Missouri transportation revenue takes hit as drivers spend less on gas

Thursday, September 5, 2013 | 9:53 p.m. CDT; updated 3:56 p.m. CDT, Friday, September 6, 2013
Missouri Department of Transportation’s construction program funding has decreased by almost half in the past four years. In its December report, the Missouri House Blue Ribbon Citizens Committee said funding levels are barely enough to maintain existing roads.

JEFFERSON CITY — As fuel prices rise, Missouri's road fund continues to fall, leaving the state Department of Transportation running on empty.

With hybrids and fuel-efficient cars gaining in popularity, Americans are spending less on gas, which translates into less revenue from fuel taxes for the government. The Missouri road fund relies heavily on fuel taxes to pay for road and bridge maintenance, so the decreased revenue has put the brakes on new projects.

The federal highway fund, supplied by the federal fuel tax, has gone dry. National fuel consumption has fallen by 9.6 percent since 2007, according to the U.S. Energy Information Administration. According to an April 2013 Congressional Budget Office report, in two years the government will no longer be able to support the fund. In the past five years, Congress has transferred $41 billion from the general fund to keep the highway fund afloat.

An empty fund

Last December, as Missourians prepared for holiday travel, the House Blue Ribbon Citizens Committee on Missouri's Transportation Needs released a report concluding that current revenue cannot sustain future infrastructure projects.

Missouri's road fund is used to pay for maintenance on roads and bridges. Around 67 percent of that fund comes from state and federal fuel taxes. The rest comes from a vehicle sales tax and registration, licensing fees and other sources.

In the past six years, transportation funding has dropped by nearly 50 percent. After funding from federal stimulus money dropped off, the remaining federal funding came from the federal fuel tax, collected by Congress and redistributed to states based on spending. The federal government reimburses the state $80 for every $20 the state spends on eligible construction projects.

As federal contributions declined, the Missouri Department of Transportation cut back. By laying off 1,200 employees, closing 131 facilities, selling 752 pieces of equipment and redirecting services and existing funding, the department saved $512 million over the past five years, according to the report. Still, MoDOT expenditures outpace revenues: in 2012, the department had a $3 million deficit.

This means MoDOT is focusing its funds on maintaining current infrastructure, with remaining funds going toward projects that will expand Missouri's transportation system and economy. The money left over isn't enough to pay for projects Missourians told the committee they wanted, such as providing direct interstate access to the Capitol or improving sidewalks and highway shoulders.

Refilling the tank 

Roberta Broeker, MoDOT's chief financial officer, said the best way to understand the department's funding situation is to look at the state fuel tax, currently 17 cents per gallon. The last state fuel tax increase was in 1996.

Missouri's future "will be maintaining what we have," Broeker said, referring to the state's vast infrastructure of more than 33,000 miles and more than 10,000 bridges — the seventh-largest highway system in the country.

One of the most talked about solutions is to raise the existing state fuel tax. However, Broeker has seen significant opposition to a higher fuel tax, something she attributes in part to misunderstanding how the tax works.

She said the gas tax is unpopular because people think it operates like a percentage-based sales tax, instead of a flat tax that doesn't change.

"And they somehow think that as gas prices go up, well, there must be a windfall; it must be like a sales tax," Broeker said. "Well it's not. It's a flat tax, and that's another reason why it's not keeping up."

A higher fuel tax isn't the only proposed solution for MoDOT's financial woes. The Blue Ribbon Citizens Committee came up with several options to raise money for the department: general fund revenue appropriation, bond sales, toll roads, a higher sales tax, higher license and registration fees, a vehicular mile tax, and transportation districts. 

Last spring, Sen. Mike Kehoe, R-Jefferson City, proposed a one-cent increase in the state sales tax for 10 years. The measure, which would have put the tax increase on the November 2014 ballot, never made it to a vote, although it could make a another appearance in the legislature this spring.

David Stokes, a policy analyst at the Show-Me Institute, decried the use of a sales tax. Stokes said it might appear easier to pay a small amount with each purchase and raise a significant amount of money, but he thinks there's a better way.

"When it's possible to pay for public services with either direct taxes or user fees ... I think it's good to do that,"  he said.

Stokes, who attended the Blue Ribbon Citizens Committee meetings once to listen and once to speak, suggests a combination of toll roads and a higher gas tax. Although a 2012 proposal to make Interstate 70 a toll road was met with opposition, Stokes said he recently had a good experience with toll roads on a trip to New York.

"I hope people bring that sort of positive experience with tolling back to Missouri," Stokes said. "Make sure people who are using the roads are paying for the roads."

Missouri isn't the only state looking for a funding fix. According to a Market Watch article, seven other states have raised their fuel tax or are looking at alternative funding sources. In 2012, Oregon implemented a program to test the vehicular mile tax, an idea the report said hasn't gained much traction in Missouri.

Under this plan, drivers would pay into the state road fund based on miles driven instead of gallons used, measured using a tracking device. Some worry that installing such a device would infringe on their privacy, but participants in Oregon's program had the option of using a device without GPS. 

For now, the committee is proposing several solutions described as "part of a larger funding package." 

Stokes offered a longer-term picture for "the Prius problem" of declining fuel use, saying Missouri still needs to rely on gas taxes.

"For the next decade or so, gas taxes are still a very effective way to fund highway infrastructure," Stokes said, suggesting higher license fees to make sure more "efficient cars are paying their share."

The Blue Ribbon Citizens Committee was created in March 2012 when the speaker of the Missouri House appointed 22 members from public and private sectors. Throughout the summer, the committee heard citizens around the state address what they saw as the greatest transportation needs.

Supervising editor is Stephanie Ebbs.

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