Finding funds for highways no smooth ride in Delaware, across nation

Matt Bittle
Posted 5/24/15

DOVER — In many ways, Delaware is a microcosm of the United States when it comes to infrastructure. Both the First State and the nation are seeking ways to increase revenue for their respective …

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Finding funds for highways no smooth ride in Delaware, across nation


DOVER — In many ways, Delaware is a microcosm of the United States when it comes to infrastructure.

Both the First State and the nation are seeking ways to increase revenue for their respective transportation funds, and both are facing what some top officials have called serious infrastructure issues.

“Everything that you’re hearing and writing about here at the state level with respect to Transportation Trust Fund is writ large at the federal level,” Rep. John C. Carney Jr., D-Del., said in an interview earlier this month.

Nationally, the Highway Trust Fund was set to expire at the end of the month before Congress began efforts to create a short-term fix last week.

John Carney John Carney

At the state level, top officials have been working for more than a year to fund additional infrastructure projects.

A 10-cent-a-gallon gasoline tax increase proposed last year for Delaware by Gov. Jack Markell swiftly was rejected by lawmakers and the public alike. The General Assembly has spent five months working to find a deal that’s acceptable to both Democrats and Republicans, but the discussions seem to have hit a wall, at least for now.

Piggybacking on the governor’s push for last year, state legislators are trying to raise $50 million per year so they can borrow an additional $50 million.

Without additional funding, $780 million worth of transportation-related construction will be untouched over the next six years.

Nationally, the Highway Trust Fund, which relies primarily on the federal gas tax, has been operating on Band-Aid fixes since 2009. While it brings in billions annually, revenues are falling short of expenditures, leaving Congress to come up with a solution.

The federal gas tax rate of 18.4 cents per gallon has not been adjusted since 1993. According to Rep. Carney, better mileage efficiency combined with fewer people driving during the recession caused revenues to fall below projected levels.

The House of Representatives passed a two-month extension several days ago, but it’s temporary, one of more than 30 similar fixes applied since 2009, according to the U.S. Department of Transportation. The nation should not just rely on “short-term gimmicks” to provide money for roads and bridges, Rep. Carney said.

According to Delaware’s congressional officials, half of the First State’s road funding comes from the federal government. About 15 percent of Delaware’s roads are in need of major repairs.

Gov. Markell, a Democrat, has repeatedly highlighted the importance of top-notch roads and bridges, and after his gasoline tax idea failed to gain a footing last year, he’s put the onus on lawmakers.

Democrats presented a bill earlier this month that would raise some Division of Motor Vehicles fees, with the money to be used solely for transportation-related needs.

A small gasoline tax hike still is a possibility, as Democratic leaders have pushed for such an increase. The current state gas tax of 23 cents a gallon was last changed in 1995. Every cent brings in $5 million, meaning a hike of just a few cents, coupled with DMV increases, would go a long way toward reaching the state government’s $50 million goal.

After dropping for months, gasoline prices have started rising again. They are about a dollar less than this time last year.

Some lobbyists have pushed for Washington to raise the gasoline tax, although many lawmakers in Congress have resisted.

And so at the same time as the United States as a whole is grappling with pressing infrastructure needs, Delaware is searching for a solution, too.

“Most people that I’ve talked to do get it, that the roads don’t fix themselves, there’s got to be a way to do it,” Rep. Carney said. “The problem that we have on our side of the aisle in the Capitol, on the Democratic side, everybody wants the perfect solution, but everybody has a different idea about what that is.”

Republicans have been reluctant to agree to any solution that would cost Delaware residents or businesses more, although both sides have come to the conclusion a long-term fix is needed, Rep. Carney said.

Road proposals should not draw support or opposition on partisan grounds, he says.

Delaware Democrats have made similar claims, arguing roads are an “investment” that benefit the entire population of the state. Republican lawmakers generally have agreed as to the importance of funding but have been hesitant to support a plan requiring higher fees or taxes unless they get concessions they believe would boost the state’s economy, such as developing right-to-work laws.

For a national fix, Rep. Carney is a backer of “repatriation” — a plan to encourage companies to bring their foreign profits to the United States.

“Basically, now if a company makes profits overseas, they’re subject to the top marginal tax rate of 35 percent,” he said. “Apple, for instance. They have $200 billion, or more, stranded overseas because they don’t want to pay the 35 percent marginal rate off the top. They’d have to pay 35 percent.

“So what they do is they get a deferral. By law, legally, they get a deferral, they keep those profits overseas, maybe they make investments in whatever country it is, which doesn’t help us here and doesn’t give us any revenue.”

He’s in support of a bill that would eliminate the deferral but in return lower the rate. The goal behind that is to incentivize American companies to bring their earnings back to the nation. Taxes on those profits would then be used for infrastructure.

Calling it a solid short-term fix, Rep. Carney said it would help stabilize the Highway Trust Fund, allowing for further discussions about a higher gas tax or another solution.

His counterparts from Delaware’s congressional delegation, Sens. Thomas R. Carper and Christopher A. Coons, both D-Del., have made similar statements.

While members of the General Assembly debate raising DMV costs and moving the Department of Transportation’s operating expenses from the trust fund to the General Fund, lawmakers in Congress search for a solution that works across the country.

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