This week’s Courier Herald column:
The Carl Vinson Institute of The University of Georgia held it’s Biennial program last week in Athens. Officially, it’s where new legislators are trained. Unofficially, it’s the last official/semi-public gathering of legislators before they too try to take a short break to spend time with family and friends. As such, it’s the last preview of what we’re likely to see in the upcoming session before the new year.
Much of the buzz in Athens was on transportation. Specifically, questions remain how we are going to continue to fund transportation in the wake of cars increasing fuel economy while gas taxes decline. Most of the headlines coming from Athens last week focused on the likely proposal for tax increases of some sort.
As someone who has been working on this issue for the past year in my role as Executive Director of PolicyBEST, I’ll go ahead and say that’s very likely. But what the headlines also didn’t capture was why this discussion is quite necessary.
The Georgia Department of Transportation is funded at the state level primarily by gas taxes. These funds are segregated from the general budget by Georgia’s Constitution, and are intended as a “user fee”. They may only be used for the construction and maintenance of roads and bridges.
The problem is, despite high gas prices over the past few years, revenues haven’t kept up with demand. From 2007 to 2013, the average car on the road increased fuel efficiency by 25%. That’s great news for America’s quest to become energy independent. That’s horrible news for a department that receives a majority of its state funding from a taxes on gasoline.
The problem is about to be compounded by the free fall in oil prices. GDOT’s already strained budget will likely see a $200 Million shortfall based on the price of oil last week. Some experts see the possibility of $40/barrel oil in the very near future, at least for a short while. CNBC last week had a story titled “Is $50 oil the new $100 oil?” If it is, that’s likely another $100 Million loss to GDOT under the current tax structure. That would be a 30% decline in state revenues in just one year.
Most conservatives are often happy when tax revenues go down, as it’s an opportunity to squeeze the fat out of a bloated system. The problem is, GDOT has been doing that for quite a while already. GDOT had almost 6,000 employees in 2002. By 2013, they had just over 4,000.
Some of this has necessitated increasing tasks to be outsourced, but much of the cuts have also had to do with increasing the time that maintenance is performed on most roads and bridges. Roads are generally designed to be resurfaced every 7 to 15 years. GDOT is currently resurfacing about 2% of our state roads per year, with 1% projected for next year. This means we’re effectively on a 50 to 100 year maintenance cycle. That, simply, is unsustainable. Roads after the 15 year period will likely have to be completely resurfaced (i.e, dug up and replaced). That’s a lot more expensive because we’re essentially deferring required maintenance permanently.
GDOT estimates the maintenance backlog for roads and bridges only to be $597 Million per year for ten years to restore the normal schedule. Other system requirements and the fall in gas prices may push that number closer to $900 Million before we even get to talking about new projects.
Let’s repeat that in case you missed it. GDOT needs another $600 to $900 Million dollars per year for the next decade just to maintain all of our transportation infrastructure that “we’ve already paid for”.
GDOT also has a statewide priority list, with the “essential” projects having a price tag of roughly $15 Billion. This includes $6 Billion for Georgia’s rural highways and various interstate expansion/redesign projects throughout the state. Again, assuming the essential tasks are done over a decade, that’s another $1.5 Billion per year.
Between maintenance and the essential new construction projects, the tab is already at a need of an additional $2.4 Billion. Per year. Every year. This amount does not include the long term project list that remains unfunded. To accomplish all of this over the next twenty years, GDOT would need almost $5 billion per year.
The needs are stark, but they are real. Legislators at the Biennial gathering weren’t discussing whether or not to do something. There is frank and direct discussion and debate as how best to tackle this problem.
Moving some revenues from the existing budget will likely be the first start. There are solutions from existing revenue streams that make a good dent in the amount needed. The fact that revenues are growing year over year as Georgia’s economy improves may aid in some of the balancing of what is available versus what is needed.
But, that will not likely be enough. The legislators in Athens seemed to have begun to accept this fact. They’re hoping the voters will quickly understand the need as well, as consensus for a real solution will require it.