Potholes forever: the state's transportation-funding impasse

The gubernatorial candidates are cautious, with McKenna favoring an early ballot measure and Inslee balancing competing constituencies.
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A highway construction project.

The gubernatorial candidates are cautious, with McKenna favoring an early ballot measure and Inslee balancing competing constituencies.

The state of Washington has a big and unresolved problem: a transportation budget deficit of large proportions. A task force appointed by Gov. Chris Gregoire in 2011 estimated that the backlog is at least $50 billion, but that the most important needs could be met with the expenditure of $21 billion over 10 years. New revenue sources would be required, and the task force provides a number of possibilities. Advocates hoped a hefty measure could be placed before state voters this year, when the presidential race assured a good turnout, particularly of Democratic voters.

The governor pared that sum to $3.6 billion when she asked the legislature to adopt a fee on oil refined in the state. But the 2012 legislature did not agree to the fee and was only able to make a relatively small down payment of ­­­­about $90 million per biennium through a package of fees on motorists. New license plates which were free now cost $10. Owners of electric vehicles must pay an annual $100 fee.

The politics so far have only produced impasse. Republicans oppose tax increases while Democrats are split over whether to fund roads or transit more. None wanted a big tax issue this year, while running for reelection.

Both of the leading candidates for governor have been queried on the issue.

Republican candidate Rob McKenna has declined to say what specific revenues should be tapped, but that it should be a mix of l taxes and fees. He did say that tolls would be needed to fund some projects. McKenna, in the first gubernatorial debate, indicated that a tax measure should be placed on a future state ballot soon, either in 2013 or 2014.

Democratic candidate Jay Inslee, who is caught between the demand for jobs the projects would produce and environmentalists skeptical of highways, has taken a more cautious approach. He has not yet stated a position on the short-term need for more revenue for transportation but has indicated that at some future date the state will have to find a way to finance transportation “mega projects.” In the debate he said that establishing trust with the voters by better management of current funds is a prerequisite to a ballot measure.

Since then, Inslee has posted an expansive and detailed position paper on transportation priorities. In it he equates transportation investments with job growth and economic competitiveness. To secure his green flank, Inslee also emphasizes expanding light rail in the Seattle metro area, a position that contrasts with McKenna’s early opposition to the Link system. McKenna now yields to the voters' wish to expand Sound Transit to the Eastside, but favors an expansion of bus rapid transit over rail in the future.

Finding revenue for transportation will be a major preoccupation for the new governor and legislature over the next several budget cycles. The needs identified by the task force run the gamut: highways, local roads, bridges, transit, ferries, and environmental impact (storm water) mitigation. Both new facilities and repairs to existing facilities will be required as population, employment, and freight volume increase. For example, large expenditures have been programmed for concrete panel replacement in the heavily traveled Puget Sound I-5 corridor. Our major roadway is wearing out. One has to drive with precision to dodge the cracks and holes in the freeway pavement.

The state has essentially run out of money for repairs beyond basic maintenance of the system. The legislature substantially increased the gas tax, the major transportation revenue source, in 2003 and 2005. The 2003 “Nickel” package funded 160 projects across the state, and the 2005 “Transportation Partnership” package funded another 261 projects with a 9.5 cent increase phased in over four years. Both were bond measures with the taxes dedicated to bond redemption and interest payments.

Although those gas tax increases will remain in effect when the bonds are paid, the gas tax has not kept up with deferred and growing needs. Now 37.5 cents per gallon, the tax is not indexed to inflation. The recession, which has produced less driving, and the increasing shift to vehicles with greater fuel efficiency have already reduced expected revenues. The governor’s task force estimated that the state will realize $5 billion less than previously predicted from 2007 to 2023.

Another large revenue hit occurred in 2000 when the legislature, responding to a Tim Eyman initiative, eliminated the statewide Motor Vehicle Excise Tax and replaced it with a $30 license fee.

Federal funding is a wild card. A divided Congress has been unable to agree on renewal of the highway and transit funding bill which provides significant revenues to state and local governments. Of the current biennial $8 billion state transportation budget (operating and capital), 22 percent is federally funded. Of that almost 80 percent is dedicated to highway preservation.

Federal monies fund local transportation projects, often through regional planning organizations. The Puget Sound Regional Council will be distributing approximately $440 million of 2013-2014 Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) funds to county and city governments and transit agencies.

Federal gas tax revenues are experiencing the same impact as the states, due to the recession and increased fuel efficiency.  A recent report by the Congressional Budget Office indicates that increased fuel efficiency imposed by new vehicle fuel efficiency (CAFÉ) standards scheduled to go into effect in 2017 will reduce federal gas tax revenues by $57 billion through 2025.

Better get used to dodging potholes!


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About the Authors & Contributors

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Dick Nelson

Dick Nelson is a former Washington State legislator. He currently contributes to the public debate on state and local fiscal issues through research and commentary. As when he was in the legislature, he prefers the Democratic Party.