The Word in the House - 2/21/2013 - The Transportation Challenge

We are now six weeks into the legislative session.  Governor Shumlin delivered his budget priorities,  the legislature passed a Budget Adjustment Bill that brought last year’s budget, based on projected revenues, in line with revenues actually realized, and now the work to come up with a budget for the 2014 fiscal year is being addressed. 

Separate from the general state budget is the Transportation Budget.  Vermont's transportation system has faced some extraordinary challenges in recent years, with four federally declared disasters in 2011, including spring floods followed by Tropical Storm Irene.  This year we face different transportation challenges, one more immediate and another reaching far into the future, that have an impact on the Transportation Fund.

The Long Term challenge: As Vermonters drive less and shift to more fuel-efficient vehicles, state revenues from gas taxes have steadily declined. These state fund reductions are combined with federal uncertainties such as highway trust funding and possible federal transportation reauthorization reduction. With this in mind, one can begin to see that Vermont's long-term transportation funding stability is seriously at risk.  A summer funding study committee worked to determine the annual gap between available state transportation revenue and the cost to meet basic transportation needs. They have reported the Vermont gap is estimated at more than $240 million per year, each and every year. The needs estimate includes the cost to preserve the state's existing transportation system in a state of good repair. It assumes that preserving the functionality of the road network is fundamental to meeting basic travel needs of people and goods. It does not include major roadway expansion beyond projects already in the pipeline.
The Short term challenge:  The $657 million, FY2014 transportation budget presented by the Governor assumes the Legislature is able to identify a revenue package that enables Vermont to maximize all of its available federal funds. Federal formula funds require a state dollar match. If Vermont is unable to provide this match, then federal formula funds must be returned and projects would be delayed and/or suspended. The additional funding needed to fully fund the proposed FY2014 transportation budget program is $36.53 million in state funds. Without action, we place at risk our ability to match all the available federal transportation dollars which would require cutting $123 million dollars in projects from this coming year’s budget.
The Proposed Solutions: The Agency of Transportation has proposed the following steps to achieve the immediate funding gap:
·    Utilize transportation Infrastructure bonds providing yielding $8.3 million after issuance costs and debt reserves;
·   Decrease the current per gallon gas tax by 4.7 cents, from 19 cents to 14.3 cents per gallon. This reduces the transportation fund by $15.32 million;
·   Index per gallon gas tax to inflation (revenue neutral first year). This action assists in a small way with the long-term structural funding problems mentioned earlier.
·   Sustain gas tax revenues by adding a 4% assessment on retail sales price, yielding $43.56 million.  This assumes $10.89 million for each one percent based on $3.79/gallon price estimate.
Combining all the recommended funding options obtains the $36.54 million needed to fully access and maximize Vermont's federal funds. They are a starting point, and the House Transportation Committee is in the process of discussing, hearing testimony and evaluating all options.
I am indebted to Rep. Diane Lanphere (D-Vergennes) for the information in this article.  I have heard from many of you on a variety of topics and continue to welcome your input. If you would like to get in touch with me about this issue or any other issue before the legislature, you can email me at or call me at 425-3960.