AUGUSTA — Lawmakers seeking ways to plug a hole in the state’s highway maintenance budget are considering measures that would raise the state’s gas tax by 7 cents a gallon and place an annual surcharge on hybrid and all-electric vehicles.
Members of the Legislature’s transportation committee heard hours of testimony Tuesday from transportation advocates and trade groups in favor of increasing fees and taxes to improve the state’s deteriorating infrastructure, and from environmental groups opposed to imposing a charge on owners of alternative-fuel vehicles.
State officials predict the state’s highway fund, which pays for the maintenance of roads and bridges, will have an annual shortfall of $159 million from 2017 to 2019, out of a $375 million annual goal. The Maine Department of Transportation expects to receive $100 million in general obligation bonds annually to help cover those costs.
Borrowing every year just to pay for regular maintenance isn’t a sustainable path forward for the state, said Rep. Andrew McLean, D-Gorham, House chairman of the joint transportation committee.
The highway account is mostly funded through the state’s 30-cents-per-gallon tax on gasoline, which hasn’t been increased since 2011. The low cost of gas, higher vehicle fuel efficiency and increased construction costs mean the tax alone is no longer sufficient to cover the state’s highway needs, McLean said. The 18-cent federal gas tax has not been increased since 1993, he noted.
About 91 percent of Maine’s gas tax is directed annually to the state highway fund, said David Heidrich of the state Department of Administrative and Financial Services.
The bill proposed by McLean, L.D. 1149, would broaden the highway fund’s revenue base by increasing the gas tax by 7 cents, imposing a $200 surcharge on annual registration of hybrid, all-electric and hydrogen fuel-cell vehicles, raising some fees charged by the Bureau of Motor Vehicles, and allocating 10 percent of the sales tax paid on motor vehicles and transportation-related items to the highway fund.
Problems with the state’s highway infrastructure cause damage to vehicles and increase the cost of doing business in the state, and there is no way to get around the expense of fixing the problem, McLean said.
Maine’s roads earned a D grade from the American Society of Civil Engineers, and as much as 15 percent of the state’s bridges are structurally deficient, according to TRIP, a national transportation nonprofit.
“We need to level with the Maine people. Fixing our roads and bridges is going to cost money,” McLean said.
OTHER POTENTIAL REVENUE SOURCES
There’s little disagreement that the state’s roads and bridges need attention, but little consensus on where the money to do the work should come from.
On Tuesday, representatives from the transportation industry said they were in favor of raising the gas tax as long as the money was directed to infrastructure that would save money over time and lower business costs for the state’s industries.
Matt Marks, CEO of Associated General Contractors of Maine, said companies already had high vehicle repair and maintenance costs because of the state’s bad roads.
“People are already paying now, it just depends on when we pay,” he said.
But McLean’s bill faces opposition from various groups, including those against increasing the gas tax.
Dan Riley, a lobbyist for the Maine Energy Marketers Association, the state’s fuel trade group, warned that raising the gas tax would send consumers into New Hampshire to buy cheaper gas, and likely other consumer items like beer and cigarettes.
Gov. Paul LePage is firmly against raising the gas tax, said Meghan Russo of the Maine DOT. Increasing the tax by 7 cents would make it the eighth-highest gas tax in the country, she said. However, the department would be willing to negotiate on other elements in the bill, including charges on hybrid and all-electric cars.
FUEL-EFFICIENCY GROUPS OPPOSE TAX HIKE
But those fees are a non-starter for the state’s environmental groups and electric vehicle advocates.
Tony Donovan, from Sierra Club Maine, said the state needs to incentivize the burgeoning electric vehicle industry, not penalize people who want to be environmentally responsible.
If fixing the roads is the goal, the state should base its highway tax on weight, so vehicles that do the most damage to roads pay the appropriate amount to fix them, Donovan said.
“Maybe heavy vehicles should pay their fair share,” he said.
That was a view shared by electric vehicle proponents like Tony Giambro, co-owner of Paris Autobarn, a maintenance shop in South Paris that specializes in electric and alternative fuel vehicles.
The Bureau of Motor Vehicles estimates there are 400 all-electric vehicles registered in the state, and 11,200 Priuses, a common hybrid. Giambro said electric vehicle owners want to pay their fair share, but don’t like the idea of an arbitrary flat fee.
“There are much more obvious ways to start than penalizing a small minority of vehicle owners,” he said. Instead, Maine should consider a weight tax that would affect owners of electric cars – which are generally heavier than gas-powered vehicles – and consider a miles-traveled system to fund highway repairs, Giambro said.
McLean’s bill isn’t the only proposal to re-imagine Maine’s highway funding. A proposal from Sen. Ronald Collins, R-Wells, L.D. 1226, would impose a $250 annual registration fee on hybrid vehicles and a $350 fee on all-electric vehicles, require municipalities to use excise taxes on community transportation projects, and divert excise taxes on some commercial vehicles from municipalities to the highway fund. Rep. Wayne Parry, R-Arundel, sponsored another bill that would direct all the sales tax from motor vehicle and transportation-related purchases, about $139 million in 2015, and devote it to the highway maintenance fund.
McLean, addressing the committee, said he was open to discussing different ways to pay for the highway fund. Even if everything in his proposal passed, it would still only raise about $75 million, not enough to cover the entire shortfall, McLean said.
“This is just a start,” he said. “Solving this problem is too important to let partisanship or narrow interests get in the way.”
Peter McGuire can be contacted at 791-6325 or at: