Transportation Funding Adjustments

Contingent upon voter approval at the November 2026 general election of a proposed initiative to amend the state constitution to change existing law on transportation funding and to increase the amount of state revenue dedicated to road transportation (proposed initiative), from January 1, 2027, through July 1, 2030, the act reduces:The excise tax on gasoline from $0.22 per gallon to $0.14 per gallon;The excise tax on special fuel from $0.205 per gallon to $0.13 per gallon; Certain vehicle registration fees, including late fees; andThe road usage fees from $0.06 per gallon to $0.04 per gallon and then, beginning in state fiscal year 2027-28, as necessary to offset the amount of state revenue diverted to transportation uses as the result of the proposed initiative.     The act creates the support road transportation fund (fund) contingent upon voter approval of the proposed initiative. The fund consists of state revenue dedicated to road transportation by the proposed initiative. Money in the fund is used to replace certain transportation-related general fund transfers for payments for the financed purchase of assets or certificate of participation agreements, and to replace certain general fund transfers to the state highway fund. The money remaining in the fund after making these transfers is allocated as follows:60% is paid to the state highway fund;23% is paid to counties for certain transportation expenses; and17% is paid to cities and incorporated towns for certain transportation expenses.     The act clarifies that state revenue collected to support road transportation, as defined in the proposed initiative, does not include enterprise fee revenue.     The act creates the road enterprise to complete preventive maintenance, repair, rehabilitation, and reconstruction projects to improve the condition of the roadway surface of the state highway system. The road enterprise is authorized to impose fees for oversize and overweight vehicles and longer vehicle combinations. The creation of the road enterprise is not contingent upon voter approval of the proposed initiative.     Contingent upon the proposed initiative being withdrawn or not submitted for the November 2026 general election, the act creates the transportation funding working group to evaluate and make recommendations to the general assembly, the transportation commission, and the governor concerning funding state and local surface transportation maintenance, repair, capacity, and safety.     Lastly, the act reduces the July 1, 2026, transfer from the general fund to the state highway fund from approximately $50 million to $500,000.(Note: This summary applies to this bill as enacted.)