A Permanent Transportation Funding Solution for Louisiana?

The Advocate reports that Louisiana lawmakers are moving towards an agreement that would provide a permanent, ongoing source of funding for additional transportation spending, rather than a one-shot injection of surplus revenues. The main source of this ongoing revenue: the state's sales tax revenue from car and truck sales. This year, the yield from this part of the sales tax base is pegged at $382 million.

So what's smart about this idea? Its main virtue is that it's matching a growing spending area (transportation) with a growing funding source-- the sales tax. Sales taxes are based on the value of the thing sold, so as prices go up with inflation, the sales tax paid on cars will go up too. By contrast, the gasoline taxes that states most typically use to fund roads are (usually) levied on a per-cent basis, which means that they don't grow so fast. A 20-cent tax on a gallon of gas will bring in the same amount, in nominal terms, five years from now as it does today.

Of course, the flip side is that if this bill passes, revenue that is currently designated for general-fund spending won't be there anymore. So this bill is robbing from Peter to pay Paul. To the extent that Louisiana lawmakers are still wondering whether their budget surpluses are "sustainable" in that they'll still be around 3 or 5 years from now, this "moving things around" approach to funding transportation leaves something to be desired.