November 10, 2014

Voters in numerous states and localities sent mixed messages on transportation and infrastructure ballot initiatives in last week’s elections. Upon further analysis, a few patterns emerge.

• Gas tax indexation is a tough sell – even in Massachusetts. Back in 2013, the Massachusetts legislature passed a law increasing the state’s gasoline tax by three cents a gallon, from 23.5 cents per gallon to 26.5 cents per gallon, and indexing the tax annually for inflation starting in 2015. Last week, Massachusetts voters overrode their political class and repealed the indexation of the tax permanently by adopting Question 1 by a 53% – 47% margin. This happened despite a massive disparity in campaign spending – according to Bay State campaign finance reports, as of November 1, the NO on One Committee had spent $2.6 million trying to educate voters as to the value of the gas tax and the indexation. Most of that money came from the construction industry, with checks as large as $400,000 being written to the campaign. Their counterpart, the Committee to Tank the Automatic Gas Tax Hikes, spent $83,727.06. (That’s a ratio of about 30:1 between pro-indexation spending and anti-indexation spending.) Yes, one could argue that the off-year electorate trends more Republican, and if the vote had been held in a Presidential year, Question 1 would probably have been defeated by a few points instead of passing by six points.   But this is still Massachusetts. Massachusetts. So a better question is: if Massachusetts voters in an off-year voted, 53%-47%, to repeal gas tax indexation, by what margin would voters in a swing state or (God forbid) a red state reject indexation in a regular election year (much less an off-year)? Add to this the questions raised by another bluer-than-blue state, Maryland, where voters stunned the political establishment by electing a Republican governor by four-and-a-half points over the Democratic Lieutenant Governor. The vote was widely seen as a rejection of outgoing governor Martin O’Malley, and in particular, the various tax increases adopted during the eight years of his Administration (which included a gas tax increase). The GOP candidate talked of little else except rolling back tax increases, and voters there apparently listened.
• Hands off my gas taxes. Voters in Maryland and Wisconsin voted for constitutional amendments prohibiting transfers of moneys from the state transportation trust fund for non-transportation purposes. In Wisconsin, the language covers all current trust fund taxes and all future taxes from auto licensing/registration/titling, motor vehicle fuel, use of roads, and anything relating to railroads or aviation, and the funds henceforth are solely dedicated to programs administered by the state DOT in furtherance of their transportation mission. In Maryland, the language does not mention any specific revenues that have to go into the fund (now or in the future), but limits the purposes of the trust fund to debt service on transportation bonds, highway construction and maintenance, and “any other purpose related to transportation.” The Wisconsin amendment has no waiver process and is final, but the Maryland version allows TF to GF transfers if the governor declares a fiscal emergency and three-fifths of both chambers of the legislature vote to divert the money. Speaking of diversion from one fund to another…
• Rainy days and highways always get me down. The voters of Texas, by an 80%-20% margin, approved an initiative to divert up to half of the existing taxes on oil and gas production that currently go into the Rainy Day Fund into the Highway Fund instead. The transfers are contingent on a joint legislative committee making biennial certifications that the Rainy Day Fund’s balances will still be enough for, you know, a rainy day. It is estimated that this will result in transfers of around $1.5 billion per year into the Highway Fund, which is still not enough to meet all anticipated future needs, but is a significant step nonetheless. ( Note: permanent user revenues are best, but permanent non-user revenues are still better then temporary or one-time revenues.) In a deep red state that recoils from real tax increases, solutions like this may be the best that transportation advocates can hope for.
• The West Coast vs. The Rest. Voters in California, Washington State, and Hawaii voted to approve bond issuances for infrastructure and tax increases for transportation plans that include a significant mass transit presence. Statewide, California approved a $7 billion general obligation bond issue for water supply projects, and Hawaii authorized special purpose bonds to make loans the private owners of dams and reservoirs. At the local level, Seattle issued a new $60 vehicle fee and a 0.1 percent sales tax increase to raise funds to preserve mass transit service (and rejected a citizen-sponsored effort to bring back the monorail plan that has been on and off since the 1962 World’s Fair). In the San Francisco Bay area, San Francisco itself, voters approved a $500 million bond issue, $358 million of which will go to mass transit and $142 million will go to traffic safety. The measure passed with 70 percent of the vote, just over the two-thirds required. San Fran voters also voted down a voter-originated proposal to make the city more automobile-friendly via cheaper parking by a 37%-63% vote. And Alameda County voters doubled and extended their dedicated sales tax for transportation through 2045. Things did not go so well Back East.
• Bad news in Florida, Kansas, Louisiana, and Texas. In Florida, Pinellas County (St. Petersburg) rejected, by a 38%-62% margin, an ambitious plan to levy a 1 percent sales tax to pay for mass transit including BRT and light rail. In Alachua County (Gainesville), a college town, voters rejected, 40%-60%, a similar 1 percent sales tax dedicated to a mix of road, bus, and bicycle/pedestrian projects. In Austin, Texas, voters rejected, 42%-58%, a $600 million bond issue for a light rail plan. (However, local transit advocates were divided on the specifics of the light rail, so it is quite possible that a different version of the project may muster the needed votes in the near future.) In Wichita, Kansas, voters rejected (37%-52%) a new 1 percent sales tax to pay for over $300 million in water infrastructure, mass transit and road repairs. And, in Louisiana, voters rejected by a wide 32%-68% margin a constitutional amendment that would authorize the use of public funds to capitalize a not-yet-created state infrastructure bank. (There does not appear to have been any organized campaign against the infrastructure bank, but there doesn’t appear to have been a great deal of effort expended to explain it to voters, either.)
• Bright spots in Georgia. Voters in Cobb County, Georgia (outside Atlanta) voted for a special 1 percent sales tax to pay for a specific slate of road-building projects. And in Clayton County, further south, voters approved a 1 percent sales tax to join MARTA (though by far the biggest business in Clayton County is Hartsfield Airport, which has MARTA rail service independent of the county).