Local Benefits from Increase in Motor Fuel Tax

BUREAU OF LOCAL ROADS & STREETS
Illinois Department of Transportation

On June 30, 1989 Governor Thompson signed into law House Bill 714 which increases the motor fuel tax by 6¢ per gallon. Three cents per gallon will be effective on August 1, 1989, and the remaining 3¢ will become effective on January 1, 1990.

This increase in the motor fuel tax will provide a substantial boost in local revenue bases for highway and street purposes. Revenues allocated to local governments will be increased at the same percentage that state highway revenues are increased, an expected 22 percent revenue growth. The increase will amount to $410 million over five years for local units of government. Local governments will receive an annual average of $458 million in direct assistance over the FY 1990-94 time period.

From the Department's share of increased highway revenues, $115 million over five years, will be made available to target specific local highway problems. After these special programs are considered, collectively local governments will receive 32 percent of the increase in revenues, while they only receive 25 percent of state highway revenues now.

$2 million per year will be targeted to provide additional assistance to needy counties; that is, those that are levying the maximum rate possible without referendum and still do not meet a minimum level of assistance per mile. This program will provide additional aid to 39 (44 identified as needy, with 5 currently ineligible) counties, and will be continuous beyond the five-year period with the program size adjusted annually commencing in fiscal 1995 by the amount of state funding available for construction. For those counties that have had their levies rolled back by referendum prior to July 1, 1989, up to a half share of the $75,000 per year maximum will be available.

$2.4 million annually will be provided for five years targeted to assist those counties that have had decreases in their local assessed valuation. This program element will aid 47 counties. Eligible counties will share equally; however, the maximum any county could receive per year under this program is $42,000, less the amount received under the Needy County program.

$5 million per year will be made available to assist 619 needy townships, bringing them to a minimum per mile level of assistance approximating $1,180 (including MFT). This program is also available to units levying the maximum without referendum, and those that have been rolled back by local referendum are eligible for a half share. After FY 1994, this program will continue but be adjusted annually by the amount of state funding available for construction.

$2 million per year for five years will be allocated to assist counties plagued by above-normal congestion. Any county experiencing more than a 38 percent increase in vehicle registration fees above the state average over the 1982 to 1988 period is eligible. Funds are allocated to qualifying counties based on vehicle registration; nine counties qualify.

$2 million per year for five years will be available to assist cities over 5,000 population experiencing above normal population growth. Any city having an increase in population greater than 5 percent from 1980 to April 1, 1989, will share in this program, which will aid 63 cities. Funding is allocated according to population.

It is anticipated that the designated recipients of funding from the above five additional assistance programs will receive their share in one-payment-per-program-per-year increments. Hopefully, the first annual allotments will be made within 60 to 90 days from the date the Fiscal Year 1990 Appropriation Bill is signed. Also, it is likely that State directives will require that the allotments be deposited directly into the recipient's Motor Fuel Tax (MFT) account. Accordingly, expenditures and audits would be performed under the same rules as regular MFT.

$5 million (discretionary) per year for five years will be made available to all units of local government to assist in local highway improvements on locally designated truck routes to increase the legal limit to 80,000 pounds. The state would provide up to $20,000 per lane

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mile for such improvements, up to 50 percent of the cost of the entire project. This program element is designed to help pay for the differential cost in upgrading these highways to meet additional weight and geometric requirements.

$3 million (discretionary) annually will be provided for traffic signal computerization in urban areas. Costs of signal improvements are normally shared by jurisdictional responsibility of the legs of the intersection. The Department will fund up to $3 million per year in previous local funding responsibility in order to interconnect state highway corridor signals.

$1.6 million (discretionary) will be provided annually for five years to local agencies on a 50 percent matching basis to improve highway access for economic development as a replacement for the Build Illinois program for the attraction of new industry.

The combination of direct state assistance and assistance directed to specific problem areas will average $499.2 million annually for the FY 1990-94 time period. This is an increase of 38 percent over the FY 1989 level. •

August 1989 / Illinois Municipal Review / Page 25