Economic Development News
Staring into the abyss of transportation funding
Published: Wednesday, March 26, 2014 10:00 am
By: Mark Mehmert
In 1913, the State Highway Department was created by the Missouri Legislature, because the legislature recognized how important transportation infrastructure is to our state's economic well-being. Seven short years later, a $60 million bond issue (more than $700 million in today's dollars) passed, with the stated goal to "Get Missouri out of the Mud" and established a state road system.
Missouri voters understood that a highway system requires maintenance, and Proposition 5 passed in 1924. The measure established a 2 cent per gallon gas tax, which inflation-adjusted for today would be 27 cents (today's state gas tax is 17 cents). The last state gas tax measure was approved by voters in 1992.
Today's Missouri Department of Transportation (MoDOT) maintains a network of over 33,000 miles of roadway, and is the nation's 7th largest highway transportation system. However, MoDOT's revenue per mile ranks 41st in the nation.
MoDOT is also responsible for over 10,000 bridges in the state system, and on average these bridges are approximately 46 years old. 213 of these bridges are classified as "major" bridges, and are over 1,000 feet long.
Overall, MoDOT has been an excellent steward of taxpayer dollars. In the past 10 years MoDOT has finished over 10,000 projects, which on average were delivered 4% under budget.
However, the situation is changing. On the expense side of the ledger, the costs of the raw materials used to build roads have substantially increased and have eroded purchasing power. Overall, MoDOT's purchasing power has decreased by more than 50% since 1992.
The income side of the ledger is also problematic. 70% of transportation revenue comes from state and federal fuel taxes. As cars become more fuel efficient, that means less revenue for transportation projects.
MoDOT's funding has declined from $1.3 billion in 2009 to $685 million in 2014. Even more disturbing is the fact that revenue is forecast to decline to $325 million in 2017--and a minimum of $545 million is needed to keep the system in its current condition. A funding level of $325 million will be the lowest it's been since 1992.
Soon, MoDOT will be unable to match federal funds. If that happens, Missouri taxpayers will be funding projects in other states which can match federal dollars.
MoDOT's Commission is well aware of just how important transportation is to economic development, and the stark reality of the situation. Due to declining revenue, they have suspended a cooperative funding program with local governmental entities and will not add any more projects to the Statewide Transportation Improvement Plan, commonly called the STIP.
"Transportation is an issue that touches everyone," Commission Chairman Joe Carmichael said. "Missourians have told us what they want, and it's more than what they have today. But the reality is that we will not be able to afford it. We'll continue to look to them for help in sharpening the vision for transportation in our state and finding ways to deal with our funding challenges."
The Missouri Legislature is working to address the issue via House Joint Resolution (HJR) 68, sponsored by Representative Dave Hinson (R-St. Clair), and Senate Joint Resolution (SJR) 48, sponsored by Senator Mike Kehoe (R-Jefferson City).
Each measure requires a vote of the people, and would ask Missourians to pay a penny more in sales tax for a 10-year period to fund transportation. 10% of the revenue (5% each) would be shared by cities and counties, also exclusively for transportation purposes.
Similar measures were approved by both Missouri legislative chambers last year by large margins, but the clock ran out on the proposals. So far, HJR 68 has been approved by the House Transportation Committee.
Last year's measures were endorsed by the Chamber's Transportation Committee and the Chamber Board of Directors. "We know that without sufficient funding for MoDOT, we won't be able to take care of our current transportation system--much less work on our priorities, such as a completely 4-lane Highway 50 statewide or much-needed improvements to Highway 63.", noted Chamber Transportation Committee chairman Todd Kempker. "We have supported getting this measure in front of voters."
As in the past, the projects funded would be decided with local transportation planning partners such as Regional Planning Commissions (RPCs) and Metropolitan Planning Organizations (MPOs). In our local area, this means MoDOT will work with both the Mid-Missouri and Meramec Regional Planning Commissions, as well as the Capital Area Metropolitan Planning Organization known as CAMPO.
Transportation infrastructure and Economic Development go hand in hand. Like our predecessors in 1920, we must commit to sufficiently investing in our transportation system if we want to grow our economy.