Republicans notched a rare budget victory Thursday, convincing several Democrats to support a proposed change to funding highway improvements – a move that could upend negotiations over the broader state budget.
Approval of the highway fund is usually a sleepy affair, but it took on an air of urgency this week when Republicans called for replacing $200 million in one-time funding with an ongoing allocation of roughly the same amount funded by sales taxes on automobiles and auto parts.
That proposal won support from Republicans and several Democrats on the Transportation Committee on Tuesday. But it faces further review and possible changes by the Legislature and its budget-writing committee.
The 9-4 vote came after Sen. Ben Chipman, a Portland Democrat who co-chairs the committee, warned that the proposed changes may not enjoy broad support among lawmakers, which is needed to prevent a shutdown in operations at the MDOT and the Bureau of Motor Vehicles at the end of the fiscal year.
It also came as the Legislature’s budget-writing committee is discussing a possible $100 million transportation bond to free up money for other priorities such as paid family medical leave and child care investments in the general fund budget – a suggestion that incensed Republicans.
While Democrats questioned the timing of the Republican proposal, Sen. Bradley Farrin, R-Norridgewock, said that a 2019 commission that studied highway funding had recommended creating a more permanent revenue stream.
“I can’t believe we’re talking about borrowing money with the revenues we have in the state right now,” Farrin said. “That’s why I think it’s important we make this statement.”
Most of the state’s highway revenue comes from fuel taxes, vehicle excise taxes and registration fees. With the state seeing record revenues and surpluses, Republicans said it’s the right time to address chronic underfunding by tapping auto sales taxes. That would also be a way, they said, to generate funding from electric vehicles, which don’t pay into the gas tax.
The highway budget recommended by the committee includes language from a bill, L.D. 713, that directs half of the sales tax revenue from the sales of automobiles and parts to the highway fund. That bill was unanimously endorsed by the Taxation Committee.
“To me, this is a 100% road use tax,” said Rep. Wayne Parry, R-Arundel. “This is a permanent fix for the highway fund.”
But Chipman, who voted against the amendment, warned that changing the highway budget late in the process could irritate party leaders and anger members of the Appropriations and Financial Affairs Committee, which negotiates a budget to send to the full Legislature.
“For us to just add this in here, I think, is going to make it toxic,” Chipman said. “(It) is really going to politicize the highway budget in a way that it’s never been politicized before. I think it’s reckless. I don’t think it makes sense strategically. And I don’t think it’s going to end up being in the final product.”
Rep. Dan Ankeles, D-Brunswick, who voted in support of the highway budget without the Republican amendment, said he worried about how the change could have “ramifications outside of this room” and “serious policy consequences across the policy spectrum, not just in transportation.”
Democrats control both chambers of the Legislature and the Blaine House, so Republicans haven’t had many legislative victories this session.
They were effectively cut out of this year’s early budget negotiations, when Democrats approved a partial state budget in March to avoid a high-stakes showdown – and a possible government shutdown – over Republican demands for tax cuts.
Any budget adopted after April 1, on the other hand, would need the bipartisan support of two-thirds of sitting legislators to take effect by the end of the fiscal year on June 30.
While Democrats passed a basic budget without Republican support, they did not push through the state highway budget, which exists outside the core state budget but funds the operations of the Maine Department of Transportation and Bureau of Motor Vehicles.
MDOT Commissioner Bruce Van Note explained the stakes to lawmakers: If the highway budget does not pass, ferries would have to stop servicing island communities at the height of tourist season; moving bridges would have no operators and would remain open, stopping vehicular traffic; construction projects would be delayed; and the state could default on contracts with construction companies and possibly be liable for financial damages.
“We have started to analyze that (impact), but there are a bunch of things that just become blatantly obvious at the Department of Transportation,” Van Note said. “I say this all as a worst case and we hope it doesn’t happen and we would do everything we could to mitigate it, but without a budget we don’t have positions – and if you don’t have positions, you can’t do all kinds of things.”
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