Lawmakers work to increase WYDOT revenue in face of $400M shortfall

CHEYENNE — The Wyoming Department of Transportation faces a shortfall in revenue of around $400 million each year, and the state is digging through the couch to find ways to increase revenue with minimal consequences for commercial and residential drivers.

The combination of commercial drivers, cross-country travelers and extreme weather conditions means constant upkeep for Wyoming’s interstate highways. WYDOT is responsible for administering and distributing gasoline, diesel and alternative fuel taxes in the state, with a significant portion of these funds allocated toward the maintenance and repair of state highways.

The State Highway Fund eats up a majority of total revenue collected by WYDOT from diesel and gasoline taxes. Analysts predict a total revenue of $82.6 million will be collected in gasoline tax for the current 2024 fiscal year, along with $87.3 million in diesel tax, according to WYDOT officials.

The total estimated revenue distributed from these taxes toward the State Highway Fund is just under $104.2 million.

Conversation between members of the Joint Transportation, Highways and Military Affairs Committee and transportation officials highlighted the challenge of generating revenue to the highway fund without significantly raising costs for Wyoming taxpayers.

“It’s too big of a topic for us to not continue to think about,” said WYDOT Director Darin Westby. “This is a continuing problem.”

Finding pennies

An increase of one penny of fuel tax generates approximately $4 million for WYDOT. Gas fuel tax collections are funded 85% by Wyoming residents and 15% by nonresidents; for diesel tax, 38% is funded by Wyoming residents and 62% is funded by nonresidents.

Members of the Transportation Committee on Friday failed to advance two bills related to the amount of money collected by WYDOT.

Bill draft 270, or the diesel highway user and registration fees bill, was requested by committee co-Chairman Sen. Brian Boner, R-Douglas, at the end of the committee’s last meeting in late August. Boner said on Friday the goal was to create a “net-zero effect” for Wyoming taxpayers by increasing the diesel fuel tax by four cents and decreasing state vehicle registration fees.

“The idea is Wyoming residents pay registration fees, everybody pays fuel tax. Therefore, if we reduce registration fees, increase fuel tax, then we might see a net gain to WYDOT,” Boner said.

Sheila Foertsch, president and CEO of the Wyoming Trucking Association, said the organization opposed the bill.

“We don’t support a diesel- only bill. We don’t support a diversion of revenue currently going to the Department of Transportation highway fund,” Foertsch said.

Benford acknowledged that while the bill had “good intentions,” it did not provide enough revenue needed for highway maintenance. A bill that was harmless to Wyoming taxpayers did “not accomplish the ultimate goal of sustainable, consistent funding.”

A second bill draft proposed a $20 decrease in vehicle registration fees across the board, with a two-cent increase in the per-gallon fuel tax on gasoline, diesel and alternative fuels. Byrne told lawmakers that the current proposal would result in a negative revenue impact of $6 million.

To break even in terms of revenue with a $20 decrease in registration fees, it would require a fuel tax increase of four cents. A memorandum provided by WYDOT noted that 100% of registration fees were distributed to the State Highway Fund, while diesel fuel taxes were not.

“If you don’t impact registration and you increase fuel tax, then there’s not a loss,” said Dennis Byrne, chief financial officer for WYDOT. “So fuel tax is certainly one way to do it.”

Deteriorating highways, lack of state funding

Due to lack of funding from the state, officials said WYDOT is in “preservation mode,” focusing on preserving existing highways, roads and bridges, rather than building on or expanding them.

“We’re really just trying to maintain what we have,” Byrne said. “What’s ultimately happening is that we’re deferring maintenance. The roads over time will deteriorate, and they will probably deteriorate quite quickly, based on our engineers’ models.”

The “quick” deterioration of Wyoming’s highways, roads and bridges was echoed by Association of General Contractors of Wyoming Executive Director Dan Benford. The state currently uses pavement preservation “to stretch funding available for repairs and maintenance,” he said.

Pavement preservation is a method of applying low cost treatments to road segments that are already in good condition to prevent deterioration, according to the National Park Service.

“This is one of our best assets. Our roadway system is where commerce moves,” Benford said. “We’d love to find a solution that can help us maintain these roads for a lifetime.”

Higher inflation has impacted WYDOT’s budget, which has been “relatively flat,” said Jordan Young, a spokesperson for WYDOT, in an interview.

“As inflation has risen, that flat number has impacted us more because costs have gone up,” Young told the WTE.

Byrne suggested increasing taxes in other areas, such as the severance tax, federal mineral royalties or sales tax.

“Ultimately, it’s a policy decision for you folks to wrestle with,” Byrne told lawmakers.

While both bills died in the committee, Boner said there would be continued conversation during the budget session next year to find ways to “fill the gap.”

“Just because we don’t have the bill draft on this topic doesn’t mean the topic is over,” he said.