This is part 2 of a special blog series on transportation issues in the Puget Sound Region. These issues are under consideration by the Transportation Futures Task Force, a group of stakeholders convened to recommend solutions to ease our transportation woes and better support transportation options. Transportation Choices’ Director of Programs, Shefali Ranganathan is a member of this task force.
PART 2: Overview of Existing Transportation Funding Shortfalls and the PSRC’s Potential Strategy for a Sustainable Long-Term Funding Solution
Written by an all-star TCC Volunteer
In last month’s blog post we discussed the declining efficiency and reliability of our regional transportation system and noted that the PSRC’s recent public opinion poll shows this is a top concern for voters. In this post we’ll examine why our traditional funding system is no longer capable of maintaining or improving mobility in our growing region. We’ll also explore some possible options going forward and challenges with obtaining voter and elected official approval.
The PSRC’s Transportation 2040 Plan anticipates that we will need a total of $173.6 billion in additional investment between now and 2040 to maintain and adequately grow our transportation system. Of this amount, the plan dedicates $81 billion to maintenance and repair and $92 billion to new infrastructure. However, according to the PSRC, existing funding sources and revenue authority can only generate $111 billion, leaving a $62.4 billion budget shortfall.
A key component of the shortfall stems from the fact that the gas tax has traditionally been the main source of funding for transportation projects, with the exception of transit projects, which are predominately funded by sales tax. In the past, the gas tax has been a fairly reliable funding source that steadily grew with in parallel with vehicle use. However, the gas tax can’t generate the revenue that it used to due to impacts from inflation, a decrease in vehicle miles traveled, and an increase in fuel-efficient vehicles. On one hand, a decrease in gas consumption is a great sign of the availability of transit alternatives and hybrid vehicles. On the other hand, people need safe and efficient bridges, roads, and highways, and the gas tax’s ability to cover the true cost of driving is eroding.
In addition to the gas tax, other major transportation funding sources include sales tax, federal funds, motor vehicle fees, tolls, bond sales, and ferry revenues. Of these, sales tax and federal funds pose particular challenges. Sales tax, typically authorized by state law and approved through voters at a local level, has become a primary source for funding at the local level in urban areas. This is the case with Sound Transit, which receives more than 60% of its funding from sales tax. However, already high sales tax rates in the state make it challenging to obtain elected official and voter support for further tax increases. Additionally, the federal transportation program is becoming a less reliable source of funding as it struggles to cover even its current obligations.
In response to some of these challenges, many new funding proposals rely on a dramatic shift toward user fees and road pricing. User fees, such as tolls or mileage-based charges, can often generate sustainable long-term revenue. However, public opinion poll respondents showed an aversion to tolls and a lack of understanding of user fees, which could make garnering political support for such mechanisms difficult. Additionally, revenue from tolls currently may only fund the facilities where the tolls are located, and a change of law would be required to allow more spending flexibility.
PSRC’s Transportation 2040 Plan proposes fully transitioning from the gas tax to user fees over the next 25 years. The first phase (2014-2020) includes only slight increases in the gas tax, car tab fees, local sales tax revenue authority, and some facility-specific tolls. The second phase (2021-2030) includes the implementation of a mileage-based charges and a HOT lane network, which will replace the current HOV system. Finally, in the last decade (2031-2040), the region will completely transition away from the gas tax to a system of user fees, including mileage-based charges and freeway tolling.
Although significant steps have been taken in the last ten years to maintain transportation funding, the current funding system is increasingly falling short of our needs. As experts continue to vet the strategies above and work to come up with a solution that is equitable, financially sustainable, and politically feasible, we will stay optimistic for a bold long-term funding plan that provides the solution that the Puget Sound region needs.
