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Janet Mills signs bipartisan highway budget compromise with new funding model

Gov. Janet Mills is flanked by Democratic and Republican lawmakers who helped negotiate a transportation budget during a signing ceremony on June 16.
Kevin Miller
Maine Public
Gov. Janet Mills is flanked by Democratic and Republican lawmakers who helped negotiate a transportation budget during a signing ceremony on June 16.

Gov. Janet Mills has signed into law a transportation budget that makes major changes to how the state funds road and bridge maintenance.

The bipartisan compromise will, for the first time, allow the Maine Department of Transportation to receive a portion of the sales taxes on vehicle sales as well as taxes received by the Bureau of Motor Vehicles. Those changes are expected to generate an additional $200 million over two years for paving, plowing, bridge maintenance and other highway projects.

During a signing ceremony with state lawmakers, Mills said the budget will leverage nearly $1 billion in federal matching funds while reducing the state's reliance on the gas tax and on borrowing.

State lawmakers and governors have, in recently decades, consistently relied on voter-approved bonds to pay for road and bridge projects. But with the state enjoying large surpluses and interest rates rising, there has been opposition among some lawmakers — particularly in Republican ranks — to taking on additional state debt.

"This bill is good policy,” said Mills, a Democrat who served on the Legislature’s budget-writing committee while a lawmaker. “It is fiscally responsible. It's the work of good bipartisan compromise. And Maine people will benefit."

The budget would capture 40% of sales taxes on vehicle purchases and 40% of sales and use taxes collected by the Bureau of Motor Vehicles beginning on July 1. The funding model, which is based on a proposal first floated this session by Republican lawmakers, seeks to shift away from gas taxes that account for roughly two-thirds of the revenue flow into the current $345 million Highway Fund. Gas tax revenues are expected to continue to decline — absent an increase in the tax rate — as vehicles become more fuel efficient and consumers switch to electric vehicles.

In the immediate future, passage of the Highway Fund budget will also avert a potential partial shutdown of the Maine Department of Transportation on July 1 that could have affected ferry service and other DOT functions over the busy Fourth of July holiday.

As part of her budget proposal, Mills had floated tapping the state’s surplus and other sources to provide $200 million in one-time money to the Highway Fund. The sales tax revenue will now replace that funding in the current budget and continue in future years.

“Planning transportation is a long-term endeavor and the idea that you can do it just one, two years at a time just doesn’t work,” Bruce Van Note, commissioner of the Maine DOT, said after the ceremony. “We have to think four, eight, 10 years out. So this takes the steadfast support that the governor had provided with one-time General Fund revenue and locks it in. So we know we have it and can start making long-term plans.”

Lawmakers are still negotiating changes to the broader state budget.