Arizona will collect less than a third of the money it needs in transportation taxes to meet the anticipated needs by 2035, including keeping the state’s roads and bridges repaired, a new state report shows.
The Auditor General’s Office says the Arizona Department of Transportation will need about $88.9 billion in its 25-year plan to ensure “minimum acceptable conditions” for the state highway system. But at the current rate taxes are being collected, the agency will have just $26.2 billion over the same period.
The study says state lawmakers should form a task force to find ways to bridge the gap. And it proposes various options ranging from higher gasoline taxes to finding new ways to raise additional dollars.
But Gov. Doug Ducey has pronounced such ideas dead on arrival if they reach his desk.
“I think we’re open to the task force,” said press aide Daniel Scarpinato. “But the governor has been crystal clear that raising taxes is the worst thing you could do to people, particularly in this economy.”
That does not bode well for a proposal by Sen. Bob Worsley, R-Mesa, to replace the gasoline tax with a sales tax.
Worsley, who chairs the Senate Transportation Committee, noted the gas tax has been 18 cents a gallon since 1991 when fuel was $1.30 a gallon. A sales tax — Worsley calls it a use tax because it’s paid by people who use the roads — would rise with the price of fuel.
“But the governor has said ‘no new taxes’ and so we’ve got to figure out what the right answer is that’s something he can support,” the senator said.
The audit says there’s no crisis — yet. But ADOT reports the percent of pavement in good condition has declined from more than 70 percent in 2005 to less than 63 percent in 2014, the most recent figures available, a trend the agency expects to continue if there are no additional revenues.
It also says ADOT needs to spend $260 million a year just to maintain the roads in current conditions “but is unable to do so because of competing construction needs and priorities.”
The audit also says the lack of maintenance hits Arizonans directly in the pocket: A study by the American Society of Civil Engineers estimates that driving on roads in need of repair costs Arizona motorists an estimated $1.5 billion a year — $318 per motorist — in extra vehicle repairs and operating costs.
According to the report, the problem is that heavy reliance on a flat per-gallon fuel tax.
“As a result, the purchasing power of Arizona fuel tax revenues also has declined,” the audit states.
Looking at the issue another way, if tax had been indexed to inflation in 1992, the state would have brought in another $4.3 billion through 2014. Instead, Arizona is collecting about $650 million in state gasoline taxes a year, less than it did in 2007.
But it’s not just the flat tax.
On one hand, there are a lot more vehicles on the road.
Consider: In 1998 there were just over 3 million non-commercial motorized vehicles on Arizona highways. The most recent number is approaching 4.6 million.
But cars and trucks also are more fuel efficient. And that doesn’t even take into account the increased popularity of alternate fuel vehicles which get much better mileage — and in some cases, don’t need gasoline at all.
At the same time, Arizonans are driving fewer miles each year now than they did at the peak in 2007.
Lawmakers could increase the gasoline tax. But each penny hike raises only about $36 million a year, meaning the levy would have to go up sharply to fund all the needs.
Another possibility is replacing the gasoline tax with a fee based on miles traveled.
That would be immune to the revenue losses that are likely to continue to occur as fuel efficiency improves. It also has the benefit of hitting the owners of electric and hybrid vehicles.
“However, there are concerns about privacy because of the need for tracking equipment,” the audit says, leaving aside the cost of ensuring that motorists are paying what they owe.
There is a loophole of sorts in Ducey’s vow to never hike taxes. Scarpinato said the governor could be convinced to boost the vehicle license fee, another source of dollars for ADOT, insisting that’s not a “tax.”
In fact, Ducey made such a proposal for the current budget, proposing to nearly double that to raise an additional $30 million. That, however, proved to be a non-starter in the Republican-controlled Legislature.
Ducey’s opposition aside, Worsley said there’s another political hurdle. He said most of the voters live in Maricopa County where freeway conditions are good, at least in part because of locally raised sales taxes.
“They don’t see the need,” Worsley said. He said voters need to be convinced there are legitimate needs, such as finishing the widening of I-10 south of Phoenix to three lanes and making a better connection between the new Mariposa port of entry in Nogales to Interstate 19.
Worsley said traffic goes through 25 new gates “and then we send them into little podunk city streets that gets jammed up and is embarrassing.”
There have been alternate ideas in the past to boost road funding.
In 2008 a group gathered petitions to boost the state sales tax by a penny, enough to generate an additional $1 billion a year. That plan had the support of then-Gov. Janet Napolitano.
But voters never had a chance to weigh in on that as it was found to have insufficient signatures.