One of the more controversial decisions recently made by the legislature is the gas tax hike. It raised state tax on gasoline by 4.2 cents per gallon to 22.2 cents per gallon. The funds generated are earmarked to pay for roads, bridges and finishing the Interstate 93 expansion project. Most Granite Staters agree NH’s roads and bridges need work, and would like the I-93 expansion finished sometime this decade. But disagreement continues over whether the gas tax is the solution.
You can be forgiven for not noticing the increase at the pump. Since the tax increase went into effect in July, the average price per gallon has dropped roughly 30 cents. The argument made in favor of increasing the gas tax in NH was math. The need for road and bridge construction has increased while Highway Fund revenue, funded almost entirely by state gas tax and motor vehicle fees, struggled to keep pace. To close this gap, politicians in recent years have used a series of one time fixes to boost revenue. Increasing the gas tax was seen as a permanent, long-term solution.
Opponents of the hike argued that if the diversion of Highway Fund dollars away from road and bridges were stopped, there would be more than enough money to meet all of the state’s infrastructure needs. In fact, nearly $80 million in Highway Fund money was spent outside of the Department of Transportation this year alone, or 29 percent of total Highway Fund expenditures.
Highway Fund History
Before taking apart that figure, some history is in order. There a clause that allows Highway Funds to be spent on more than road and bridgework, specifically “the supervision of traffic thereon.” Drafters of that amendment consciously inserted that clause to allow Highway Fund money to be spent on law enforcement.
Budget writers may have interpreted it too broadly. So in 2008, the Legislature sought to stem this diversion by crafting a law mandating that at least 73 percent of the Highway Fund be allocated to the Department of Transportation (DOT) by Fiscal Year 2014. The Department of Safety’s share was to be capped at 26 percent and all other areas of government at 1 percent. The plan was to be phased in over the course of three budgets to ease the transition. Progress had been made over the last two budget cycles and targets met, though Gov. Maggie Hassan suspended the law, reducing Transportation’s share to below 70 percent.
Where Does It Go?
In the current fiscal year, nearly all of the diversion, roughly $77 million, is spent at the Department of Safety. Contrary to popular belief, it is not all spent on State Police, which accounts for just under half. Roughly $27 million of it is spent on the Traffic Bureau and Enforcement Divisions, which patrol NH’s roads and interstate highways. The Department of Safety has also used the money for the Department of Information Technology.
Outside the Department of Safety, roughly $3 million in Highway Funds are spent on activities at number of state agencies that are “road related,” largely by the Judicial Branch, ostensibly to cover the costs of handling road related crimes.
State Sen. Jeb Bradley (R-Wolfboro) attempted to tackle this problem earlier this year and identified just over $22 million in Highway Fund money spent outside the DOT. To fix this, he sponsored a bill that would reallocate those Highway Fund dollars to Transportation in the next budget. These were not cuts to the Department of Safety; rather the bill would have required those functions to be paid for by non-Highway Fund money. The measure passed the Senate, only to die in the House.
This is not to say that the $22 million in expenditures was not needed. The question is what is the best use of scarce Highway Fund dollars. Efficiencies and realigning of priorities across state government could have easily found the additional $10 million allowing more Highway Fund dollars to be spent on infrastructure, negating the need to increase the gas tax.
Politicians should make sure that tax dollars are being spent as efficiently as possible before going to taxpayers for more. Above all, at a time when the state’s infrastructure needs improvement, shouldn’t the state be devoting as much Highway Fund revenue to fixing the problem as possible?
Josh Elliott-Traficante is a policy analyst and director of transparency at the
Josiah Bartlett Center for Public Policy
in Concord. He can be reached at 603-224-4450. For more information, visit www.jbartlett.org or
www.nhopengovt.org.
Current Issue - May 2024