States see tax hikes as path to transportation upgrades

Pennsylvania latest to raise taxes for improvements

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WASHINGTON — This year, several states have done something that's become politically impossible in Congress: They raised taxes to pay for transportation improvements.

From liberal Maryland to conservative Wyoming, states are enacting a variety of tax and fee increases to pay for transportation.

Pennsylvania became the latest this month with a measure that will generate billions of dollars for roads, bridges and transit. It lifts the cap on taxes on the price of gasoline at the wholesale level, meaning drivers ultimately will pay more at the pump. They'll also pay more for driver's licenses and traffic violations.

"Unlike Washington, we proved that by working together we can deliver and bring the quality transportation system that Pennsylvanians expect and deserve," said Gov. Tom Corbett, a Republican who signed the bill on Monday.

Earlier this year, Virginia enacted a landmark transportation law that will provide $3.4 billion over the next five years for transportation projects, including highways, mass transit, passenger rail, airports and seaports.

"We know that other states are looking at what we're doing," said Virginia Transportation Secretary Sean Connaughton.

Some conservative groups have grumbled about the tax increases and plan to challenge the lawmakers who supported them. But infrastructure spending is popular with the public, and it's rarely a losing issue.

"Most voters understand the need to do this," said G. Terry Madonna, a professor of public affairs at Franklin & Marshall College in Lancaster, Pa.

The current federal transportation law will lapse by the end of next year, and unless Congress makes drastic changes, more states will be left to fend for themselves. An 18.4-cent tax every motorist pays on a gallon of gasoline no longer generates enough revenue to sustain the Highway Trust Fund. Congress last raised the tax in 1993.

An alliance of the trucking industry, road builders, the U.S. Chamber of Commerce and organized labor have pleaded with lawmakers to fix the federal fund, even if that means raising taxes.

"We want to pay more," said Bill Graves, president and CEO of the American Trucking Associations. "We're ready to pay more, in some type of user fee, whatever Congress can agree to."

The bipartisan Bowles-Simpson deficit reduction commission of 2010 called for a 15-cent increase in the federal gasoline tax. But there's a growing recognition that raising the gas tax isn't a viable long-term solution. Americans are driving less, and the cars they drive burn less gasoline. Fuel-efficient vehicles are better for the environment, but worse for building and maintaining roads as long as the funding is tied to fuel consumption.

"Everyone sees the same thing," Connaughton said. "The gas tax is a very weak foundation to build a transportation program for the future."

Virginia's new law scrapped a 17.5-cent-a-gallon state gasoline tax and replaced it with a 3.5 percent wholesale tax, paid by gas stations, increased vehicle registration fees and even imposed a special registration fee for hybrid vehicles. Virginia also raised its state sales tax, to 5.3 cents from 5 cents.

Other states have opted to simply raise their gas taxes. Maryland's went up by 3.5 cents a gallon, while Wyoming's increased by 10 cents. Massachusetts raised its tax by 3 cents, overriding the governor's veto. Vermont imposed a 2 percent sales tax on gasoline.

Not everyone is willing to go with tax increases. Texas tapped its rainy day fund to the tune of $1.2 billion a year. The fund is supported by taxes on the state's oil and natural gas industry.

Voters, meanwhile, have proved themselves willing to vote for transportation funding at the ballot box. This fall, 86 percent of such measures were approved, according to the American Road and Transportation Builders Association, an industry group that supports increased state and federal transportation investment.

Several cities in California, Missouri and Washington state increased their local sales taxes to pay for road and transit improvements. North Carolina's Wake County, which includes Raleigh, approved a property tax increase for a $75 million transportation bond package. The measure passed with a 70 percent majority.

However, states have huge transportation challenges.

"States cannot expect to bear this burden alone," said Pete Ruane, president of the road builders association.