Senate Transportation weighs phased return of purchase‑and‑use tax revenue to the transportation fund

The committee discussed several proposals to reallocate purchase‑and‑use tax revenue to the transportation fund.

Staff described two main transition models: a faster five‑year glide path that would return all purchase‑and‑use tax revenue to transportation within five years, and a slower six‑year option that phases in the change more gradually. Both options include interim backfill mechanisms so the education fund does not immediately lose its current receipts; one House proposal discussed earlier would backfill education with meals‑and‑rooms tax revenue. A separate option presented would provide a one‑time $10 million transfer from the general fund to transportation in the coming fiscal year, followed by phased purchase‑and‑use reallocation beginning in FY28.

Committee members pressed staff for clearer visualizations showing year‑by‑year dollars flowing to the education fund under current law and under each alternative. Several members expressed concern that purchase‑and‑use revenues can be volatile and dependent on consumer purchasing patterns, and asked staff to include sensitivity scenarios (for example, recession effects) in their modeling.

Members asked the Agency of Transportation to prepare two budget scenarios — with and without the purchase‑and‑use reallocation — and to provide a chart that shows how much the education fund would receive under each option. Staff will also provide tables that translate draft statutory language into annual dollar flows so members can compare options side‑by‑side.

The committee did not adopt a final approach at this meeting. Staff will add the longer glide path and charts to the working draft for further committee consideration and will coordinate with finance staff and other committees on education‑fund backfill options.