Communication and Public Awareness

Transportation Funding...

Don't let the Treasure Valley fall through the cracks

Why is transportation funding such a big deal?

Transportation is the lifeblood of our economy. Without a well-functioning transportation system, our residents can’t get to their jobs, our farmers and factories can’t get their goods to the market, and our stores can’t stock their shelves. Without the ability to get people and goods from “here” to “there,” our economy stops.Infographic showing the annual trasnportation funding shortfall in the Treasure Valley of 150 million dollars

Our transportation also impacts our quality of life, from how much time we spend sitting in traffic, to the choices we have in how we get around, to the safety of those choices.

The big deal is that we don’t have enough money to maintain the system we have now, much less to “grow” the system for the future. The population of Ada and Canyon Counties alone is expected to increase to by over 334,000 people by the year 2040, for a total forecasted population of 1.022 million.

COMPASS estimates that the region will need an investment of approximately $513 million per year between now and 2040 to meet maintenance needs and the demands of growth. Funding estimates conducted in 2018 showed that we were $235 million short of meeting those needs, each year, in Ada and Canyon Counties alone.

Maintenance Matters!

Due to the funding shortfall, when developing Communities in Motion 2040 2.0, the COMPASS Board of Directors made the decision to focus available federal funding on maintaining the existing transportation system, while strategically addressing regional priorities. While it doesn’t receive the fanfare of a new road, bus service, or bike path, maintenance is critical to ensuring our existing transportation system continues to function. Yet, even with this focused funding, the two-county area will not have enough money to keep up with maintenance needs.

What does that mean to you?

While progress has been made, without additional funding, your commute will look very different in 2040 than it does today. For comparison…

Commute Today 2040
Drive time from Caldwell to downtown Boise 39 minutes 55 minutes
Drive time from the City of Star to St. Luke's Regional Medical Center in Boise 33 minutes 62 minutes
City of Nampa to Micron 32 minutes 42 minutes

How do we pay for transportation now?

For the most part, transportation is funded through a “user pay” system – most of our transportation infrastructure is funded through fuel taxes, vehicle registration fees, and other mechanisms, as opposed to coming from general tax dollars. The federal fuel tax is placed in the federal Highway Trust Fund, then allocated to states. The State of Idaho collects gas tax and registration fees and places them in the state Highway Distribution Account. Transportation agencies use these and other funds to pay for transportation infrastucture.

  • Federal fuel tax:
    • 18.4 cents per gallon for gasoline; 24.4 cents per gallon for diesel
    • Unchanged since 1993
  • State fuel tax:
    • 32 cents per gallon for gasoline and diesel
    • Raised in 2015
  • Local property tax:
    • Assessed by highway districts
    • Also used by Valley Regional Transit, through contributions from cities (Valley Regional Transit cannot assess property tax itself)
  • Impact fees: ACHD and City of Nampa only:
    • Fees collected on new development
  • Vehicle registration fees:
    • ACHD (through a local option vote)
    • Idaho Transportation Department
      • Update! annual increase of $21 for most vehicles – effective July 1, 2015 (see below for more details)
  • Transit fares:
    • Collected by Valley Regional Transit and ACHD Commuteride

While transportation funding is extremely complicated, there are a few key issues that affect how it is collected, distributed, and used:

  • Fuel tax:
    • The state fuel tax increased by 7¢ per gallon on July 1, 2015; the federal fuel tax has not increased since 1993. Neither are adjusted for inflation, which means that without Legislative or Congressional action, transportation funding will not increase as transportation costs do.
  • Money silos:
    • There is not simply one “pot” of transportation funding. State and federal laws and policies frequently dictate how and where transportation funds can be used, putting the money in “silos.” For example, in Idaho, the state constitution prohibits fuel tax from being used for public transportation. Federal funding also is divided into “silos,” which specify how certain funds can be used.
  • Donors vs donees:
    • In Idaho, we get more back in federal gas tax than our citizens put in, due to federal legislation that sets a minimum share per state regardless of population. The amount varies, but generally we get at least $1.50 for every $1 our citizens pay. This may change in the future, decreasing Idaho’s share of federal transportation dollars.
  • Gas mileage:
    • We have seen a significant increase in fuel economy in the past 20 years, and the trend is for even more hybrid, electric vehicles, and fuel efficient cars. While that is a good thing for the environment, it means that people are purchasing less fuel - therefore paying less in fuel tax - while still using the roads. Funding based on fuel tax is not a sustainable funding source for the future.

What are our options and what do they mean to me? Infographic explaining that just two dollars per day per household would raise enough money to eliminate the transportation funding shortfall in Ada and Canyon Counties

While $235 million per year sounds like a lot, if we all contribute our share, it is only $1 per person, per day. That’s less than a latte!

