Maine Motor Vehicle Taxes Are New Highway Fund Source
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Maine Gov. Janet Mills has signed a two-year, $829 million highway budget law creating a reliable revenue stream to fund highway repairs using portions of state motor vehicle taxes.
Mills said the new measure will decrease state borrowing by creating “a sustainable, long-term source of funding for infrastructure repair and unlock nearly a billion dollars in matching federal funding.”
The new funding will inject money into the state’s highways by allocating 40% of the 5.5% sales tax on vehicle purchases. It also calls for taking 40% of sales and use taxes collected by the state Bureau of Motor Vehicles, which is under the secretary of state’s office.
The new revenue stream is projected to provide more than $200 million for infrastructure repair every two years. In the past, Maine has issued bonds to provide revenue for highway transportation improvement projects.
This morning, I signed a bipartisan Highway Fund Budget that builds on my Administration’s record investment in Maine roads and bridges. pic.twitter.com/dNPk0GkWf4 — Governor Janet Mills (@GovJanetMills) June 16, 2023
The governor’s office noted the funding source will enable the Maine Department of Transportation to implement its three-year work plan. These projects include 264 highway safety and spot improvements, 271 miles of highway building or repairs, work on 302 bridges and paving 3,178 miles of roads.
Bruce Van Note, MaineDOT commissioner, reacted to the governor’s action. “The need for sustainable, dedicated revenue for MaineDOT’s capital program has been a persistent challenge for decades, making long-term planning very challenging,” he said.
Before Mills enacted the new law June 16, the state faced continued difficulties in financing highway infrastructure expenditures. In October, Kirsten Figueroa, state commissioner of the department of Administrative & Financial Services, completed the Four-Year Revenue and Expenditure Forecast required every two years under Maine law. The 32-page report projected a shortfall in the 2024 biennium of $712 million “representing a structural gap between revenues and expenditures that appears to be widening.” Maine adopts budgets for two-year periods.
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“Maine Policy has long supported redirecting a portion of automobile-related sales taxes to the Highway Fund to shore up the state’s transportation infrastructure, reduce future borrowing and spare Mainers from tax increases,” said CEO Matthew Gagnon. “We’re pleased the Legislature has finally endorsed this change to save taxpayers from future debt.”