Our spending proposal is an integral part of the overall recommendations and we would not support the fuel tax increases without the following spending program priorities and funds being tie-barred to any legislation increasing the fuel taxes. This proposal calls for three key changes in policy. The first change would involve dedicating the incremental revenue raised above to three specific purposes, rather than placing it all in the existing formulas. The second policy change will relate to focusing a good deal of the incremental revenue to a new high priority, economic development network of state/county/city roads. The third policy change will involve creation of three distinct sub-funds that some of the above tax increase revenues would be deposited into.

Perhaps the most important part of our proposal involves the way in which we propose the base fuel tax and registration fee enhancements be spent in the future. The current formulas would distribute these new monies between state, county and municipal roads, and by geographic area of the state. The formulas do not take into account more recent changes in growth patterns and economic activity. In order to maximize the economic development benefit of these expenditures, it is critical to channel the new monies into the roads most needing the investment, where VMT, average daily traffic, road condition improvement requirements and economic need are greatest. In order to accomplish this objective, and to provide some funding growth for basic preservation and maintenance needs, we propose dividing the new monies into three key categories.

First, 1 cent of the gasoline tax increase and all registration fee revenue enhancements, or $146.5 million per year before indexing, should go into a fund for distribution using the existing jurisdictional and geographic formulas. This money will help with preservation and maintenance of the current system. Another 4 cents of gasoline tax and all the diesel tax, worth some $291 million per year, should go into a fund for distribution only to a new high priority economic development highway network. The third category of money would include the final 1 cent of the gasoline tax increase and would result in some $48.5 million per year being put into three incentive match funds. These match funds would be designed to incentivize and encourage consolidation/cost savings, local private funding and local public funding. The programs related to the high priority network and the three match funds are described more fully in the following section on spending program details.