COVID’s Economic Effect Means State Lawmakers May Raise Taxes to Fund Road and Bridge Repairs

States are currently “waiting to see what direction the federal government is going to be taking” in regards to raising state infrastructure taxes, according to American Road and Transportation Builders Association advocacy director, Carolyn Kramer.

Tax raising plans have seen little movement through 2021, although many Democratic and Republican lawmakers have often been in agreement in regards to these plans relating to the updating and improvement of bridges and roads throughout the country.

Additionally, the amount of infrastructure boosts and repairs needed has grown steadily while the funds available to do so have declined, likely due to revenue challenges brought about during the COVID-19 era.

However, while many states plan to raise fuel taxes as soon as possible, others aren’t currently seeing the need.

“It looks like a cruise ship sitting in a pond–that’s how much money we’re getting flowing into the state of Colorado from the federal government,” explained Senator Ray Scott of Colorado. “If Biden does get this pushed through and we have additional funding coming our way, why would we go after the taxpayer when we have ways we can handle it right now?”

Some of Colorado’s Democratic legislators plan to raise electric and hybrid vehicle sales fees, retail delivery service fees, ride-sharing company fees, and gasoline sales fees, although Senator Scott is working to create an upgraded transportation plan on any boost in federal funding.

Per capita spending on Colorado transportation has dropped by nearly half in the last 20 years, while gas tax rates throughout the states have remained the same. In regards to an updated state funding plan, Colorado hasn’t undergone a legislative hearing.

“Colorado’s transportation system is so far behind that we need federal investment and we need state-level investment,” said Senator Faith Winter.

Fewer than 170 transportation funding bills have been proposed in 2021 throughout the country, which is only half the number proposed by state lawmakers in 2019. No transportation tax rates increases have been passed, either.

In the works: President Joe Biden has proposed $135 billion for American road and bridge projects (as part of his $2.3 trillion infrastructure plan) and has also signed a coronavirus relief package–including $350 billion for state and local government projects. Many states, including Indiana and Maryland are working to use this funding on a variety of transportation upgrade projects while other states are using their allocated funds in accordance with future federal guidance. 

In regards to Biden’s road and bridge funding, Republican Senators have opposed this plan with a counter proposal of $299 billion for infrastructure projects. Congress is also in the process of approving a long-term highway program renewal that would funnel billions to states on an annual basis.

Additionally, Congress is being pushed by the American Association of State Highway and Transportation Officials to double current funding limits and bring about another $485 billion five-year highway program, along with a $200 billion road-and-bridge stimulus.

For North Dakota, recent legislature has passed a $680 million infrastructure bonding plan that would focus on flood-control infrastructure projects as well as $70 million for bridge and road projects–bonds which would be repaid with state oil tax savings earnings as opposed to the Senate-defeated 3-cent gas tax raise.

North Dakota’s bridge and road spending can be funded with the help of federal coronavirus relief package funds and possibly a federal infrastructure bill, according to North Dakota Senate Majority Leader Rich Wardner. A gas tax boost is not needed thanks to the state’s oil fund, he explained.

Many states have come back quickly from the revenue obstacles brought about by COVID-19-related restrictions, even seeing budget surpluses at the hands of federal aid and income tax revenue.

“You cannot sell a tax increase to the public at a time when you’ve got something like $4 billion sitting in your checkbook,” explained Senator Tom Bakk of Minnesota. “That’s just not going to happen.”

29 states have raised fuel taxes since 2013, and these increases, for the sake of road and bridge projects, have received strong support from both republicans and democrats. Still, no states have implemented such an increase since Virginia’s fuel tax increase at the start of COVID-19’s economic effects on the country.

Still, many government officials who oppose any fuel tax increases–regardless of their potential benefit to state infrastructure–have explained that, especially coming out of coronavirus-related economic struggles, many people should not only not have to bear the burden of these revenue deficits, but too many people wouldn’t be able to afford it.

“Adding another almost 10 cents a gallon to the price of their commute, they just wouldn’t be able to handle it,” said Alaska state Representative Kevin McCabe.