A bad move
Published 2:37 am Wednesday, June 4, 2008
There has been a great deal of conjecture and discussion in the press and at the state Legislative Building about a bond proposal for road construction being put to voters this November.
At present there are two definite proposals coming from the loftily named 21st Century Transportation Committee. But these proposals are not so lofty and look to the past as inspiration. Both would spend up to $1.75 billion on new road construction (and some bridge repair if roads are not ready to be built.) One proposal wants an unspecified amount to be spent on public transportation. The other, coming from the “Prioritization” sub-committee chaired by Sen. Clark Jenkins, does not. The influential senator’s position is a signal that the Senate doesn’t look too keen on public transportation being in the bond proposal, although the message coming from the House Speaker’s office is that leaving out public transportation is a deal breaker.
In many respects, the uncertainty over public transportation funds being included in a bond proposal is a distraction from the core issues. Throwing a bone to the public transportation crowd doesn’t buff and shine what is, in essence, a pretty tired old proposal. Here are seven reasons why bonding for transportation is a bad idea this fall:
1. The DOT transformation has barely begun. The 2007 report from management consultants, McKinsey &Co., was pretty damning. DOT is starting to clean up its act, but most new programs and processes are still in the pilot phase. The result: new money spent now will probably be money wasted. The department needs more time to get its house in order and probably needs new leadership to fast track the process.
2. There is no objective and transparent road construction project prioritization process. The bond will accelerate slightly, perhaps, the current road building program. That’s putting dollars in the wrong places. The major road construction program in this state, the intra-state highway system, was drawn up in the late 1980s as a means to get the Highway Trust Fund legislation passed. What was the rationale behind the program? Answer: Every one gets theirs, not putting lane miles where the traffic is. In days when construction was cheap and our Piedmont cities were growing slowly, that was a luxury we could afford. But that is not the case now.
3. Our maintenance program is deficient and needs addressing first. Many of our roads are showing signs of wear and tear. The Cape Fear River and Yadkin River bridges are but two of the hundreds of bridges that require maintenance work now or in the near future. We are not taking care of our existing infrastructure, so why build more until we do?
4. The bond doesn’t solve the revenue problem. The math is simple: the price of building and maintaining roads is rising faster than revenues. The problem is not that fees and tax rates are not high enough, but that gas and vehicle sales growth is lagging behind construction and maintenance price inflation. We rely on those two to drive (pardon the pun) transportation revenue growth.
Gas sales are flattening out as prices increase, motivating people to move to more fuel efficient vehicles. Construction inflation is at least five times the rate of vehicle sales growth since 2003. The gas tax provides just under half of our state transportation revenues, and fees related to vehicle sales and operation (sales tax, registration and title fees, etc.) provide virtually all of the rest. The result is like most other states, North Carolina is in a transportation budget hole. A bond won’t fix that hole.
5. Using our debt capacity now reduces future options. The bizarre aspect of the bond proposal is that while $1.75 billion is a massive amount of money (think of what it could do for child care!), in road terms it’s probably only be enough to build a couple of major bridges and a couple of dozen miles of four lane road or so. That’s the benefit. The cost is up to 6 percent of transportation revenues being used for debt service for the next 30 years. Not only would this put the transportation budget further in the hole, but it would mean that if, say, a hurricane destroyed a significant number of bridges we would have to start dipping into the General Fund to pay for it. Borrowing now means there is little or no wiggle room in the future.
6. Better and more diverse jobs can be created through school and university construction or public transportation spending. An argument being heard often at the legislature is that a road construction bond will create jobs. True. But road construction does not create as many jobs as similar expenditures on public transportation (either construction or operations), or on road maintenance. Road construction also fails to provide the diversity of jobs that school or college building construction would. Given the state of our schools, wouldn’t a school construction bond make more sense (and give counties some relief?)
7. More of the same won’t provide household budget relief. Experts agree that gas prices look set to increase further over the next five years. The scariest prediction is that crude could hit $200 a barrel. That would translate to $7 or more per gallon. This shows building new roads as the 1950s solution to mobility it really is. There are media stories almost daily of people leaving their cars at home and taking the bus to work. Unlike this bond, a real 21st century solution would place bus and rail at the middle of transportation planning, not as an adjunct.