PROPOSED FUEL TAX INCREASE
(from Maine Townsman, February 1999)

A 5-cent fuel tax increase implement on September 1, 1999 would raise nearly $67 million in Highway Fund revenues over the FY 2000-FY 2001 biennium. The revenues are necessary to fund $45.2 million in direct assistance to municipalities and $21.4 million for highways and bridges matching $84 million in federal funds.

Unlike the sales or income tax, the fuel tax does not increase with inflation and is constant regardless of the price of gas. Inflation has outgrown by 1% per year the growth in fuel tax revenues. For example, when indexed to inflation the 19-cent gasoline tax in 1998 generated less real value that the 17-cent gas tax did in 1990. Without the increase, adequate funding for municipalities and road improvements are in jeopardy. Over the past two years, Highway Fund shortfalls have been covered through borrowing. The 5-cent increase will provide a long-term solution to this ongoing Highway Fund shortfall and will allow the Department of Transportation to reduce its debt. In fact, the Highway Fund debt will be cut nearly in half over 10 years, thereby freeing up money for additional infrastructure improvements.

Currently there are 4,199 miles of deficient state highway, arterial and collector roads, which in total represents $1.5 billion in resurfacing and rehabilitation cost. The Maine Department of Transportation’s 20-Year Plan proposes to spend $1.3 billion over the next 20 years to address the 141 deficient National Highway miles, 290 minor arterial miles and 828 (40%) of the deficient major collector miles. The plan does not budget any funding for 1,200 miles of deficient major collectors and all the 1,700 miles of deficient minor collectors.

An increase in the fuel tax would enable the Department of Transportation to meet the state’s National Highway, minor arterial and major collector preservation needs as outlined in MDOT’s Six-Year Plan. According to the 2000 - 2005 plan, if the Highway Fund is adequately funded, the state could address 1,746 miles of pavement needs across the state.

Maine’s gas tax was last increased in 1991 by 2 cents, to 19 cents per gallon. Even with the proposed 5-cent increase, to 24 cents per gallon, Maine’s gas tax will still be below the average tax of other New England states. The 5-cent per gallon increase is estimated to cost the average passenger car driver $26 per year.

Without an increase in Highway Fund revenues, Maine’s roads will continue to deteriorate, thereby increasing cost for infrastructure maintenance and improvements.