Maine’s Highway Fund is in Serious Trouble

November 10, 2014 by

Maine’s highway fund has nowhere near enough money coming into it to meet the state’s basic transportation needs, according to the biennial revenue and expenditure projection released earlier this fall by the state’s budget office.

According the budget office’s projections, the state will need to spend $924 million over the two-year period beginning in July, 2015 just to maintain minimally safe and efficient roads and bridges. But the state forecasts that highway fund revenue over the same period will be only $616 million, or $348 million short of what’s needed. If lawmakers do nothing over the next two years to raise more revenue for the highway fund, the state will spend less than two-thirds of what the DOT estimates is needed to get our roads up to “fair” condition, as defined under state law.

road constructionThis isn’t a new development. Two years ago, the state estimated the gap between revenues and expenditures—for the two-year period beginning in July, 2013 –to be $330 million. Four years ago, it estimated the gap for the two-year period beginning in July, 2011 at $345 million. This chronic shortfall between the spending required to maintain our roads and bridges and the revenue lawmakers are willing to raise is the reason why Maine’s roads and bridges are in such bad shape. Lawmakers responded to these enormous gaps by failing to raise more revenue for the highway fund. In fact, Governor LePage proposed and the 125th Legislature enacted fuel tax cuts that all but ensure a permanent crisis in the highway fund and persistent deterioration of the condition of Maine’s roads and bridges.

Taxes on gasoline and diesel fuel provide most of the highway fund’s revenue. Instead of addressing Maine’s crumbling roads and bridges with a balanced approach that includes both revenue increases and spending cuts, the LePage administration worsened the transportation funding problem by repealing the automatic inflation-adjustment of the tax on gas and diesel fuel. The fuel tax is a pennies-per-gallon excise tax: the current levy is 30 cents per gallon of gas purchased, and 31 cents per gallon of diesel. Now that those taxes are no longer linked to the purchasing power of the dollar, they will remain at 30 and 31 cents, respectively, inflation will eat away at  them every year, and our roads and bridges will continue to deteriorate.

The Legislature and voters have used sporadic bonds to borrow funds for some capital repairs and improvements to Maine’s roads and bridges, but this borrowing is nowhere enough to make up for the annual $150-200 million shortfall in the highway fund. And the interest payments on the bonds that voters have approved in recent years are coming out of the General Fund, which is the state’s primary source of funding for education, health care, and other priorities. The highway fund is in such bad shape that it can’t even repay its own borrowing.

A safe and efficient transportation network is a cornerstone of a strong economy. Safe and reliable roads and bridges shouldn’t be a partisan issue. After they are sworn in next month, one of the 127th Legislature’s top priorities should be to fix the highway fund and repair our roads and bridges. The only practical way to do that is to raise the fuel tax and reestablish its automatic adjustment for inflation. Failure to act will put public safety and economic security at risk.

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