Maine highway budget approved, minus tax option

| 6/17/2011

Plans for road and bridge funding in Maine are nearly complete.

The Legislature voted to send to Gov. Paul LePage a $637 million two-year highway spending package, which includes tax breaks. The transportation budget covers improvements and maintenance on roads and bridges, state police and other transportation-related services.

One provision in the budget drops indexing as a funding source. Indexing is a system of automatic adjustments in the tax on motor fuels. The change regularly results in annual increases.

Indexing would end in July 2012. According to a fiscal note on the bill, the removal of indexing is expected to cost the state about $5 million per year.

Gov. LePage supports the measure in LD1348. He and some fellow Republican lawmakers have noted that they are opposed to automatic increases in taxes. Instead, advocates would rather require lawmakers to vote on any changes.

Critics say the state should not be sacrificing a steady source of income when money is hard to come by. They say the lost revenue would need to be made up elsewhere.

Supporters acknowledge that lost revenue will need to be replaced in the long run. However, the loss of funding will not initially change plans for road work and other transportation services.

One option that has been mentioned to replace the lost revenue from fuel taxes is applying a portion of the state sales tax.

Nebraska lawmakers approved a similar plan this spring, which will take effect in 2013. Arkansas voters will decide in 2012 whether to adopt the same policy.

To view other legislative activities of interest for Maine, click here.

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