State flexing motor fuel tax for transit
By Chrissy Mancini Nichols
May 13, 2011
This post first appeared at metroplanning.org
Did You Know? Maryland’s Motor Fuel Tax funds one-third of its transit costs.
As the price of gas surges people flock to public transit. Transportation for America reports commuters from Tennessee to Indiana and California are trading their cars for trains and busses. According to the American Public Transportation Association, when gas prices rise above $4 a gallon public transit use increases by 10.8 billion trips per year. With the U.S. Energy Information Administration predicting the price of a barrel of crude oil remaining above $108 through 2012 (last year’s price was $76), investments in accessible and reliable public transit are more important than ever.
At the federal level, 2.86 cents of the 18.4 cent per gallon MFT is dedicated to fund transit. The American Association of State Highway and Transportation Officials found that in 2008, states provided $12.3 billion for transit from various sources, including the Motor Fuel Tax (MFT). This allowed them the flexibility to use transportation revenues according to the needs of residents, whether that’s roads or mass transit. In total, 16 states think differently about how they use revenues from the MFT, taking a comprehensive approach to transportation funding.
For example, in California, state funding from gasoline and diesel sales taxes flow to transit through the State Transit Assistance (STA) Fund/Public Transportation Account. This funding source historically accounts for 15 to 40 percent of a transit agency operation budget. In FY 2008, the MFT generated $400 million for public transit in California, representing 17 percent of total funding. In Connecticut the MFT is deposited into a Special Transportation Fund that supports transit operations and capital projects. In Florida state law mandates a minimum of 15 percent of Florida’s Transportation Trust Fund dollars must be spent for public transportation, which includes transit, rail, aviation, seaports, and intermodal facilities. In FY 2008, the MFT generated almost $80 million for public transit in the state, representing 55 percent of total funding. Maryland’s MFT is deposited into a Transportation Trust Fund which supports transit operations and capital projects. In FY 2008, the MFT generated almost $270 million for public transit in Maryland, 32 percent of total funding. Rhode Island’s state law specifies all income from MFT be deposited into the Intermodal Surface Transportation Fund (ISTF). A portion of the ISTF funds ($0.0725 per gallon of taxes imposed) are allocated to public transit. In FY 2008, the MFT generated $38 million for Rhode Island’s public transit, yet representing a whopping 80 percent of total funding.
Illinois has the second largest public transit system in the nation, yet state law does not allow any of its $1.3 billion in MFT revenues to go to programs other than roads and highways. Instead, the state must spend limited transportation dollars based on arbitrary formulas divided into isolated silos that fragment road, highway, transit, rail, bike, and pedestrian projects. It would be more effective and efficient to make targeted investments, no matter what the revenue source, based on their ability to reduce hours spent in traffic, curb emissions, and connect people to their homes and jobs, be that a road or train. Thinking differently about how we spend all transportation revenues would grant state leaders the flexibility to serve commuters needs and fund healthy, sustainable transportation improvements.