Taxes or Tolls? MoDOT funding crisis looms large
Missouri Department of Transportation administrators are using drastic language in redicting how the state highway system will operate when funding drops dramatically two years down the road.“We’re going to fall off a cliff,” said Bill McKenna, a former senator in the final days on the transportation commission.“A perfect storm continues to brew on the transportation horizon,” MoDOT Director Pete Rahn said in his State of Transportation address Wednesday. “Three major factors are stirring up gale force winds that are coming on like a freight train set to arrive in 2010.” Those factors are a 40 percent drop in federal funding for Missouri’s transportation needs, the end of funding from bonds approved in 2004, and sharply rising costs for material to maintain and build roads.State senators have introduced legislation for consideration this year that would counter the problem by either charging tolls for using I-70 or diverting a percentage of growth in state general revenue. And a senator who last year proposed raising the sales taxes by a penny to generate highway funds now aims to organize a petition drive to place a measure on the August 2009 ballot.When “the bottom drops out of Missouri’s transportation funding,” Rahn said, “we go from a $1.2 billion dollar construction program in 2005 to a $569 million dollar one—from the largest highway-building program in Missouri history to one where we will struggle to maintain roads. We will go from an improving highway system to one that is deteriorating.”
From Feast to Famine
After suffering through the dark times of the Missouri Highway and Transportation Commission, McKenna said MoDOT has turned around during the past four years. “I can hear much better things about MoDOT,” McKenna said, in contrast to headlines about insufficient funding, project delays, a spurt of deadly crashes and claims of mismanagement.
Since voters freed more funding for the agency in 2004 and the commission brought in Rahn from New Mexico as director that year:
• Improved conditions have dramatically slashed the accident rate and deaths on the state roads. Included were cables that prevented crossover deaths on interstates, more rumble strips, wider stripes and more readable signs.
• A “smooth roads” initiative improved surfaces on most of 2,200 miles of major highways. The achievement increased the share of state roads in “good condition” from less than half to three-quarters.
• Improvements to U.S. 60 from Springfield to the Mississippi River and U.S. 36 across northern Missouri have given those areas of the state four-lane highways that opened out-of-the-way stretches to modern transit.
• The highways and transportation department in December began the transformation of U.S. 40 into Interstate 64 through the hearts of St. Louis city and county without major traffic disruption in the state’s largest metropolitan area.
McKenna’s vision of the progress, though, has been marred by the looming funding crisis. For his part, Rahn said there is an $18 billion gap in the price of what the public has identified as transportation priorities and what the department can afford in the foreseeable future.
“While the public has filet mignon expectations, MoDOT has Filet O’ Fish funding,” Rahn said in his address to the General Assembly.
Amendment 3, the 2004 change for road building, had allotted all the state vehicle sales tax—adding $200 million a year—to the highway department, instead of just half, and required the agency to issue a $1.9 billion bond issue for new construction. The department essentially spends all that bonded construction money in two years.
Missouri anticipates that it will lose 35 to 40 percent of its federal highway aid in two years because Congress decided to spend the reserves from the highway trust fund faster than the federal gas tax generated revenues. With the state now receiving $895 million a year from the federal government, the shortfall could reach $350 million.
“The needs that directly impact our state’s economic competitiveness are not going away,” Rahn said. “Our two busiest interstates, I-70 and I-44, are overcrowded and that congestion is growing everyday. They also have been stretched beyond their limits. The $7 billion necessary to completely rebuild and expand them— with dedicated truck lanes to separate 18-wheelers from family sedans—is a monetary illusion as we stand today.”
What can Missouri do to avoid the coming highway crunch?
With such a time crunch before the state loses half its highway funding—and the need for a statewide vote before replacement monies are authorized—the 2008 session is startling because of the lack of headway on legislation to fill the gap.
Sen. Matt Bartle, a Lee’s Summit Republican, offered a constitutional amendment and legislation (SJR and SB 793) that would allow the department to charge tolls for using I-70 and rebuild it. The bill, however, limited the fee to $5, or far less than the tolls in other states. Pennsylvania, for example, will charge $25 for a car and $100 for a truck to travel the length of I-80, which the state plans to convert to tolls.
Even without that cap, tolls are unlikely to generate substantial funding for road construction because most Missouri highways serve sparsely populated areas. “Tolls work on very few routes in our state,” Rahn told the CBT. “Tolls are not the solution to all of our needs,” he said, although he held open the prospect of converting major interstates.
Of the 32,000 miles of state roads, 5,000 miles carry 80 percent of the state’s traffic.
Owners of trucking companies, convenience stores, gas stations and other businesses generally are opposed to tolls because of difficulties in getting on and off them, and many existing businesses likely would lose customers under any design. Missourians have tended to view highways as public investments they made – and they seldom want to pay, even if some leaders promote public-private partnerships.
