States Find Road and Bridge Money Hard to Come By
South Dakota Transportation Secretary Darin Bergquist delivered grim news to lawmakers last summer: Money to fix and build roads was dwindling, and the situation was getting worse.
The state's main sources of money for road projects — taxes on gasoline and car sales — were both slipping. Meanwhile, the cost of actually building and maintaining the roads was going up, because prices were increasing on raw materials, from de-icing liquid to asphalt and concrete. What's worse, delaying fixes only made the repairs more expensive. Letting a road deteriorate from excellent condition to fair condition makes it three times as costly to fix.
Faced with those sobering facts, legislators studying the issue recommended raising $250 million for transportation over five years by increasing the state's gas tax, hiking vehicle registration fees and increasing the tax on vehicle sales. Republican state Representative Shantel Krebs, who headed the study committee, saw the proposal as a good investment. "I can't see, as a legislative leader, making my taxpayers pay more because we didn't have the political will to take care of it in the short term," she says.
But come spring, the plan fell flat. A Senate panel blocked it, because senators didn't want to raise taxes in the middle of a recession.
These are frustrating times to try to build roads, bridges and other transportation infrastructure, as the episode in South Dakota shows. But skittish state legislators are only a small part of the problem, eclipsed by the larger forces of the economic slowdown and congressional inaction.
The result is that, three years after a fatal bridge collapse in Minneapolis focused the public's attention on transportation infrastructure, states increasingly are trying just to keep up existing roads and bridges instead of building new ones or rebuilding old ones.
Desperately seeking funds
Only a few states this year came up with new money to spend on transportation projects.
In fact, says Jim Reed, a transportation expert at the National Conference of State Legislatures, no state this year has increased its gasoline tax, a traditional source of transportation money. Even last year, when states were already in the throes of the current budget crisis, just a handful hiked their gas taxes.
One of the most widely discussed ideas to bring in transportation dollars is to erect toll booths along state borders, in an effort to get out-of-state motorists to pay for the upkeep of interstate highways. Connecticut, New Hampshire and Pennsylvania all have considered the concept, but none has gone forward with it.
First-year Virginia Governor Bob McDonnell, though, fulfilled a campaign pledge by asking federal officials for permission to collect tolls from vehicles coming into Virginia from North Carolina along I-95, the interstate that runs from Maine to Florida. He says Virginia could bring in between $30 million and $60 million per year, allowing it to issue $1 billion of bonds to improve the highway. Recently, McDonnell said that he had talked to North Carolina Governor Bev Perdue about the proposal, and that her state is considering tolls along the Virginia border, too.
Rhode Island legislators are exploring a different tactic: Charging drivers for the number of miles they log rather than the amount of gasoline they buy. Last week, the Rhode Island Senate called for a study of the so-called "vehicle miles traveled tax," a concept that the state of Oregon also has explored.
Other states have been pondering a variety of ways to raise more money for transportation. In Georgia, residents in each of 12 regions will vote in two years on a one-cent sales tax hike for transportation. West Virginia legislators, meanwhile, are asking counties to take on a greater role in building roads, a task left largely to state government there since the Great Depression.
Kansas, recently cited for having the best roads in the country, approved an $8.2 billion transportation plan for the next decade, paid for with new bonding, a hike in vehicle fees and a share of a new state sales tax that takes effect in July. This year's transportation bill in Vermont is the largest in state history, with more than one-sixth of the $595 million package going toward bridge repair. The package uses federal stimulus money and revenues from a gas tax hike approved last year.
Stuck in federal limbo
Casting a pall over almost all transportation decisions in the states is uncertainty from Congress. Since the passage of the stimulus law last year, major transportation legislation has stalled in both chambers, mainly because there's no agreement on how to pay for it.
The most immediate concern for states is the status of the Highway Trust Fund, the pot of money that states use to carry out the federal government's road and mass-transit programs. States must put up a share of their own money to get the matching federal dollars.
Three times in the past two years, Congress has had to deposit more money into the trust fund account to keep it solvent. Simply put, the federal gas taxes and other revenue sources that go into the fund are not keeping up with expenses. Every time the trust fund comes close to going dry, state transportation agencies must deal with the prospect of not getting federal help for projects they have already started — no small worry since the federal government often pays 80 percent of the bills. This spring, Missouri delayed starting new projects for two months while a jobs creation bill, which included more money for the trust fund, languished in Washington.
Bergquist, South Dakota's transportation chief, says the short-term fixes make planning difficult. It's hard to tell local residents when a major project will be done without knowing when federal funding will arrive, he says. "And when you ultimately get your funding, it comes at the last minute, like it did last year. You haven't had time to plan. You can't necessarily use those funds on your highest priority because you're reacting."
Funding also is a major hurdle for renewing the federal government's massive multi-year surface transportation plan, which expired last September. Congress agreed to keep the old plan going temporarily while lawmakers try to strike a deal on a replacement. Initial versions of that next bill suggest Congress may link funding to how well projects meet certain goals. The specifics about what those goals are and how they're measured could significantly change the types of projects that the federal government approves. Highway advocates worry, for example, that a heavy emphasis on reducing greenhouse gases could stymie highway projects in favor of passenger rail.
Another wild card from Capitol Hill is the cap-and-trade bill to limit carbon dioxide emissions. A recently unveiled plan would tax petroleum products. But many transportation-related industries and advocates argue that not enough of the money would go toward transportation projects. They also worry that once a new tax is placed on oil-related products, it would be harder for Congress to raise the federal gas tax to replenish the Highway Trust Fund.
When Missouri transportation officials unveiled their five-year plan this spring, it was a marked departure from recent years. Money from road-construction bonds approved five years ago finally ran out, and additional help from the federal stimulus package will expire soon. The state's average budget for transportation projects will drop from $1.25 billion over the past five years to just $500 million in the next five. So Missouri's plan included no new construction projects.
The Missouri Department of Transportation is trying to reduce costs and cut its payroll, says Jorma Duran, an agency spokesperson. The cutbacks mean the agency won't be able to make major safety improvements to roads, or build more of them to relieve traffic congestion.
The situation in Missouri is typical. In fact, the federal stimulus package helped push many states toward focusing on simple maintenance. The influx of cash was designed to be spent quickly, and maintenance projects can be completed more quickly than major upgrades or brand-new construction. "The stimulus helped, but it was a drop in the bucket," says Sean Slone, a transportation analyst at the Council of State Governments.
Jay Hansen, of the National Asphalt Pavement Association, says state transportation departments have become very conservative in their planning because of uncertainty over congressional action and the end of the recession. Orders for asphalt have declined by 35 percent since the recession began, declining to levels not seen since the late 1980s. Orders have started to level out, but after the bulk of stimulus money is spent this summer, he says, "your guess is as good as mine."
In South Dakota, the shortage of funds means the Department of Transportation remains in "preservation mode," Bergquist says. He says the public won't notice anything immediate or drastic, but services will be scaled back. More ditches along highways will go unmowed and new construction will be put off.
But in the northeast corner of the state, which has been ravaged by floods for the past two years, the lack of funding could pose an even bigger problem for local governments. Hundreds of miles of roads once topped with asphalt are now "muck," Bergquist says, and the counties don't have money to rebuild them. The counties are patching the roads, sometimes with gravel, to make sure emergency crews can get through, but it will be years before the roads can be rebuilt.
Bergquist stresses that the pressures his department faces are similar to those confronted in state transportation agencies around the country. "We are trying to juggle a lot of balls that we're responsible for and keep them all in the air," he says. "At some point, one or more of those balls is going to have to drop. But we're not to that point yet."