Flurry of state bills tackle road funding in lieu of gas tax

Bloomberg News

Two-thirds of states this year have floated transportation funding bills, including a controversial measure passed by the Indiana General Assembly that allows tolling on all its interstates, as states seek road funding alternatives to the gas tax.

Thirty-seven states have introduced a total of 130 transportation funding bills in the first quarter, according to the American Road and Transportation Builders Association's Transportation Investment Advocacy Center. Nearly 25% of the bills are for recurring revenue, such as new fees and taxes, and just under 20% are for local funding, like county fee or local government taxes. Seventeen percent would generate one-time road dollars.

The pace of transportation funding measures is about on par with the most recent odd-numbered year, when 35 states introduced 125 bills, ARTBA said. "While these numbers will likely grow throughout the year, many states have reached introduction and crossover deadlines," the group said. "The number of new bills will slow while progress is made on existing measures. Sixteen states have already advanced legislation out of the first chamber."

A rising number of states are hunting for fresh sources of revenue to supplement the gas tax, which is failing to keep pace with transportation infrastructure needs amid the rise of electric and fuel-efficient cars. Of the bills introduced this quarter, 14% would create an electric vehicle fee and 11% create a road usage charge.

Congress is eyeing a national EV fee to offset the weakening gas tax in its next surface transportation bill next year. Republicans have introduced a bill called the Fair Share Act that would tax EVs, which don't currently pay into the Highway Trust Fund.

In Indiana, lawmakers on Friday sent Republican Gov. Mike Braun a bill that would allow the state to pursue tolls on any interstate highway. House Bill 1461 authorizes the Indiana Department of Transportation to seek federal waivers for tolling interstate highways and implement the tolls without additional legislative approval.

"We are having the conversation: How do we fund roads into the future?" the bill's sponsor, state Rep. Jim Pressel, a Republican, was quoted as saying in local reports. "Should it come out of the general fund? I don't believe that to be true. I think we should have user fees. You pay for what you use."

The bill's fiscal analysis notes that a previous tolling study estimated Indiana could receive approximately $38.2 billion in revenue between 2029 to 2050.

Maryland lawmakers on April 7 approved legislation that would generate an estimated $500 million in transportation revenue for fiscal year 2025-2026 based on a variety of new and increased taxes and fees.

On the more traditional borrowing side, North Carolina lawmakers are considering legislation that would allow local governments to issue bonds against anticipated revenue that's been identified but not yet issued in the State Transportation Improvement Program.

After winning Republican Gov. Glenn Youngkin's signature, Virginia has a new law that allows the Commonwealth Transportation Board to issue up to $1 billion of revenue bonds to be known and designated as "Commonwealth of Virginia Special Structures Program Revenue Bonds."

The Massachusetts Municipal Association is lobbying for passage of H. 53, an act financing long-term improvements to municipal roads and bridges. The measure would increase by 50% the Chapter 90 program, which provides funding to cities and towns for road capital projects, and invest $200 million for a culvert and small bridge program.

Washington lawmakers have introduced a bill that would allow the issuance of up to
$1.6 billion of bonds for the design and construction of the I-5 Bridge Replacement Project. The bonds would be backed by tolls and may also carry the state's full faith and credit pledge.