Rep. Neal St. Onge, chair of the House Transportation Committee and co-chair of the Joint Committee on Transportation Oversight, said tolls could work on I-70 and I-44. But he added, “I don’t think Missourians are close to accepting tolls.”
Sen. John Loudon, a Ballwin Republican, received substantial attention when he filed a constitutional amendment (SJR 43) that would divert 10 percent of the growth in state general revenue to future highway needs.
Political figures involved in the issue indicated the Loudon proposal has numerous problems— principally its raid on general revenue, which largely provides much of the state’s investment in elementary, secondary and higher education, mental health and the state Medicaid program. The proposal would generate only $36 million in 2010 and supposedly grow to $1.3 billion by 2030 if inflation rose at levels higher than they are now.
“I see a lot of opposition from everybody, and I’m also afraid that if we did that, we would lead people to believe we had solved a problem,” St. Onge said. “The money generals do not feel it generates enough. It could create the illusion that we had produced enough money for transportation.”
The $8 billion interstate highway plan
Missing from the list of legislation filed this year are proposals from the chairmen of the two transportation committees, St. Onge and Sen. Bill Stouffer of Marshall, who busily pursued them in 2007.
St. Onge would have increased gas taxes by four cents, diesel taxes by six and the general state sales tax by a half cent, along with other vehicle fees, generating more than $700 million a year for mass transit, ports and mostly the reconstruction of I-70.
Stouffer, however, would have raised the sales tax by one cent until 2018—earning about $800 million a year for the state to rebuild and improve I-70 and I-44 as eight-lane interstates or a total of $8 billion, admittedly the largest tax increase in state history.
Neither piece of legislation advanced beyond committee, but during the interim, St. Onge and Stouffer continued working on the proposal. They eventually planned to organize an initiative petition drive to gain voter signatures and place the highway funding measure on the August 2008 ballot, when Missouri also had a primary election scheduled.
One figure stood in their way—Matt Blunt, who was still planning to run for re-election and would have faced potentially sticky questions on the ballot issue because of his no-tax-increase pledges on an issue heavily supported by some Republican allies. Later in 2007, the fellow Republican sent a message to legislators who were backing the plan.
Stouffer and, to a lesser extent, St. Onge still are enthused about building on the original concept and giving highways inroads into the sales taxes on general sales. “The sales tax is the easiest way, probably the only way to raise the dollars we need” for full funding of road needs, St. Onge said.
Stouffer, though, has given thought to marketing the proposal as an “economic development bill, a jobs bill” that would use the new distribution center for the country,” building on its central location, access to the Mississippi and Missouri rivers, and the presence of two major airports and major rail facilities in Kansas City and St. Louis.
Stouffer now aims to organize a petition drive to place a measure on the August 2009 ballot, although St. Onge has heard about the poor chances of winning off-year elections. But St. Onge knows that the virtual end of Missouri’s highway funding in 2010 makes an election next year timely. “We cannot afford to wait,” he said.
Stouffer said he expects his drive to take off after this November’s elections and for politically powerful groups to wait to announce their support then. He has no plans to attempt to take the plan through the legislative process to get it on the ballot.
Their approach once again would allow Missouri’s roads to consume some of the taxes that previously supported general social needs, but it does not divert revenue from schools, colleges and hospitals to roads.
Stouffer said he has talked to 60 or more groups about the campaign. “They all say, ‘why haven’t you done it yet?’” he said.
He also talked warmly about groups that have signed onto the objective—an improved economy and revitalized transportation system. None of the ones he mentioned would verify anything but interest in the plan.
The Missouri Chamber of Commerce and Industry wants to seriously study such a major improvement for the state’s roads, which handle 70 percent of the industrial and retail tonnage moved here. Trey Davis, the chamber’s vice president for governmental affairs, noted that it recently sponsored a conference that featured transportation issues only and featured Rahn, Stouffer and St. Onge as speakers, but the group had taken no formal position.
Associated Industries of Missouri so far is keeping at arms length on the issue, although it, too, has sponsored annual conferences on transportation because of the interest of both its manufacturing and retail members, said Gary Marble, the AIM president.
“Both groups realize there’s a real funding issue coming to Missouri,” St. Onge said. “I haven’t seen anybody jump up and down to raise taxes. You have to realize typically the chamber and Associated Industries are conservative groups, even Republican groups. And the Republican mantra has been no new taxes. But it’s going to take a tax increase.”
McKenna, a Democrat when he served in the Senate, said, “I would love to see both Democrats and Republican candidates for governors say, ‘We need to make this state move forward’ on transportation planning and projects.