OF GAS TAX BONDAGE

Maine’s roads need to be repaired but coupling a $60 million transportation bond with a suspension of indexing the state’s fuel tax is a poor solution. The move won’t provide relief to taxpayers and it will cut into the same road repair revenues that the state would supplement with the bond.

To get Republicans to support the recently passed supplemental budget, House and Senate Democratic leaders agreed there would be no borrowing proposals this session. Faced with a $130 million shortfall in funding for highway and bridge work, because of the rapid rise in the cost of construction materials and changes in the federal funding system, the Department of Transportation last fall said it would have to defer about 20 percent of the projects slated for the next year.

By re-engineering projects and putting off those that couldn’t be completed by next June, the department cut $40 million from the deferral list. Another part of the solution was to use $15 million from the Highway Fund and $15 million from the General Fund to cover some of the cost. The final suggestion was $60 million in funding from what are called grant anticipation revenue vehicles.

GARVEE bonds allow states to borrow against future federal allocations to complete current projects. New Hampshire last year approved a $195 million bond and 23 other states have used GARVEE financing. Although not required, the proposed Maine bond would be subject to a referendum vote.

Although House and Senate leaders reiterated their “no borrowing pledge,” the Transportation Committee endorsed the bond. When it faced defeat in the Senate, Sen. Kenneth Gagnon, D-Waterville, proposed that the bond be paired with a one-year suspension of gas tax indexing.

He said this would help people cope with high gas prices and would secure more votes for the bond, which passed by one vote in the Senate last week and must now be considered in the House. If Democrats had been more willing to include Republicans in policy debates and Republicans had focused less on the next election, this ludicrous situation, and others like it, may not have developed.

Eliminating the next inflation adjustment on the fuel tax would save drivers less than 1 cent per gallon of gasoline or diesel fuel. For an SUV driver that would add up to less than a quarter per fill up, enough for a gumball but not tax relief.

Worse, not increasing the gas tax on July 1 would eliminate about $8 million from DOT’s budget. Although the gas tax also helps fund the State Police and Secretary of State’s Office, DOT would likely cover their share because these departments use the revenue for on-going expenses while the transportation department uses it for capital expenses.

In effect, the state would be borrowing $60 million to get $52 million it can actually spend on roadwork. Assuming a 15-year term and a 4 percent interest rate, it would cost nearly $3 million more to borrow $60 million rather than $52 million, which would again shortchange DOT.

Faced with a $1 billion backlog of transportation infrastructure repairs, the state clearly needs money for such projects, but it must raise the money wisely, not in the most politically expeditious way.