Preserving Public Infrastructure The Economic Lifeline for our Metro Area and for our Region
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In Missouri and Kansas we have over 300,000 miles of roads and nearly 50,000 bridges. Many of these assets are in immediate need of repair. Because revenue sources have been affected by sluggish economic conditions, so has the level of service DOTs are able to provide.
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Our roads and bridges represent more than 100 years of public investment. We face considerable financial challenges in our efforts to maintain them.
Federal revenues provide between 30 percent and 35 percent of the transportation budgets for Kansas and Missouri. The current federal surface transportation legislation authorized funds for state and local governments for six years, Federal Fiscal Years 1998-2003. Re-authorization of this program is critical, as is the amount of federal spending devoted to this portion of the budget.
Other revenues which state DOTs [Departments of Transportation] receive come from highway user fees. Cities and Counties also receive significant pass throughs from these same sources. These revenues include motor fuels tax, vehicle registration fees, license fees and investment earnings on those same funds.
In recent years both states have passed important legislation providing for needed highway funding. In Kansas a portion of the statewide general sales tax is authorized for use in funding highways. Motor Fuels Taxes, currently are set at 21 cents per gallon in Kansas and 17 cents per gallon in Missouri provides a major portion of state generated funding. Because these revenue sources have been affected by sluggish economic conditions, so has the level of service DOTs are able to provide.
In Missouri and Kansas we have over 300,000 miles of roads and nearly 50,000 bridges. Many of these assets are in imm-ediate need of repair. The increased cost of deferred maintenance is significant. To meet public expectations, highway revenues must keep pace with the number of roads and bridges that are in need of repair. Projections show a gap between estimated revenues available and those needed.
Declines in consumer spending and manufacturing activity, as well as drought conditions have wreaked havoc on state budgets. As cutbacks have been imple-mented transportation programs have been among the hardest hit. In order to address our needs innovation is required.
Toll Road legislation will be introduced in Missouri this year. This legislation would give the state an important financial tool. Kansas has a toll road system in place.
Both states have used the issued bonds to finance improvements, effectively combating deferred maintenance costs by completing projects on a timely basis. While the bond investors require certain operating covenants, neither state has relied on bond issuance such that these covenants have become restrictive.
Both states now have "transportation development district" legislation in place. Under these statutes local governments can develop and fund projects using sales taxes, assessments on property and increases in property tax receipts as added sources of revenue. Where pressure exists to quickly undertake a project, cost sharing programs have also been utilized bringing in locally generated funds to allow projects to be accelerated.
Transportation Corporations can also be organized to promote, develop and fund projects. One example is the Lake of the Ozarks Community Bridge Corporation. This Corp. was formed to issue bonds to construct a bridge spanning the lake. The bridge reduces local drive times by as much as an hour. The Corporation collects tolls which repay the bonds issued to finance the project. Economic Develop-ment funds have also been used to finance transportation improvements necessary to attract important new industries.
All of these efforts, as well as new ideas will be required to eliminate the current gap between projected revenues and required expenses. We must reauthorize existing revenues when necessary and accept increases in funding because the costs of maintaining these important assets is growing faster than currently available revenues. Our roads are economic life- lines for our metro area and for our region. As a regional trade center we are dependent on the commerce generated in the rural areas of Missouri and Kansas. Together, we are all dependent on our transportation system for prosperity.
Roger Edgar is the Exec. vp and manager of Midwest public finance for George K. Baum. He may be reached at 816.283.5135 or e-mail edgar@gkbaum.com.