Delay makes Fed highway funds iffy
By Keith Golden
(As told to the AJC Editorial Board on May 8) Right now the challenge in Washington is to come up with a transportation bill. But the immediate challenge is that the Federal Highway Trust fund itself — the 18.4 cents (per gallon federal tax) that you pay at the pump and goes to Washington — as well as the dollars that they subsidize it with, which is general fund money that’s been propping up the trust fund, is set to go dry sometime between July and August. (Congress) didn’t put enough money in the (current) two-year transportation bill to get us through that.
Starting Oct. 1 (start of the new federal fiscal year) we need a new transportation bill, and there’s really been no substantial movement in Congress to give clarity on what that’s going to look like, how they’re going to fund it, what those funds might be, and what we (should) expect as a state.
The challenge for us moving forward, because we’re so dependent on federal dollars, is that we don’t know what the program will look like, therefore I can’t let construction projects.
How our state budget rolls into that is a key component. In the state fiscal year, we go to June 30. The federal fiscal year starts Oct. 1. But they appropriate or allocate our dollars to us throughout the year. Our goal in Georgia has always been to use those federal dollars during the state budget year. We obligate all the federal funds that come to us generally early in the state year and use up our state matching funds, so we can budget wisely. One of the things that does is, it allows you to compete for additional funding that (other states) don’t use; that’s called redistribution. And Georgia has been able to take advantage of it over the years. We always want to position ourselves to do that.
In a traditional year — during July, August and September — Georgia would take the state motor-fuel dollars that we receive from the legislature, and we would do what’s called “advance construct.” We would get permission from the federal government to use 100 percent state motor-fuel dollars and fund that project. Then, when October rolls around, we would be able to convert it to a federal project and get our money back and start building against the federal portion.
This year, we just don’t know that that’s even going to be there, or going to be a possibility. (In a letter from U.S. Transportation Secretary Anthony Foxx) they’re telling us that they are going to start slowing down existing payments, as well as maybe even delaying those to some extent, or maybe giving (us) less money back than (we) were supposed to be getting.
Right now, starting around July of this year, the trust fund will be empty, and the federal government is saying that without a new bill or any kind of funding levels they really won’t be able to authorize or appropriate any federal dollars. We will go through the motions and say they owe us the money. They just won’t be able to guarantee that they can pay us back. And in a state like Georgia where we can’t go into debt, we’re having to do a risk-management on our cash flow today.
Around July 1, we’re going to stop our federal authorizations and wait to see what Congress does. We’re confident that they will do something, we just don’t know what that something will look like, or how they will fund it.
This is not something our governor has caused. This is not something our state legislature has caused. It’s not something my state transportation board has caused. This is basically Washington not knowing how it’s going to move forward with how they fund the transportation bill.
It’s a huge impact to our state. Summer is usually your major construction season. You’re trying to get projects out and keep them going, and keep your highway contractors working. So it will have an impact to our workforce certainly in the short-term. We are going to have some big (construction) letting in … June, because that’s closing out old money. But there are states now that are shutting down active construction projects, because they are not going to be able to pay the contractors.
If this goes on for a prolonged time, maybe for six or seven months without a transportation bill, it could be a challenge for us. The reason we’re concerned is, everybody understands there’s a problem, (but) nobody’s got the solution.
Keith Golden is commissioner of the Georgia Department of Transportation.
State needs power to fix problems
By Benita M. Dodd
What’s a state to do when the federal surface transportation program heads toward its Sept. 1 expiration date with little promise of a new transportation bill and the Federal Highway Trust Fund’s expenditures outpace tax receipts about $1.25 billion a month?
The good news is nobody expects Congress to allow the program to lapse. Washington will slap on some Band-Aid legislation taking states into 2015 (hint: November elections) but the wounds of partisanship will continue to fester. What Georgia should not be doing is holding its breath. State transportation leaders should hold their noses instead; forge ahead with new and growing independence from the federal government.
Gov. Nathan Deal is doing so already, having approved the sale of bonds and using some fuel tax funds as a stopgap until federal funds become available when Congress takes action. But it’s a stopgap. Even accepting that a fuel tax increase is politically unfeasible, Georgia leaders’ opportunities are as wide open as the roads (not under construction) in the state.
The state will gain credibility with taxpayers and voters when it shows, first, that existing funds are being dedicated to transportation. This includes dedicating the “fourth penny” – the 25 percent of the 4 cents-per-gallon sales tax that currently goes into the state’s general treasury. It also includes enabling counties to divvy up a penny Special Purpose Local Option Sales Tax (SPLOST) – split an existing penny tax without needing to add a penny for transportation projects.
Second, prioritize user fees. Fuel efficiency and growth in hybrid and Alternative-Fuel Vehicles have shrunk gas tax revenues even as needs grow. Because fuel tax revenue in Georgia is dedicated to roads and bridges, the state loses revenue for such infrastructure when AFVs are not “paying at the pump.”
For some states, the solution is to adopt an indexed gas tax – a percentage based on price instead of a fixed cents-per-gallon. While helpful it, too, is a temporary fix. With shrinking revenues, it makes sense that Georgia target road users through increasing tolling and, eventually, implement an Oregon-type charge for vehicle-miles traveled.
Third, embrace private sector involvement. Georgia’s infrastructure investments need sufficient long term credit, not pay-as-you-go. Private investors can facilitate this. While public projects may not always be completely privately funded, the dollars and experience of private companies can expedite a project. Outsourcing services, including transit, and encouraging private investment not only reduces the taxpayer burden, it increases efficiency. The private sector prioritizes needs to get the best return on investment.
Finally, reduce the federal government’s role in state and local transportation policy so that domestic needs can be prioritized. Sound transportation policy is being diluted because planners are losing sight of the overriding principle that transportation solutions should solve transportation problems. Money from the feds comes back mired in earmarks and tangled in strings; state and local governments must tailor requests to accommodate the federal government.
Taking critical dollars away from the principle of getting people from Point A to Point B, these costly ideas include: transit-oriented development; live-work-play; “road diets,” “world-class city” ideas (such as light rail, streetscaping and streetcars); environmental policy, such as tougher fuel emissions regulations and CAFÉ standards; and energy policy – such as transportation grants funding solar panels on the canopy of bus stalls at MARTA’s Laredo Facility in Atlanta.
Georgia loses money and control when fuel taxes go first to Washington. It’s time the state that is the origin of the nation’s greatest do-it-yourself chain can adopt more of the same.
Benita M. Dodd is vice president at the Georgia Public Policy Foundation.