Gov. Janet Mills, surrounded by bipartisan lawmakers, signs a new state highway budget Friday. The budget sets up a new long-term revenue stream to pay for road and bridge work. Photo provided by the governor’s office

Gov. Janet Mills signed into law a new highway budget Friday, averting a partial state government shutdown and establishing a new funding stream to maintain the state’s roadways and bridges.

Lawmakers from both parties unanimously approved a deal to use tax revenue from motor vehicles sales to support the highway fund, which exists outside the state budget and has historically relied on tax revenues from fuel sales. Growing use of electric vehicles, among other factors, made the highway fund insolvent, requiring cash infusions to pay for highway maintenance and operations of the state’s Department of Transportation.

Had both parties not agreed to the plan, the department would have been forced to shut down some operations and highway projects beginning July 1.

“This compromise agreement builds on my administration’s record investment in Maine’s roads and bridges and advances our work to reduce borrowing, create a sustainable, long-term source of funding for infrastructure repair, and unlock nearly a billion dollars in matching Federal funding,” said Governor Janet Mills. “This bill is good policy, it’s fiscally responsible, and Maine people will benefit from it. I applaud the Legislature for their work.”

Mills signed the budget during a ceremony surrounded by lawmakers from both parties.

“The need for sustainable, dedicated revenue for MaineDOT’s capital program has been a persistent challenge for decades, making long-term planning very challenging,” said Department of Transportation Commissioner Bruce Van Note. “This budget makes a huge stride toward fiscal sustainability for the Highway Fund.”

The new law dedicates to the highway fund 40 percent of the 5.5% sales tax on vehicle purchases and the 5.5% sales and use taxes collected by the Bureau of Motor Vehicles. It is expected to generate more than $100 million for infrastructure repair each year.

Passage of the budget will allow the Department of Transportation to implement its three-year work plan, which includes 302 bridge projects, 3,000 miles of paving, 271 miles of highway construction and rehabilitation, and 264 other highway safety and improvement projects.