The state of Maine has lurched from short-term spending agreement to short-term spending agreement, often using pricey borrowing to pay for Maine’s roads and bridges for years. But Republican lawmakers said Friday they’ve finally won support for a GOP idea that will dedicate tax revenue to an infrastructure spending fund.
Under the terms of the supplemental spending bill Republicans and Democrats agreed to this week, the state will dedicate 40 percent of the sales tax collected on vehicle purchases, as well as 40 percent of the sales and use taxes collected by the Bureau of Motor Vehicles, to the Highway Fund.
The Highway Fund will pay for vital upgrades to Maine’s roads, bridges, and other infrastructure projects. It is estimated that this mechanism will generate roughly $200 million for the fund per biennium, or $100 million annually, to pay for numerous key infrastructure investments.
Republican leads on the Transportation Committee, Sen. Brad Farrin (R-Somerset) and Rep. Wayne Parry (R-Arundel), have advocated for such a dedicated funding arrangement for several sessions.
In the current session, a bill from Rep. John Andrews (R-Paris) emerged from the Taxation Committee to become the vehicle that Republicans on Transportation eventually won majority support for, despite opposition from some Democrats on the committee. The original proposal called for 50 percent, but a compromise reduced that level to 40 percent.
Republican lawmakers called the compromise funding arrangement historic, noting in a statement that a “Blue Ribbon” commission convened in 2020 had failed to agree on a viable solution to the funding problem.
“Maine owes a debt of gratitude for the leadership of Senator Brad Farrin, Representative Wayne Parry and Republicans on the Transportation Committee, without whom this critical change would not have come about,” Senate Minority Leader Trey Stewart (R-Aroostook) said in a statement.
“We’ve known for a while that the motor vehicle fuels tax was no longer sufficient to fund our transportation needs and [Electric Vehicles] were only going to make it worse,” said Sen. Rick Bennett (R-Oxford), the Republican lead on the Appropriations Committee.
“We’ve been avoiding the problem for years through borrowing and other financial sleight of hand but this move to permanent funding will help avoid the need to do that,” said Bennett.
Farrin proposed the amendment dedicating tax revenue to the fund after hearing talk of yet another bond issue being floated despite record state revenues.
“This will ensure that Maine’s transportation infrastructure will have dedicated funding now and in the future and our transportation needs will be met,” he said.
Stewart also emphasized that the new funding scheme would allow the state to avoid borrowing money and paying interest to finance infrastructure projects.
Gov. Janet Mills signed off on the plan Friday morning, emphasizing the matching federal funds the spending bill would unlock.
“This bill is good policy, it’s fiscally responsible, and Maine people will benefit from it,” Gov. Mills said in a statement.
“I applaud the Legislature for their work,” she said.
Maine Department of Transportation Commissioner Bruce Van Note also praised the deal.
“The need for sustainable, dedicated revenue for MaineDOT’s capital program has been a persistent challenge for decades, making long-term planning very challenging,” he said.
“This budget makes a huge stride toward fiscal sustainability for the Highway Fund. Transportation affects every Maine person every day, so this budget represents a real win for the safety, economic opportunity, and quality of life of all Maine people,” he said.
The Mills Administration said the funds generated by this spending plan will allow the Department of Transportation to implement a three-year work plan containing a number of critical infrastructure projects, including “302 bridge projects, 1,178 miles of preservation paving and more than 2,000 miles of light capital paving, 271 miles of highway construction and rehabilitation, and 264 highway safety and spot improvements.”
Supplying adequate financing for the Highway Fund has been a key concern in Maine for many years now, and utilizing sales tax revenue from vehicle, and vehicle-related, purchases, has long been recommended as a means by which to close the persistent gap in funding.
Maine Policy Institute CEO Matthew Gagnon released a statement this morning on the newly-enacted Highway Fund budget.
“Maine Policy has long supported redirecting a portion of automobile related sales taxes to the Highway Fund to shore up the state’s transportation infrastructure, reduce future borrowing and spare Mainers from tax increases,” he said. “We’re pleased the Legislature has finally endorsed this change to save taxpayers from future debt.”
“Maintaining our roads, bridges and other key infrastructure is a core function of government and should always be a spending priority for lawmakers,” Gagnon said, adding, “There was never a good reason to put these investments on the credit card.”
“With this budget, lawmakers have finally taken action to plug the transportation funding shortfall and we commend them for enacting this change,” he said.
Disclaimer: The Maine Wire is a project of the Maine Policy Institute.
