Funding gaps threaten transportation projects of all sizes

| December 2, 2014

The struggles of the federal Highway Trust Fund continue to affect states and regions throughout the United States. The fuel taxes that power the fund haven’t increased in two decades; here’s what a few state and local governments are reporting about their transportation finance situations.

Lockhart, Tx

Texas is having trouble supporting its massive highway infrastructure, and even higher gas taxes won’t help. From zeesstof.

Texas

Despite the passage of Proposition 1, which will funnel billions in tax revenue from the state’s oil boom into its highway fund, the Texas Department of Transportation estimates an annual budget shortfall of $5 billion. So, although the agency is set to receive a predicted $1.7 billion as a result of Proposition 1 this month, officials contend that the infusion of funds will only relieve a fraction of the budgetary stress.

In addition, the relief will be variable because it relies on the unpredictable performance of the oil industry. With no permanent or dependable funding source, TxDOT is likely to continue grappling with its primary transportation issues: congested highways and a high traffic accident rate.

Virginia

In Virginia, Congressional dawdling landed a blow to the state’s transportation goals. In 2013, Virginia’s then-governor — Bob McDonnell — drafted a transportation-funding bill heralded by many. It got rid of the 17.5-cent gasoline tax, upped the general sales tax, and introduced a 3.5% wholesale sales tax on motor vehicles fuels.

But the state, like neighboring Maryland, hoped the passage of the Marketplace Fairness Act, which would require online retailers and other so-called “remote sellers” to collect a sales tax, would allow it to dedicate a portion of the new funding source — online sales tax revenue — to road and transit projects.

Congressional inaction has stalled the act, however, forcing Virginia and Maryland to increase their wholesale fuel sales tax. In Virginia, the tax will bump up to 5.1%, and in Maryland, it will rise by another 2 cents in the next two years.

Washington, D.C.

The languishing federal Highway Transportation Fund isn’t the only factor affecting transportation budgets nationwide. In the D.C.-area, a projected decline in overall revenue for the Washington Metropolitan Area Transit Authority, coupled with estimated increases in operating costs, has officials proposing a 10.3% increase in subsidies from the jurisdictions that the agency serves. Without the increase, riders can expect fewer trains and more crowded platforms and trains.

Metro has already cut where it could, said Dennis Anosike, the agency’s chief financial officer. It’s cutting roughly 50 jobs currently vacant and deferring improvements to its bus system. The agency has also proposed handing over some Metrobus routes to local bus operators in an effort to cut costs.

Puerto Rico

In other regions, it’s the local agency’s poor borrowing habits that have threatened transportation service disruptions. In Puerto Rico, Governor Alejandro Garcia Padilla says that the Highway & Transportation Authority (HTA), which supports mass transit for the unincorporated U.S. territory, borrowed more than $2 million between 2009 and 2011 without sufficient funds for repayment. The agency’s actions raised its debt from $80 million to more than $2 billion, escalating Puerto Rico’s debt crisis.

Last week the island averted a transportation shutdown by passing a controversial increase in the oil tax. Its passage allows the government to back a bond sale of up to $2.9 billion, but senators are requesting guaranteed operational changes at the HTA that will make the agency more self-sufficient.

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Category: Infrastructure, Transportation

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