Lottery revenue earmarked for maintenance on state highways would be diverted to local road and bridge needs under legislation pending in the Mississippi Senate.

The legislation would undo one of the primary commitments made by the Legislature in a 2018 special session designed to address a deteriorating state transportation system.

During that special session, lawmakers adopted the state lottery and decided the first $80 million in annual lottery revenue would be earmarked for the Mississippi Department of Transportation. At the time, a Mississippi Economic Council study concluded the Department of Transportation needed an additional $300 million annually for state highway maintenance, repairs and construction projects.

The legislation would divert any lottery revenue in excess of $80 million to public education.

Central District Transportation Commissioner Willie Simmons said the legislation pending in the Senate, if passed, “removes from MDOT $80 million in critically important funding and the first new, sustainable revenue source for our state-owned highways since 1987.”

“Without question, this would have a marked negative impact on our mission to deliver an efficient and reliable state transportation system,” Simmons said.

Simmons, a Democrat, was serving in the Senate as Transportation Committee chair when the 2018 special session was held.

In that special session, lawmakers made various other changes to the state’s taxing structure to ensure additional funds for infrastructure needs.

Perhaps the most significant change besides the lottery was a diversion of 35% of the revenue from the state’s use tax (a 7% tax on retail items purchased out of state, such as via the internet) to local governments. When the diversion is fully phased in, it is estimated it will create $120 million annually for city and county transportation needs.

In addition, the Legislature in the 2018 special session created the Emergency Road and Bridge Repair Fund, with $250 million in revenue from the sale of bonds. The three-member Transportation Commission, with advice from a special board created by Legislature, awarded $213 million for local projects and $37 million for projects on the state system. There were about $1 billion in requested projects made of the Emergency Road and Bridge Repair Fund.

Legislation authored by Sen. Melanie Sojourner, R-Natchez, would divert the annual lottery revenue from the Department of Transportation to provide additional funds for the Emergency Road and Bridge Repair Fund. Sojourner said the local governments need the additional funds more than the state agency.

“The last national audit of state highways shows that Mississippi state funded highways actually rank eighth in the nation,” Sojourner said. “However, when you look at locally funded roads and bridges, we have some of the worst in the nation. The only way to truly address this is by designating a steady stream of reoccurring funds to these local infrastructure project.

“The lottery fund is new money just created by our state a few years ago and is a great source of revenue to help us address this critical need in cities and counties across our state.”

She said it also is a way to generate the revenue for the cities and counties without raising any other taxes.

While praising the Emergency Road and Bridge Repair Fund, Scott Waller, chief executive officer of the Mississippi Economy Council, said the lottery revenue does not need to be diverted from the state highway system.

“I thought the Emergency Road and Bridge Repair Fund was a tremendous success,” said Waller, who served on the board that advised the Transportation Commission on the awarding of the projects. “The accountability put in place with the commission (advisory board) helped everybody understand the plan and where the money was going.

“… However, I do not think the diversion from the Department of Transportation is the best approach.”

Waller said the MEC study found that the needs for the state system were about three times those for local roads and bridges.

Simmons and others point out that before the August 2018 special session, the Department of Transportation had not received a new source of revenue since 1987, when the 18.4-cent-per gallon motor fuel tax was enacted. Revenue from the motor fuel tax has been static at best in recent years thanks in large part to increased fuel efficiency in vehicles at the same time the costs of supplies for road maintenance and construction, such as the cost of asphalt, have increased by an estimated 400%.

According to data from the Department of Transportation, the $80 million in lottery revenue was used in fiscal year 2020 to pave 280 miles of state highways that had not received maintenance in 30 years. During the next seven years, it is estimated that 2,000 miles will be paved with the lottery revenue in primarily rural areas of the state that do not qualify for federal funding.

During the 2018 special session, revenue from casino sports betting and from a new tax on hybrid cars also were earmarked for the Department of Transportation. In fiscal year 2020, those funds generated less than $5 million combined.

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