Thursday, July 18, 2024

Report: Louisiana’s Transportation Trust Fund expected to lose more than $500M over next decade

by BIZ Magazine

By Victor Skinner | The Center Square contributor

Louisiana’s Transportation Trust Fund is expected to lose more than a half billion dollars in revenues over the next decade due to increasing fuel efficiency and electric vehicles, according to a recent report from the Louisiana Legislative Auditor.

Louisiana Legislative Auditor Mike Waguespack published a report on the state’s Transportation Trust Fund last week that evaluates the sufficiency of the fund to meet Louisiana’s transportation needs, and highlights ways to increase revenues.

The performance audit comes in response to a 2019 State Highway and Bridge Needs report from Louisiana Department of Transportation and Development that identified $14.87 billion in unmet transportation infrastructure needs.

The backlog is due in part to declining revenues from the state’s 16 cent per gallon motor fuel tax, the TTF’s largest source of revenue, which is not tied to inflation and has not increased since 1990.

“The average fuel efficiency of light-duty passenger cars in the United States increased from 18.8 miles per gallon in 1990 to 22.9 miles per gallon in 2020, which decreased the amount of revenue the state receives per Vehicle Miles Traveled (VMT),” Waguespack wrote in a summary letter to lawmakers.

Auditors noted that declining fuel tax revenues are compounded by electric vehicles, though a new road usage fee for EVs approved by the Legislature last session will help to offset some of the losses.

“We projected that higher fuel efficiency and external electric charging will result in $563.6 million less in motor fuel tax revenues for the state from calendar years 2023 to 2032. In 2032 alone, we estimated the state will take in $107.5 million less, assuming electric vehicles account for 30% of new vehicles sold in Louisiana by then,” the letter read.

“However, Act 578 of the 2022 Regular Legislative Session will enable the state to begin collecting road usage fees from these types of vehicles, assuming that all Act 578 road usage fees will be collected as required,” Waguespack wrote. “We projected these fees will be sufficient to offset the impact of external electric charging vehicles on motor fuel tax collections, but not the impact of more fuel-efficient vehicles. As a result, the state still could lose $322.9 million from calendar years 2023 to 2032.”

Auditors also pointed to TTF revenues that have been used to cover debt service associated with the Transportation Infrastructure Model for Economic Development Projects for certain local transportation needs. That constitutionally permitted use of TTF funds diverted $309.6 million in revenue between fiscal years 2015 and 2021, and auditors expect the TIMED debt to consume another $902.6 million over the next 24 years.

“The total future TIMED Debt Service owed from fiscal year 2022 through fiscal year 2043 is approximately $3.9 billion,” according to the report.

The audit report highlights several examples from other states as possibilities for increasing TTF revenues to address the backlog of transportation projects.

In Texas, lawmakers created two temporary funding sources for transportation projects: a portion of oil and gas production taxes that have generated $8.22 billion over the last six years, and portions of revenues from sales and use taxes, as well as motor vehicle sales and rental taxes, that have generated $7.5 billion over the last five years, according to the report.

In Florida, legislators use up to 38.2% of collections from a documentary stamp tax to fund transportation needs, a source that brought in $467 million in 2021.

Georgia lawmakers supplemented transportation funding with extra fees on heavier vehicles, as well as a $5 per night fee on hotel and motel rooms, while Colorado legislators taxed transportation network companies like Uber and Lyft, as well as retail delivery services like DoorDash and UberEats.

The latter was approved in 2021 and is expected to generate $113.2 million in the first year, according to the LLA.

Numerous other states are also participating in a federal Surface Transportation System Funding Alternatives program to study the use of mileage fees systems, which base drivers fees on miles driven.

“Louisiana already collects mileage information during a car’s emissions inspection in certain parishes which could be used to implement a mileage fee system pilot program,” auditors wrote.

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