Eliminate Transportation Revenue Diversions

One way to increase revenue is to eliminate the diversion of transportation-derived revenue to nontransportation purposes. Many states use transportation revenues for other state programs.  For the 2003-04 Wisconsin budget, 25.6 percent of revenue to the transportation fund-$370 million-was provided for general fund programs.2 Initiative 51 in California in 2002, which failed, would have reallocated 30 percent of certain state revenues collected on motor vehicle sales or leases from the general fund to the Traffic Congestion Relief and Safe School Bus Trust Fund. The money would have been allocated for transportation programs, including highway expansion, specific freeway interchange improvements, mass transit improvements, bus purchase, and expansion of light and commuter rail.3 A Washington legislative committee studying financing alternatives recommended in 2004 that all transportation-related fees and charges be dedicated to transportation purposes. 4 It specifically referenced the sales tax on transportation construction labor and materials. As a first step, states may want to examine the issue of revenue diversion to see if it is viable to shift transportation-derived revenue sources for use solely on transportation purposes.