AUGUSTA – Maine’s highway fund is taking a major hit as people drive less, creating prospects that lawmakers will have to trim plans for road and bridge improvements, the co-chairman of the Transportation Committee said Thursday.
“We’re seeing very significant losses of revenue,” Democratic Sen. Dennis Damon said after the committee was told that highway fund revenues are $1.6 million under budget only two months into the fiscal year. “Right now, it’s a very cautionary red flag.”
Because fuel taxes are based on gas-pump purchases, the low figures reflect a pattern of less driving as gas prices have shot upward during the last couple of months. The figures, from the state fiscal office, cover a period before Hurricane Katrina’s effects ratcheted fuel prices even higher, which leaves prospects that revenues will continue to come in on the low side.
For July, the first month of fiscal 2006, fuel tax revenues were $670,823 below projections, and in August they fell $964,332 under budget. Maine’s tax is 25.9 cents per gallon for gasoline and 27 cents per gallon for diesel.
“The real eye-raising piece is that these trends start before the natural disasters” in the Gulf States had their own ripple effect on fuel prices, said Damon, referring to hurricanes Katrina and Rita. Damon said he expects the trend to continue when September figures come out.
With less money coming in, it’s “very conceivable” lawmakers will have to modify the state’s highway and bridge improvement program, which is already lagging behind schedule. “This would exacerbate that,” Damon said.
The lower revenues are part of a triple-whammy on highway financing, coming as oil-based paving materials and operating costs are rising, Damon said.
The figures also appear as the winter heating season approaches, raising a question as to whether rising heating oil prices will have a further impact on fuel tax revenues as Maine consumers, caught in a squeeze, reduce their motor fuel consumption even further.
“I think clearly that people are changing their habits,” said Maria Fuentes of the Maine Better Transportation Association, which represents highway users.
Gov. John Baldacci’s office has said that heating oil prices this year are nearly 60 percent higher than they were last winter, prompting a request for emergency federal funding for heating assistance.
Fuentes said it’s safe to assume, given the bleak revenue figures presented Thursday, that the highway and bridge improvement plan will face “major cuts.”
Some, but not all, of the loss can be made up by bonds, Fuentes said.
Question 2 on the Nov. 8 ballot proposes a $33.1 million bond issue for improvements to highways and bridges, airports, public transit improvements, ferries and other transportation facilities.
AP-ES-10-06-05 1313EDT
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