June 6, 2016– As the 109th General Assembly has concluded our 2016 session, transportation was a frequent topic around the district and at the Capitol. Here is a wrap up of many of the issues surrounding transportation. One should take particular note not just in what bills passed, but in the actions and inactions surrounding transportation and funding.
Transportation Funding and Alternatives
Several years ago, roughly 260 million dollars was taken from the Highway fund. This year, 100 million was allocated from the budget to repay a portion of those monies. An additional 42 million was designated to counties for local road and bridge projects. The significance of the 42 million is that counties often have to let the allotted road monies build up approximately three years before they can work on a project. This amount will allow counties to jumpstart many needed projects in their communities.
Tennessee had nearly a billion dollars in non-recurring funds, and around 750 million in recurring funds. Despite having that much revenue, one should take notice in that not all of the 260 million was paid back to the Highway Fund. If transportation funding were truly in a crisis situation, one would have expected all the amount to have been repaid in order to jumpstart projects for the state, as well.
HB 2407 provides a framework to allow Private Public Partnership (P3) agreements for certain transportation projects. The bill authorizes partnerships between private entities and state and local governments for the private development, redevelopment and operation of transportation facilities. There has been much debate over these P3 agreements with the benefits being access to new sources of capital for projects, and shifting of initial risk to private investors. Risks include things like loss of control, failure of the private sector to deliver, and continued governmental responsibility. With growth and transportation needs for our future, innovation and options ultimately persuaded the General Assembly and the Governor to adopt this bill.
Last year, and prior to session starting, I had several meetings with TDOT about funding including asking for a 10 year future projection of needs and funding levels. While I never was able to receive any future projections, I did receive a 10 year retrospective look at their budget. The bottom line was that there has not been a shortfall in funding, but over the last 10 years there has been a shift in how funds have been allocated. Without going into details, there has been about a 150 million dollar shift from money allocated to “future projects and planning” to go towards actual construction.
Understanding that Tennessee had a recurring 750 million dollar surplus, as well as discovering the budgetary shift, one needs to ask several questions. Is the shift truly a problem? If so, is there other revenue in the TDOT budget to compensate? If not, why wasn’t any of the 750 million recurring funds allocated towards TDOT instead of being spent on expanding programs or new programs?
In my opinion with the information I have been given, the shift presents a looming problem. If the TDOT budget remains static, and the shift exceeds 200 million, then the first phases of construction will cease until either current projects are completed or new funding is provided. Although I had been told that there were possible areas for cuts to be made in TDOT’s budget to account for part of the shift, I was not shown any specifics.
I did some digging on my own, and I would, however, like you to take a look at the pie chart on page 38 of our current budget here. You should note that 6% of our revenue comes from gas taxes. Yet, only 5% is going towards transportation. The 1% amounts to around 349 million. As it has been explained to me, this amount is going directly to the counties. If that is the case, please, take a look at transportation in the county budgets here. http://www.capitol.tn.gov/joint/staff/budget-analysis/county-reports/index.html
If you look at several counties, including Bedford, Davidson, Knox, Rutherford, Robertson, and Shelby, one will notice that upwards of two thirds or more of the funds aren’t going towards roads, but towards airports. Now, one can argue that airports are transportation, but the point is that of the possible 349 million going to the counties, millions are being spent on items other than roads. I point this out not to say that we shouldn’t be funding airports, but to point out that money that could offset the shift for road projects is there, but currently being spent on non-road projects. Secondly, if we as a state are OK with gas tax money being spent on non-road projects, then shouldn’t we be OK with non-gas tax revenue from the general fund being spent on roads?
One should note that I offered a budget amendment that would set aside 150 million of the new 750 million recurring funds to be applied towards the shift in TDOT funding, and compel the 110th General Assembly to develop a long term plan. I presented my findings in front of the budget committee, but my amendment never got out of committee. Secondly, I co-sponsored HB 1464 from Rep. Zachary which would have directed that 25% of excess monthly revenue go towards the top 100 projects in the state as determined by TDOT. Last month alone would have been 46 million.
The bottom line is that options were turned down this year for TDOT funding, and the new recurring funds were prioritized towards new or expanding programs. As actions speak louder than words, one should conclude that either 1) TDOT funding is not a crisis, 2) we are governed by spend then tax politicians, or 3) new recurring funds are expected to be available next year to address the issue. Assuming funds are available, I’ll release my plan soon in another update, as there are options other than a gas tax increase.
Knowledge is power, and power is with the people. I hope you find these updates useful and informative.
Rep. Bryan Terry