States plug surpluses into transportation projects

State budget surpluses are boosting transportation investment, with state lawmakers approving nearly $13.5 billion in new transportation funding in the first six months of the year.

One-time funding measures, many of which will use bonds, account for half of all the bills that have been introduced this session, according to the American Road & Transportation Builders Association, which tracks state transportation legislation on a monthly basis.

The $13.5 billion approved so far this year compares to a total of $15 billion in new transportation funding passed all of last year by state legislatures, according to ARTBA.

Minnesota governor's office

This year's figures are on track with 2021, which totaled $30 billion. Odd-numbered years, which typically feature longer legislative sessions, traditionally see more transportation bills enacted.

"We're definitely tracking a little higher this year," said Carolyn Kramer Simons, a senior director at ARTBA. "It's been a very busy year and it's continuing to be a busy summer," Simons said, noting that more bills have been passed since ARTBA's most recent May tracker.

Hundreds more funding-related bills remain pending in legislatures across the country. So far this year, states have introduced 218 transportation funding bills, ARTBA said. Of those, 25 have passed at least one chamber and 23 have been signed into law, totaling $13.48 billion of new investment.

Bills that create new or increased fees for electric vehicles make up 16% of the bills introduced during the first five months of 2023, accounting for the second most popular category behind one-time funding. That's a "notable increase" over eight bills tracked last year, ARTBA said.

More states are eying alternatives to the gas tax, which is failing to keep pace with transportation funding needs amid the rise in electric vehicles and increasingly fuel efficient cars. The bulk of the new EV-related revenue is pegged to annual or biannual registration fees, Simons said.

As states enjoy strong surpluses — at least for now — many are diverting some of that money to transportation infrastructure projects. Florida recently transferred $4 billion from its general fund for 20 transportation projects that will address congestion, according to Gov. Ron DeSantis' office.

"We are seeing a lot of one-time funding being approved right now as states have that general fund surplus," as well as COVID stimulus money and bond money, Simons said. "They're utilizing that to jumpstart the transportation funding projects."

Minnesota is a frontrunner among states this year with the passage of a significant transportation package. The legislation Gov. Tim Walz signed in May sets up a new retail delivery fee, increases the metro sales tax and motor vehicle sales tax, and indexes the gas tax to inflation. The legislation is estimated to generate $1.3 billion over the next two years, ARTBA said.