Southwestern States Considering Local Option Bills to Raise Money for Infrastructure

Frustrated over growing transportation needs that aren鈥檛 being filled with state dollars, legislators in Arizona and New Mexico are sponsoring bills that would allow cities and counties to vote to tax themselves to pay for infrastructure improvements.
Arizona鈥檚 auditor general reported in 2015 that the state was facing a $62.7 billion transportation funding shortfall over the next 20 years. New Mexico鈥檚 current shortfall is $1.3 billion, according to its Department of Transportation.
However, the states鈥 Republican governors, Doug Ducey of Arizona and Susana Martinez of New Mexico, are anti-tax hardliners, which threatens the bills鈥 chances of passage.听
鈥淭here are a lot of local jurisdictions that are tired of waiting for the state to do something for infrastructure, kind of like the states are tired of waiting for the federal government to do something,鈥 said Tony Bradley, president of the Arizona Trucking Association. 鈥淭hey want to have the option to have their future in their hands. The roads drop off dramatically outside Maricopa County [metropolitan Phoenix] which has a half cent sales tax to fund roads.鈥
Senate Transportation Committee chairman Bob Worsley, who sponsored Arizona鈥檚 local option bill, has also proposed taxing electric and hybrid vehicles along with users of compressed natural gas and liquefied natural gas while also raising license fees.
Kevin Adam of the Rural Transportation Advocacy Council called Worsley鈥檚 bill 鈥渁 step in the right direction.鈥
Bradley added, 鈥淔or the past four years, when I have a conversation about the gas tax, it usually stops with, 鈥榃e鈥檝e got to do something about those electric vehicles. They don鈥檛 pay anything for our roads.鈥 Until we can get past that, people don鈥檛 want to have the conversation about a gas tax increase.鈥
Arizona hasn鈥檛 raised fuel taxes since 1991, New Mexico since 1993.
In addition to its local option bill, New Mexico legislators are considering: SB 95, authored by Transportation Committee Chairman Clemente Sanchez, which would raise the taxes on diesel a nickel to 26 cents per gallon and on gas a dime to 27 cents per gallon; and SB 131, co-authored by Senate Finance Committee Chairman John Arthur Smith and House Transportation Committee Chairman Roberto Gonzales, that would split the revenue from a 10 cents per gallon fuel tax increase between infrastructure needs and the state鈥檚 badly depleted reserve fund until the latter has recovered or five years, whichever comes first.
鈥淥ur situation in New Mexico is very, very bad because we haven鈥檛 given our DOT a revenue increase in so long and because of the decline of oil and gas prices,鈥 Gonzales told Transport Topics. 鈥淚 have seen gas prices change 13 cents in a week and nobody says a word so there鈥檚 room to make adjustments to the tax. Hopefully we can convince the governor to work with us on one or two pieces of legislation.鈥
Johnny Johnson, managing director of the New Mexico Trucking Association said that NMDOT鈥檚 $1.3 billion funding shortfall听鈥 $1.5 billion worth of identified projects compared to $200 million in revenue听鈥 is the biggest he has seen during his five decades working in transportation in the state.
鈥淲e鈥檙e in deep trouble,鈥 said Johnson, whose group supports another Gonzales bill that would transfer the 3% tax on motor vehicle purchases, worth about $150 million a year, back from the general fund. 鈥淣o one wants a tax increase, but we understand that at the end of the day, you鈥檙e going to have to pay the piper. Our caveat this year is that the money has to go to transportation. If they want a tax increase without a lockbox, we鈥檙e not going to be able to support it.鈥
NMDOT spokeswoman Emilee Cantrell noted that the department鈥檚 budget has grown by between听0.5% and 1.5% annually for the last decade while the cost of highway construction has risen about听5% a year.
鈥淲e鈥檙e looking for any kind of revenue stream that would support transportation infrastructure,鈥 said Mike Beck, executive director of the Associated Contractors of New Mexico. 鈥淲e see states all around us, even red states with Republican governors, seeing the need to increase revenues. The national average is 31 cents for gasoline and we鈥檙e at 18 cents. The governor has been very firm in her stance of no tax increases. But if the public is willing to support it, it鈥檚 hard to understand how that would be a problem for her.鈥
That鈥檚 also how Arizona stakeholders hope Ducey and anti-tax legislators will handle Worsley鈥檚 local option and alternative vehicle bill. They have better odds of being approved by the Legislature since they鈥檙e not double-assigned unlike new House Transportation Committee chairman Noel Campbell鈥檚 fuel tax hike, which sailed through his panel only to be spiked by the House Finance Committee.
鈥淚 would think the medium-sized counties in the 150,000-400,000 range would vote for the local option,鈥 Adam said. 鈥淭here鈥檚 obviously an anti-tax sentiment in Arizona and not just among legislators, but if they have confidence that the funding will be used appropriately, they would support a tax increase for infrastructure.鈥
But would Ducey?
There鈥檚 an argument to be made that this is just authorizing the counties to implement their own tax, but I haven鈥檛 heard Ducey address that,鈥 Bradley said.
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