On Nov. 4, 2014, voters across the country addressed a series of state and local infrastructure funding proposals that will have substantial ramifications for transportation and infrastructure finance in many major states. Despite the overall political trends nationwide, these initiatives saw considerably disparate results in different parts of the country. With the recent trend to increasing bi-partisan support for public-private partnerships (P3s) federally (see prior GT Alerts: The GROW AMERICA Act and White House Initiative to Expand Public-Private Partnerships), these results may suggest that some states look further into P3 opportunities to address funding challenges. As these results will impact the ability to advance major infrastructure projects in a variety of places in the United States, this Alert provides a brief summary of Tuesday’s ballot questions.
Summary of Results
In both Maryland and Wisconsin, ballot initiatives to amend the state constitution to ensure that transportation revenues (fuel tax revenues and vehicle registration fees) are spent exclusively on transportation projects passed overwhelmingly in both states. In Wisconsin, Question 1, which passed with close to 80 percent support, requires that revenue generated by transportation fees and taxes be deposited into the state's transportation fund. Likewise, in Maryland, a similar initiative passed with 82 percent support that will prohibit the use of transportation revenues for general fund uses, unless the Governor declares a fiscal emergency and both chambers of the General Assembly approved the transfers by a three-fifths vote.
Separately, in Texas, voters overwhelmingly passed a constitutional amendment with approximately 80 percent of the vote that would add an additional $1.4 - $1.7 billion annually to the State Highway Fund for road infrastructure from oil and gas severance tax revenue. The funds are restricted to non-tolled, pay-as-you-go projects. Collectively, these results suggest exceptionally strong support across the country for restricting transportation revenues to transportation uses and utilizing existing revenue streams for transportation purposes.
However, by a very narrow margin, Massachusetts voters repealed a 2013 law that indexed to inflation the 24 cents per gallon motor fuels tax. The automatic indexing of the tax, which some advocates projected to raise $1 billion over a 10-year period, was a component of a broader transportation finance package enacted in 2013. Likewise, in Louisiana, voters resoundingly rejected a proposal to authorize the creation of a state infrastructure bank. When taken together with states such as Texas, Maryland and Wisconsin, it appears voters are more likely to support user fee-based, pay-as-you-go measures rather than debt-based approaches.
Additionally, there were several transit-specific ballot questions in Austin, Atlanta, Rhode Island and California’s Bay Area. While Austin voters rejected a $1 billion bond issuance to fund part of a nine mile urban rail project and supporting road projects, voters in metro Atlanta (Clayton County) and Rhode Island supported transit projects. In Clayton County, Ga., voters supported a 1 cent sales tax increase to enable public transit service (MARTA) to serve the county. In Rhode Island, Question 6, which passed, authorized $35 million in mass transit expenditures in Rhode Island. In San Francisco, Proposition A, a $500 million bond measure to be used for redesigned streets, more bike and transit-only lanes, updated traffic signals, improved maintenance facilities and new elevators and escalators at Metro stations, received the necessary two-thirds support of the voters. In Alameda County, the $8 billion Alameda County transportation tax achieved the needed two-thirds approval. Measure BB, which is similar to an initiative that lost in 2012, raises an existing half-cent sales tax to 1 cent. The measure allocates $5 billion to transit, bicycle and pedestrian improvements, including $400 million toward a Livermore BART extension and $1.5 billion to boost AC Transit service, and the remainder to road projects.
Despite the tremendous needs facing states to fund critical transportation and infrastructure projects, voters were mixed on the options presented within this election cycle. Voters seemed to strongly and consistently approve the dedication of existing revenue streams for transportation projects (Maryland, Wisconsin and Texas), even though doing so will likely reduce revenues for other state programs. Funding for transit projects fared well with the exception of the defeated proposal in Austin. Voters, however, were not as inclined to increase revenue streams dedicated more generally for transportation (Massachusetts) or authorize the use of additional innovative finance tools (Louisiana). At this point in time, it may be difficult to generalize any overall conclusions from these regional and local initiatives. At a minimum, these results underscore voter skepticism and concerns regarding new revenue streams and considerable enthusiasm for protecting and securing current revenues for particular uses. We expect the fierce competition for transportation dollars to continue for the foreseeable future.