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Please note that all amounts are forecast in 2000 dollars,
so they are inflation adjusted. Actual dollar amounts would
be much greater.
http://www.indystar.com/articles/1/183401-4771-092.html
INDIANAPOLIS STAR - October 2, 2004
Tucked away on Page 134 of the state's official long-range transportation report is a sobering chart.
In nondescript black and white bars, the chart lays out a looming shortfall as the cost to build and repair roads is expected to almost double in the next decade to roughly $1.4 billion. The available money is predicted to remain steady at about $500 million a year.
Fed by rising costs and aging roads and highways, maintenance and expansion needs in Indiana -- including the upgrade of U.S. 31 between Indianapolis and South Bend and a new segment of I-69 are on pace to eclipse available revenue as soon as next year, the state projects.
The predicted gap between costs and revenues threatens the state at a time when Indiana faces swelling congestion and the natural decay of a highway network built under President Dwight Eisenhower in the 1950s.
What's more, the long-term estimates do not include the possible construction of a multibillion-dollar mass transit system in Central Indiana that is now under consideration. The transit project, likely to be paid for with a combination of federal, state and local dollars, has not received federal approval.
"We're just getting further and further and further behind," said Bill Haan, executive director of the Indiana Association of County Commissioners, which is based in Lafayette.
The state's money woes extend far beyond road construction. State lawmakers continue to grapple with an $800 million-plus budget slump that has strained nearly all of state government. But shortfalls in future highway funding are particularly acute.
Road construction funding has materialized as a key issue in this year's gubernatorial campaign, with Democratic Gov. Joe Kernan and Republican challenger Mitch Daniels quarreling over how best to glean more construction capital.
"If you don't pay for reconstruction and maintenance now, you have to go back and reconstruct years later at 10 times the cost," said state Rep. Scott Reske, D-Pendleton, chairman of the House Roads and Transportation Committee.
Policymakers point to a collection of reasons for the road budget quandary. They include an uncertain national economy, an imbalance in the sharing of federal gas tax revenue and an ongoing partisan clash on Capitol Hill that has frozen more than $250 billion in federal highway aid for the states.
Dwindling pool of money
But experts who closely monitor road spending say Indiana is one of many states struggling to overcome proportional declines in state road spending and flat gas tax revenues.
Since the late 1950s, the share of money states earmarked to maintain and expand roads has dwindled, according to the U.S. Census Bureau.
In 1960, highway funding represented 19.2 percent of all state spending nationally, according to Census figures. In 2000, that share had shrunk to 5.5 percent. In contrast, state spending on public welfare, which includes Medicaid, more than doubled over the same period -- from 7 percent to 18.3 percent nationally, the Census showed.
For many states, including Indiana, money budgeted for road construction remains separate from the general fund. Even so, lawmakers here and elsewhere have relied more on federal funds to pay for transportation as costs for education and other programs such as Medicaid have increased.
"Most states have placed transportation third at best in their priority of spending," said William Ahern, a spokesman for the Tax Foundation, a nonpartisan group in Washington that monitors tax rates and policy across the nation. "Who are the opponents for spending on education? On health care? They aren't numerous. But there are vocal and organized opponents to transportation spending: property owners, environmentalists."
While support is broad for improved mass transit, vocal opposition exists to the construction of a new segment of I-69 between Indianapolis and Evansville.
Gas tax drawbacks
Indiana's dependency on the state gas tax is another concern.
For years, revenues from state gas taxes have comprised the largest part of many state road budgets, according to Arturo Perez, a fiscal analyst for the National Conference of State Legislatures in Denver. The thinking is simple: Motorists should pay the largest portion of road upkeep and expansion.
Indiana's 18-cent gas tax ranks 37th highest among all states and the District of Columbia, according to the Federation of Tax Administrators in Washington.
But the age-old funding structure has its drawbacks.
For one, gas taxes in the majority of states are not indexed to inflation. So, even as construction costs climb, gas tax revenues remain relatively flat -- that is, unless legislators raise rates.
State lawmakers also worry that gasoline tax revenues will decrease over time as vehicles increase in fuel efficiency and consumers turn to alternative fuels, such as ethanol or hydrogen. In short, motorists may rack up more road mileage, but consume less gasoline and, thus, pay less in gas taxes.
"It's pretty much to the point where a gas tax based on gallons is quickly becoming antiquated," Reske said.
Indiana's rate was last raised in 2003 from 15 cents. About a third of the increase paid for a $200 million bond issue for road construction, while another portion went to other state functions. But the onetime infusion of cash from the bonds is slated to evaporate next year.
Talk of toll roads
To confront the shortfalls, a growing number of states have begun considering gas tax rates that rise with inflation. Others, such as Ohio, have approved expansive revenue packages that include significant gas tax increases spread out over a number of years.
In Indiana, much of the political chatter has centered on the concept of building toll roads. In the governor's race, Daniels, former budget director under President Bush, has said he would consider new tolls, perhaps on the new I-69 or Ohio River bridge crossings. Kernan staunchly opposes tolls, saying he would consider higher fees at the Bureau of Motor Vehicles and intensify Indiana's efforts to collect a larger share of federal gas tax revenue.
Some policymakers, including Kernan, have suggested crafting a package of revenue measures similar to the "Crossroads 2000" initiative, a $400 million road and highway funding plan crafted by then Gov. Frank O'Bannon in the late 1990s.
Others, most notably state Rep. Jeffrey K. Espich, R-Uniondale, the ranking Republican on the House Ways and Means Committee, have pushed for legislation that would keep the state gas tax rate in line with inflation and fuel use.
Espich's proposal has met stiff resistance in previous state legislative sessions. But he said there is a "good likelihood" that some kind of gas tax increase will move forward next year.
"You have to have more revenues and that, to an honest and great extent, means higher taxes on transportation users," Espich said. "There is no magic bullet."
Call Star reporter Theodore Kim at (317) 444-6247.
"Costs of roads growing, but funding stalls Construction, repair demands
eclipsing available revenue."
John Smith
COUNT US!
http://www.i69tour.org
address/phone
