State highway fund revenues lagging Spring project delays worry lawmakers

AUGUSTA – After the first two months of the budget year, revenues dedicated to the state highway fund are $3.7 million below estimates and lawmakers are worried the trend could mean further delays to road and bridge projects already put on hold.

“We have already had delays in projects, and this could mean more delays,” said Sen. Dennis Damon, D-Trenton, co-chairman of the Legislature’s Transportation Committee.

Maine Transportation Commissioner David Cole said he does not believe the two-month downturn in revenues will affect projects under way this fall, but if the trend continues, it could have an impact on projects scheduled to start in the spring.

“Our hope is that revenues will rebound,” Cole said. “It is still early in the year.”

The department already has delayed millions of dollars of projects because of huge increases in the cost of petroleum-based products used in road repair and construction as well as the higher fuel costs for the heavy equipment used in construction.

For the first two months of the budget year that began July 1, fuel taxes are down $2.4 million or 11.3 percent below estimates. Motor vehicle registration fees are down about $1 million or nearly 7 percent below projections. In fact, of the six separate revenue lines that make up the highway fund, five are below estimates. Only revenue from fines, the smallest of the income sources for the fund, is above estimates.

The total highway fund budget for the year is about $331 million.

“I think it is important to note that gas tax revenues are $800,000 above where they were a year ago,” Finance Commissioner Becky Wyke said. “There has been an increase year over year, but not as much as was projected.”

But committee members from both parties believe there is good reason to worry. Budgets are built on revenue projections, and the lawmakers point out that they can’t wait to see whether revenues meet estimates before adopting a budget.

The highway fund ended the last budget year in the red, and that was covered by a surplus carried forward from the previous budget year.

Sen. Christine Savage, R-Union, the senior member of the Transportation Committee, doesn’t believe the current gasoline tax is sufficient to meet the needs of the highway program.

“We are going to have to find another source of revenue and that is not going to be easy,” said Savage, who has served on the panel for more than a decade, including one term as co-chairwoman of the committee.

She said her committee has to do a better job of convincing the rest of the Legislature that economic development depends on adequate roads and bridges.

“I don’t think there are enough legislators who understand that we have to have good roads to have a good economy,” she said. “Legislators on Banking and Insurance or Human Services [committees] don’t get it, and we have to do a better job of explaining to them we’ve got to have the infrastructure to get the jobs.”

Rep. Boyd Marley, D-Portland, the House co-chairman of the Transportation Committee, said Savage is right on target. He said Maine’s economy is at risk without adequate investment in the transportation infrastructure.

“That was a dramatic increase in the cost of construction that no one foresaw,” Marley said. “What if that sort of unexpected thing happens next year, and then we will fall even further behind in what we need to do.”

He said the state needs to find additional resources for highway improvements, or Maine’s economy will suffer.

Rep. Doug Thomas, R-Ripley, who also serves on the Transportation Committee, agrees that more resources are needed, but he is concerned that some lawmakers might consider new taxes as a solution. He believes existing resources need to be used before any new taxes should even be discussed.

“I think we can do a better job with the resources we have first,” Thomas said. “The last place I want to look for more resources is from more taxes on the people of Maine.”

Thomas said the Legislature should shift more existing revenue, possibly part of the sales tax collected on car and truck sales, to the highway fund instead of raising new taxes.

Both Damon and Savage said any attempt to get additional funds from general tax revenues for highway purposes has been blocked in the past. The notable exception was the use of $15 million in one-time surplus funds this year for the highway fund.

“We have to come up with something that is ongoing,” Damon said. “We need a solution, but I can’t tell you right now what that solution is.”