accompanied by just four pieces of written testimony, the legislation received little debate before committee members voted overwhelmingly to kill it, 33-2.

“This is the problem that is run into every single session,” said Brian Parke, president of the Maine Motor Transport Association, which represents the trucking industry and supports a “reasonable” fuel tax increase. “It goes nowhere because of politics. Nobody wants to be seen on the wrong side of tax increases.”

But, Parke continued, “everybody agrees with the need. Everybody agrees something needs to be done.”

The math is simple. As the gas tax has stayed the same, vehicles have become more efficient, using less and less fuel, meaning the money coming in to keep Maine’s bridges and highways safe has been roughly flat for a decade, even as the cost of maintaining that infrastructure continues to rise. Last year a group of engineers gave the state’s roads a “D” rating, indicating they are in “poor to fair condition.”

With pledges from automakers and President Biden to dramatically increase the number of hybrid and all-electric vehicles, and legislators reluctant to raise the fuel tax, that could mean a bleak future for Maine’s Highway Fund.

For years, money raised by taxing fuel (diesel and gasoline, among others), has accounted for two-thirds of the revenue coming into the Highway Fund. That figure has been largely stagnant for a decade, and in some years has fallen — last year, the state’s gasoline tax brought in $194 million — $2 million less than in 2010.

That’s in part because the tax has been 30 cents per gallon since 2011, when lawmakers voted to decouple it from inflation, a practice known as indexing. Since 2013, 33 states and the District of Columbia have increased their state fuel taxes.

But in Maine, legislators have consistently voted down bills to raise it. The federal government hasn’t increased the gas tax since 1993, when it was set at 18.4 cents per gallon (adjusted for inflation, that’s the equivalent of 10 cents today). 

“We’re supposed to be leading and taking care of our state’s resources, and we keep just deferring on this,” said Rep. Ben Collings, D-Portland, who sponsored “An Act to Invest in Maine’s Roads and Bridges.” “I think it’s so ridiculous how scared both parties are of the ‘T word’ — taxes — and the implications for an election.”

There was little appetite for tax increases amid the COVID-19 pandemic, said Collings, but similar bills get shot down every year.

“We need to be adults about this and be responsible,” he said. “The public gets it and supports things like this.”

Staff cuts and dark humor

Even after cutting staff and shifting priorities, the Maine Department of Transportation (MDOT) estimates that its highway and bridge budget is still short $232 million each year of what it should be, and that assumes voters will continue to support a $100 million annual transportation bond, which they typically do.

“The shortfall number would be even larger, but several years ago the department scaled back the number of miles it is improving,” said Maria Fuentes, executive director of the Maine Better Transportation Association), in testimony on Collings’ bill. 

MDOT also cut nearly 20 percent of its workforce over the past decade, said Fuentes, “a dramatic reduction for a public agency. But they knew they had to do it because of their funding situation … Maine’s Highway Fund is cratering, like many of our roads.”

Over at MDOT, staff have taken to using the acronym “PUNT” for the department’s new approach to managing many roads under its control: “patching until normal treatments” become fiscally possible.

“I’m starting to not believe in tipping points because it seems like we’ve tipped over so many tipping points lately,” said Andrew McLean, a former state representative who chaired the Transportation Committee and has advocated for increasing the fuel tax. “I have to believe when the money dries up we’re going to have to take action in some way.” 

Better gas mileage equals less revenue

Lawmakers’ reluctance to increase the tax has also been accompanied by cars using less and less fuel. The average new vehicle sold in the U.S. in 2019 averaged 24 miles per gallon, roughly double the typical gas mileage in 1975. 

That decrease in consumption is necessary to cut emissions (the transportation sector accounts for 54 percent of greenhouse gas emissions in Maine and 29 percent nationwide), but better fuel efficiency also means that revenue from Maine’s fuel tax has stalled, and there is no reason to expect a turnaround. 

“As cars have become more efficient and as we churn more toward hybrid and eventually electric cars, the funding will completely dry up,” said Fuentes.

With promises from automakers and Biden to increase the sale and production of electric vehicles (EVs), the funding shortfall likely will get worse. Ford, General Motors and Stellantis (the company behind Jeep, Dodge and Ram) jointly pledged this month to have EVs (battery electric, fuel cell and plug-in hybrids) make up 40-50 percent of their U.S. sales by 2030. Biden announced a similarly ambitious target, to have half of all vehicles sold by 2030 be emission-free. 

Environmental advocates point out that the highway funding deficits aren’t the fault of EVs: The National Resources Defense Council estimates that “even if EV sales increased tenfold by 2025, they would still account for about 3 percent of cumulative transportation funding revenue losses from 2010.” 

But without another source of funding, the shift toward electrification of cars, trucks and buses will compound the problem. 

“The party line I hear a lot of people say is don’t blame EVs, they’re a small portion of the market,” said Marty Grohman, executive director of E2Tech, an organization working “to build Maine’s environmental and energy technology economy.”

“No single raindrop thinks it caused the flood,” he said.

If lawmakers raised the…

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