Bill would tap state taxes to fund road, bridge work

AUGUSTA – With a crumbling road and bridge network and declining funds to repair and maintain it, Sen. Dennis Damon, D-Trenton, says a bold and comprehensive fix is needed.

Damon unveiled a plan Friday afternoon before the Legislature’s Transportation Committee, which he argued takes on that challenge by tapping two existing taxes as revenue sources for road and bridge work.

Maine has 22,750 miles of public road, of which the state owns 8,368 miles. Of the 3,000 bridges, 288 are in poor condition and 239 have outlived their expected lifetime of about 80 years, and the DOT does not have the funds to repair or replace them.

The crisis in Maine’s road and bridge infrastructure is the result of a 35 percent spike in the cost of construction, coupled with nearly flat revenue coming into the state highway fund from fuel taxes, as people drive less and buy more fuel-efficient vehicles.

A bond that will go before voters in June would pump more than $100 million into road and bridge work, but Damon and those supporting his bill said a long-term solution is needed to reverse “the erosion of our transportation infrastructure.”

Damon, who is co-chairman of the transportation panel on which he has served for five years, called his proposal “the most important bill to come before the committee perhaps in the last 30-40 years.”

The bill, LD 1790, calls for directing portions of sales taxes on vehicles and accessories and the excise tax collected by municipalities to the Maine Municipal Bond Bank. The bond bank essentially would create a trust fund for the dedicated taxes and then lend money to the Department of Transportation for repairs on roads and bridges.

Because the bonds are paid for with dedicated tax revenue, they would not affect the state’s debt rating. The money also would be unavailable to any future legislatures tempted to seize it to solve a fiscal crisis or for a pet project.

In the first year under Damon’s bill, 4 percent of the sales tax paid on new and used vehicles and vehicle accessories would be directed to the bond bank. The percentage would increase by 4 percent each year until the fifth year when it would lock in at 20 percent.

The second source of revenue, the excise tax paid when a vehicle is registered at a municipal office, also would begin at 4 percent and top out at 20 percent in the fifth year. But the redirected portion of excise tax would affect only municipalities with populations of 7,500 or more.

Municipalities with populations between 2,500 and 7,500 could voluntarily divert a portion of excise tax to the fund, earmarked to the specific town or city, to be tapped for road or bridge work later.

Damon defended the funding mechanisms, even though the diverted sales tax would create a hole in the state’s general fund, and tapping the municipal excise tax might shift a burden onto the local property taxes.

“This situation is not getting better … because we don’t have enough funds to make it better,” Damon said. “We have demonstrated we cannot keep up with it.”

Municipalities would be able to earmark the excise tax in the bond bank, and the DOT, in many cases, would match those funds for road and bridge work in the corresponding municipality. If the town or city chooses to do work the DOT won’t match, it still can access its “deposit” to the bond bank, he explained.

Fuel taxes funnel about $700 million annually into the state highway fund, Damon said; the per-gallon tax on gasoline is at 26 cents. That tax would continue, but LD 1790, if enacted, would generate an additional $1.4 billion in funds.

If the bill passes, road and bridge projects could get under way immediately, he said, because the bond bank could issue funds based on the certainty of funds from the two revenue sources.

In addition to road and bridge work, 10 percent of the dedicated funds would go toward rail, air, ferry and mass transit needs.

LD 1790 also creates a schedule for road and bridge work that addresses critical needs in an orderly, ongoing process.

Nine people spoke in favor of the bill, including former DOT commissioners John Melrose and Dana Connors, and those representing transportation advocacy groups such as the Maine Better Transportation Association, the Maine Motor Transport Association and the Maine Tourism Association. No one spoke against it.

After the hearing, Damon conceded that the two revenue sources identified in his bill might change, but he remains committed to the concept of putting road and bridge work on a more secure financial footing.

In the hearing, Damon urged the committee to work toward a change in funding for roads and bridges, rather than wait.

“Let’s not delay the very good to wait for the perfect,” he said of his bill.