By: Adam Wilson
The Olympian
July 15, 2008
Link to original article
Record fuel costs are forcing people to drive less, and that is cutting into tax collections that pay for road construction statewide.
It's a cycle that might prompt state leaders to seek more money through tolls, shifting funds from health or environmental projects, or a new version of the tax on car values that voters rejected years ago.
"There are a lot of things going on in the world that affect our ability to put those projects out there. When we're getting a reduction in consumption, and this increase in prices, it's going to be a tough one for us," state budget director Victor Moore advised state Department of Transportation Secretary Paula Hammond recently.
Overall traffic was down 2 percent in March and 1.4 percent in May compared with 2007, according to vehicle counts from the DOT.
Less travel appears to be cutting into fuel tax collections. The state's biggest source of money to pay for road improvements is the 37.5 cent per gallon gasoline tax, and expectations for income have been cut by $95 million through next June.
"This is our stress. This is what's keeping me awake," Hammond said. "We are struggling now to deliver the projects we're supposed to deliver."
Lawmakers approved a 5 cent gasoline tax increase in 2003 and a 9.5 cent increase in 2005. Those increases were supposed to pay for 391 transportation improvement projects through 2012.
But construction costs increased by 60 percent in five years, as demand in India and China drove up prices for steel and concrete, and the cost of diesel fuel for construction equipment soared.
To avoid canceling any projects, lawmakers spent $3.8 billion in the past four years, said Rep. Judy Clibborn, D-Mercer Island.
Now, with people buying less gasoline, calling off some projects again is a possibility, said Clibborn, who also is chairwoman of the House Transportation Committee.
"I think we're done with the belt-tightening, and we've got to reprioritize our projects," Clibborn said.
The public approved the 2005 gasoline tax increase, voting down an attempt to stop it through initiative.
But asking the people to accept higher gasoline taxes to save the promised projects wouldn't work, Clibborn said.
"I just don't think that politically, people are willing to support new revenue sources for old projects," she said.
The state transportation budget has never recovered from the loss of a tax on car values in 1999. Voters eliminated it and replaced it with a $30 licensing fee by initiative.
The DOT reports that less money will be collected in this two-year budget cycle than in the 1998-99 cycle, despite the additional 14.5 cents per gallon in the gasoline tax and increases in car tab fees, when adjusted for inflation.
About $3 billion in the car tax, licensing fees, fuel taxes and ferry fares were collected in the 1998-99 budget, and for the current budget, the figure will be about $2.8 billion in 1998 dollars, the department reported.
The issue is most important for the ferry system, which received a quarter of its funding from the old excise tax and is now hard-hit by the cost of fueling its ships, Clibborn said.
Tolls in certain urban areas and a new version of the car tax are possibilities to fund future projects, she said.
"I think everything needs to be back on the table if we're going to look at trying to fund a system," Clibborn said.
The lead Republican senator on transportation, Dan Swecker of Rochester, said any return to the car value tax is out. He said some of the projects promised in 2003 and 2005 might be delayed by a couple of years, but that's as far as most lawmakers would be willing to change them.
Swecker supports taking money from the state's sales tax to pay for road projects. The public isn't concerned about the traditional firewall between the budget for government services and the budget for transportation, he said.
"What they see is we collect enough taxes. They don't want us to raise taxes," Swecker said.
The state is expected to have a budget shortfall next year, however. Taking money out of the general budget for road construction would spark a fight over taking the cash away from programs, such as environmental protection or health care for low-income families.
The extreme disagreements mean lawmakers might just try to hold on to the projects already planned, Clibborn said.
"In this environment, with everybody tightening their belts, it may be we don't do anything new," she said.
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Facts about the gasoline tax
• Traffic was down 1.4 percent in May and 2 percent in March compared with 2007.
• The gasoline tax is 37.5 cents per gallon.
• Income from the tax is expected to be down $95 million through next June.
• Lawmakers approved a 5 cent increase in 2003 and another 9.5 cent increase in 2005.
• Those increases were supposed to pay for 391 transportation improvement projects through 2012.
• Less money will be collected in this biennium than in 1998-99, despite the addition of 14.5 cents per gallon to the gasoline tax and increases in car tab fees, when adjusted for inflation.
Gasoline tax local projects
The basic, 23 cents per gallon gasoline tax pays for state highway projects and is shared with cities and counties to help pay for local road improvements. When the last 9.5 cents were added to the tax in 2005, however, it was tied to specific projects throughout the state.
In South Sound those projects included:
•$160 million to widen Interstate 5 from Mellen Street in Centralia to Grand Mound in south Thurston County.
•$33 million to buy land for a state Route 510 bypass of Yelm.
•$500,000 to study possible changes to the interchange between U.S. Highway 101 and Black Lake Boulevard in west Olympia.
The 5-cent gasoline tax increase approved in 2003 included:
•$84 million to widen I-5 from Grand Mound to Maytown south of Tumwater. That project began this year.