Many options exist to increase our transportation funding, including the option to do nothing. Below is a brief list of options.

Increase state fuel tax rate:

  • However, this is a flat rate, so will not increase as costs increase. If the fuel tax were to be increased an additional 1¢ per gallon per year, it would generate an additional $9 million per year, over the previous year.
  • Idaho state fuel taxes cannot be used for public transportation, so increases to the fuel tax rate only address a portion of the transportation funding issue.

Increase federal transportation funding:

  • Federal fuel taxes do not generate enough revenue to support the federal Highway Trust Fund.  While there is general agreement on the problem, there is little agreement on a solution. An increase in the federal fuel tax rate has been discussed, but received very little support. Other options are being discussed, including changes to the federal tax code. In the meantime, short-term infusions of money from the federal general fund have kept the Highway Trust Fund solvent. Watch COMPASS social media and follow links to transportation funding in the news for ongoing updates.  

Increase state vehicle registration fees:

  • State registration fees provide about 30% of the state's Highway Distribution Account funds and are used for roadway construction and maintenance. All drivers (including owners of hybrid and electric vehicles) contribute to the transportation fund via registration fees.
  • The 2015 Idaho Legislature increased registration fees by $21 per year for most vehicles. In addition, owners of plug in hybrid vehicles pay an annual fee of $75 and owners of electric vehicles pay an annual fee of $140.
  • The 2015 legislation that increased the fuel tax and registration fees also stipulated that by January 2019 an additional registration fee will be added to all commercial vehicles.
  • Idaho state registration fees cannot be used for public transportation, so increases only address a portion of the transportation funding issue.

Institute a local option sales tax:

  • Local option sales tax is a tool that allows a taxing district, such as a county or city, to present a local sales tax proposal, along with a description of the project the revenue would be used for, to the voters. The voters then decide if they wanted to tax themselves for that project. If the proposal passes, the tax is instituted and the project proceeds. If the proposal fails, no new tax is instituted and the project does not proceed – or at least goes back to the drawing board.
  • Outside of a few resort communities, this tool is not available in Idaho. Legislative action is needed to provide local entities with the authority to use local option sales tax.
  • This tool has the potential to provide flexibility to be used for all types of transportation (and other) community infrastructure projects, meaning it could be used to fund public transportation, unlike fuel tax and registration fees.
  • If this tool were to become available, the amount of funding it could generate would be dependent on the community’s wishes, as well as many other variables. However, as an example, a 1% local option sales tax (raising the current sales tax from 6% to 7%) enacted in both Ada and Canyon Counties combined would generate about $54.8 million per year.

Institute a tax on vehicle miles traveled:

  • A vehicle miles traveled tax, or road usage tax, charges drivers based on the number of miles driven, instead of the amount of fuel purchased. As vehicles become more fuel efficient, the amount of transportation funding generated through fuel taxes is decreasing. This type of tax would shift the tax away from the amount of fuel purchased to the number of miles driven, thus tying the amount of tax to actual use and stabilizing the funding mechanism. Oregon is the first state to institute a road usage tax. Learn more online here and at the COMPASS education series presentations on Oregon’s road usage tax on September 24 and 25, 2015.

COMPASS response: Tolls: The decision to institute a toll on I-84 falls upon the Idaho State Legislature. Idaho Code grants the state legislature toll road authority, but no tolls currently exist in the state. For more information, please see the answer we provided to a similar question about tolling above.

Tobacco tax: Idaho law outlines how revenue from the cigarette tax will be distributed through fiscal year 2019, and provides another distribution formula to take effect after that. Currently, the total revenue is split among nine state funds, two of which help pay for transportation.

  1. Each year, $4.7 million from the cigarette tax is directed to the GARVEE Debt Service Fund. The GARVEE program invested $857.6 million in 59 road and bridge improvements from 2006 to 2015 through bonds that need to be repaid.
  2. After the first eight state funds have received their distributions, any remaining cigarette tax revenue is directed to the State Highway Distribution Account.

After 2019, the GARVEE Debt Service Fund and the State Highway Distribution Account will be removed from the cigarette tax distribution formula. Further legislation can again redirect revenue to new funds under a new distribution formula.

Alcohol tax: Idaho law outlines how revenue from beer and wine taxes are distributed. Currently, the majority of the revenue collected is directed to related substance abuse treatment programs and other funds; however, after these funds have received their distributions, the remaining beer and wine tax revenue is directed to the General Fund.

Any decision to increase tobacco or alcohol taxes, or to change the distribution formulas for these taxes, must be made by the Idaho Legislature.