Unboxing Transportation Lockboxes at the Ballot Box
September 4, 2018
As Eno continues its examination of transportation at the ballot box during the 2018 midterm elections, we find that measures to raise revenue are not the only ones attracting attention this year. Lockbox amendments—that dedicate certain revenues to transportation uses—are once again on the ballot.
This November, Connecticut voters will consider the Transportation Revenue Lockbox Amendment that would constitutionally prohibit lawmakers from using the state transportation fund for anything other than transportation purposes. Currently, the state’s Special Transportation Fund receives all revenues from fuel taxes, motor carrier taxes, petroleum products gross earning tax, motor vehicle fees, fines, and a portion of the state sales tax. The lockbox would reserve those revenues only for transportation purposes, including transportation-related debt. In theory, this would ensure that transportation spending has consistent revenue to enable long-term investment, and voters are more likely to support fuel tax increases if they know that those taxes would go only to the transportation system.
Connecticut is hardly the only state with a lockbox. In fact, Alaska is the only state to not have statutory or constitutional restrictions on transportation revenue diversion. Since 2010, California, Maryland, Wisconsin, New Jersey, Illinois, and Louisiana voters have all amended their constitutions through ballot measures to enable transportation lockboxes. What’s more, these lockboxes are getting tighter: a lockbox measure is back on the Louisiana ballot in November, this time to exclude funding for the state police (originally included for their traffic control duties) from the Transportation Trust Fund. Virginia’s legislature considered a lockbox constitutional amendment, but ultimately did not send it to voters.
The constitutional amendment nature of lockboxes is an important part of the policy mechanism. At the federal level, the Highway Trust Fund is theoretically a lockbox because transportation revenues such as national fuel taxes are dedicated to transportation programs. But because it is not explicitly ratified in the federal Constitution, Congress could decide to dismantle the Trust Fund and use fuel tax revenues for another purpose. The recent trend at the state level has been to replace or reinforce statutory prohibitions with constitutional amendments, which makes it all but impossible for future legislatures to divert transportation revenues to general spending needs. According to the 2016 American Association of State Highway and Transportation Officials’ 50-State Review of State Legislatures and Departments of Transportation report, 31 states have constitutionally protected lockboxes and 20 states follow such statute (Arkansas, Kansas, and Maryland have both a constitutional and a statutory protection).
Not all lockboxes are created equal. While most dedicate revenues from transportation-related taxes, some include non-transportation sources such as the proposed fraction of the state sales tax in Connecticut. Twenty-one states dedicate revenues to transportation broadly (such as Rhode Island, Nebraska, Florida, and California), while 27 restrict spending only to highways (such as Arizona, Iowa, and Maine). Some, like Louisiana, restrict revenue from paying state transportation department employee wages and benefits or other administrative costs. Others include exceptions beyond transportation such as in Texas where 75 percent of fuel taxes are for roads and bridges, while the remaining 25 percent is dedicated for education.
State lockboxes tend only to be for transportation. Few other sectors have dedicated funds enshrined in state constitutions. Texas and Ohio for example, have education lockboxes filled by gambling or lottery revenues. But while transportation advocates typically support lockboxes, education proponents often oppose them, citing the lockbox as a ceiling rather than a floor for education spending.
Groups like the American Road and Transportation Builders Association advocate for the proliferation of lockboxes, arguing that they help pass fuel tax increases by demonstrating to the public that the increased taxes will be committed to transportation users’ needs. Indeed, citizens have supported past measures, passing constitutional amendments by an average of 68 percent since 2010.
Yet lockboxes, especially of the constitutional amendment variety, also come with risks. While they ensure that transportation revenues won’t suddenly get cut, they tie transportation to fuel taxes, which inflation or increased fuel economy can erode away. California has a constitutional lockbox and voted to reinforce it through the successful state ballot Proposition 69 this June. However, it could be undermined if citizens vote to repeal a recent increase in the gas tax.
In today’s modern era where multimodal or technological solutions might be the best way to improve transportation, states need as much agility as possible. Constitutional lockbox amendments are binding and very difficult to overturn procedurally. With the dramatic changes in transportation in recent years, the system of the future may actually require more flexibility, not less.