Missouri voters will decide later this year whether to raise the state sales tax to generate more than $500 million annually for roads and other transportation projects.
The House gave final approval Wednesday to a proposed constitutional amendment that would impose a three-quarters-of-a-cent sales tax for transportation. The Senate approved the measure previously.
That means it will go before voters in November, unless Gov. Jay Nixon sets an earlier election date.
If approved by voters, the general sales tax increase would take effect in 2015 and run for 10 years. It would mark the first time that Missouri’s roads have been funded with something other than a user fee, such as a motor fuel tax, registration fees or a tax on vehicle sales. The projected $534 million of annual revenues would make it the state’s largest-ever tax increase.
Without a new source of revenue, officials at the Missouri Department of Transportation say they soon won’t have money to adequately maintain roads and bridges, much less undertake any major new projects.
Over the past five years, Missouri’s construction budget for roads and bridges has fallen from about $1.3 billion annually to $685 million this year. It is projected to dip to $325 million by the 2017 budget.
Missouri has struggled to come up with a stable funding source for transportation.
Voters in 2002 overwhelmingly rejected a plan that would have raised about $500 million annually for transportation through a one-half cent sales tax and 4-cent increase in Missouri’s 17-cent-a-gallon motor fuel tax.
But two years later, voters approved a measure that earmarked existing vehicle sales tax revenues to roads, instead of the state’s general revenue fund. The transportation department used those redirected revenues to support a bond issuance, which allowed an immediate surge in highway construction spending. That spike has now passed and the state is on the hook to repay those bonds.
Federal highway funding also has become more uncertain. Fuel taxes have flattened out, partly because of more fuel-efficient vehicles. And constructions costs have risen for materials such as concrete, asphalt and steel.
Various business and construction groups have been trying to build support for several years for a new transportation funding source. A proposed 1-cent transportation sales tax failed in the final days of last year’s legislative session.
This year’s measure also began in the House as a 1-cent sales tax proposal, but the Senate amended it last month it to a 0.75 cent sales tax, which is why a final House vote was required. The measure had appeared in jeopardy last week, when some Democrats threatened to withdraw their support because of concerns about a separate income tax cut enacted when the Republican-led Legislature overrode Nixon’s veto.
The proposal sets a 10-year limit on the transportation sales tax, with an additional vote of the people required for it to extend beyond that. Ninety percent of the money, an estimated $480 million annually, would go toward state transportation initiatives. Ten percent, or an estimated $54 million annually, would be split among cities and counties for transportation projects. While the sales tax is in place, the measure would bar the state from raising the fuel tax or operating toll roads.