Louisiana officials look for alternate solutions for transportation project funding
Published 4:09 pm Thursday, January 26, 2023
Louisiana Department of Transportation and Development Secretary Shawn Wilson and state Rep. Mark Wright, R-Covington — who is chairman of the House of Transportation, Highways and Public Works Committee — chimed in on the conversation surrounding the stagnation of the Louisiana gas tax at a recent Public Affairs Research Council of Louisiana webinar.
Questions surrounding the Motor Vehicles Tax became to rise last September with the release of the audit report by the Louisiana Legislative Auditor, “Sufficiency of the Transportation Trust Fund in Meeting the State’s Transportation Needs.”
The performance audit was conducted to evaluate the sufficiency of the Transportation Trust Fund to meet Louisiana’s transportation needs. TFF is the primary pool of money that funds the state’s transportation needs.
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This audit followed the DOTD’s 2019 State Highway and Bridge Needs report, which stated Louisiana had $14.87 billion in unmet transportation infrastructure needs.
This report found that funding is insufficient. The gap in funding lies in the state’s gas taxes.
“We found TTF funding has not been sufficient because motor fuel taxes, which are TTF’s largest revenue source, have not increased since 1990 and are not indexed for inflation,” said Legislative Auditor Michael J. “Mike” Waguespack in the report released in 2022.
The state’s tax on gasoline, diesel and special fuels is now levied at 20 cents per gallon. These rates are a fixed amount, in accordance with state law, and do not fluctuate with inflation. At the current rate, the motor fuel tax brings in about $600 million per year; $627,069 million in 2022, $610,221 million in 2021, $596,273 million in 2020 and $639,922 million in 2019, according to the 2022 audit report.
If the gas tax were indexed to ebb and flow with inflation, the tax rate would have risen to 49 cents in 2021, creating a projected increase from $600 million to $1.2 billion.
The report also indicated that electric and hybrid vehicles will greatly affect the monies generated by the gas tax. According to Waguespack, higher fuel efficiency and external electric charging will result in $563.3 million less in motor fuel tax revenues from 2023 to 2032.
Wright said he believes major changes will not be made this term, but conversation surrounding long-term funding will become prominent during the next term. “I don’t think there is any real serious attempt this year to do something about this,” he said. “I think between IIJA and the sales tax dedication a couple of years ago, it gave us a significant amount of money to bridge into the next term. I think when we get into the next term, we are going to see a serious look at how we can do this in a sustainable way in the long run.”
Louisiana has accumulated a boost in funding following the Infrastructure Investment and Jobs Act (IIJA), in addition to $280-$300 million consistently generated by the vehicle sales tax.
The process of securing these funds was in an effort to create stable, consistent funding. “The state of Louisiana, through the Louisiana Legislature and the governor, found a way to use vehicle sales tax dollars and dedicate it to infrastructure,” Wilson said. “During 2017, when we talked about new revenue, we weren’t so much concerned about the actual amount as much as we were concerned about the consistency so that we could program appropriately and allocate those dollars in the right places. The idea that we are going to see approximately $280 to $300 million consistently… in addition to the IIJA, formula increases and discretionary, that puts us in a phenomenal position to have steady improvement.”
He acknowledged while this is a beneficial amount of funding, it is important to realize it does not account for inflation, supply chain issues or workforce issues. “So, it’s going to go a long way, but not as far as, I think, anyone expected, or hoped, it would go.”
For Wright, raising the gas tax is not a viable option. “I’m skeptical about raising the gas tax. I could see bumping it up a little bit… but to put it at a level at which you would have to sustainably fund, I don’t see an appetite in the public or the Legislature.” He said he would like the Legislature to consider allocating sales tax funds for infrastructure projects.
Wilson has previously shown interest in an increase in the gas tax, but recognizes it is a “dying tax base.”
“We are in such a volatile time right now, in terms of the evolving energy source for vehicles or how we’re driving them… I don’t think the gas tax is sustainable… considering we are looking at hydrogen, electric or hybrids,” he said.
In the coming years, Wilson said he would be interested in researching a road usage charge. This technology would chart the “time and space that you consume on our roads.”
“You can quantify that in a way that is comparable to what you do for gas taxes.” Coalitions in Oregon, the MidWest and Northern Corridor have been conducting research on the efficiency of such a system, according to Wilson.
The road usage charge would involve consumers installing equipment on their car that would track their driving. This information would then be put into a formula that would calculate cost. He believes this system would be efficient and financially sustainable, as cost is based on movement, not fuel type.
With the current boost in funding over the next few years — IIJA funding will last five years — Wilson said he believes this is a prime time to study infrastructure funding alternatives for the ever-evolving future.