AUGUSTA – Maine’s highway fund faces a shortfall of $720 million over the next two years, according to the latest analysis presented to lawmakers.

A legislative analyst told Transportation Committee members Wednesday that expected expenditures exceed expected revenue by $350 million for the year starting July 1, 2011, and $370 million for the next year.

“I still want to recognize that, wherever there are efficiencies, we should try to find them,” said Sen. Dennis Damon, D-Trenton, committee’s Senate chairman. “But efficiency-finding alone is not going to get us out of this predicament.”

The shortfall projections are based in part on a measure passed by the Legislature recently outlining capital investment priorities.

“The needs of our transportation system have been pretty well documented recently in our 10-year transportation plan, and I think that it’s fairly well known that the needs are beyond the expected revenues,” said Herb Thomson, director of communications for the Department of Transportation.

More than 70 percent of the highway budget comes from fuel taxes. Motor vehicle licenses and fees, inspection fees and fines make up most of the rest.

Increased fuel efficiency in motor vehicles and a down economy have reduced fuel tax revenue nationally, Thomson said.

“The prevailing view for transportation analysts is that there will continue to be improvements in the fuel efficiency of vehicles and changes in technology to other fuel sources that would continue to erode the absolute amounts of revenues through fuel taxation,” he said.

Thomson said the department has sought to control administrative costs, reducing the workforce by about 10 percent in the last five years.

“We have eliminated about 200 positions in the last five years, including the elimination of 115 full-time positions and 40 layoffs,” he said.

Projections for the current budget were dire, but more than $131 million in federal stimulus funding provided a “shot in the arm,” Thomson said.

Lawmakers on Wednesday did not discuss potential solutions to the budget dilemma. Previous efforts led by Damon — who is finishing his fourth Senate term and is constitutionally barred from running for re-election — and others to increase the gas tax were stymied in the Legislature.

The gas tax was last increased by lawmakers in 1999, from 19 cents per gallon to 22 cents per gallon, according to Maine Revenue Services.

In 2002, legislators voted to index the gas tax to inflation. Since 2003, it has increased slowly, with the exception of this year.

MaineToday Media State House Reporter Rebekah Metzler can be contacted at 620-7016 or at:

rmetzler@centralmaine.com