Missouri hitches future road work to proposed statewide sales tax

Thursday, July 24, 2014 | 6:00 a.m. CDT; updated 12:01 p.m. CDT, Friday, July 25, 2014
Construction workers from the Missouri Department of Transportation work on the Broadway overpass above U.S. 63 on Monday in Columbia. MoDOT would receive an estimated $540 million per year from Amendment 7, a three-quarter cent sales tax increase.

COLUMBIA — Chris Scrivner has reaped the economic benefits that can come from new roads.

Scrivner, the general manager for Babbo’s Spaghetteria on Grindstone Parkway, remembers when the area was forested before the four-lane thoroughfare was built in 2003 and turned the corridor into a commercial and residential hub.

Proposed Boone County projects

There are more than 800 projects on the Missouri Department of Transportation's Amendment 7 list. Boone County would receive $68.8 million in funding for Columbia-centered projects over the 10-year life of the tax. That list includes:

  • Reconfiguring and adding additional ramps to the Interstate 70 and U.S. 63 interchange. The project would cost about $20 million and be completed as part of the larger $2 billion plan to widen Interstate 70 to six lanes across the state. If voters approve the tax, Tim Teddy said, the state will use a "design-build" process. Developers would submit not only a bid, but also a solution to the congestion. The state would contribute about $20 million.
  • Extending Stadium Boulevard from U.S. 63 to Route WW, $17.22 million.

  • Building a new terminal at the airport, as well as improvements to the runway, the parking lot and the pavement on Airport Drive. The state has pledged $9 million to fund construction of the new terminal, but the city must match that amount. In total, MoDOT would provide $14 million.

  • Adding two additional hours to the city bus service, $10.5 million.

  • Resurface and add shoulders to Route E from Route 124 to I-70, $3.26 million.
  • Provide $1 million to OATS, a nonprofit transportation service for seniors, for a new service between Columbia and Jefferson City.
  • Construct a sidewalk along West Broadway from West Boulevard to Maplewood, $700,000.

  • Replacing and repairing the Route F bridge over Coon Creek, $640,000.
  • Replacing and repairing the Highway 124 bridge over Grindstone Creek, $730,000.
  • Replacing and repairing the Route F bridge over Perche Creek, $490,000.
  • Construct a sidewalk along Garth Avenue from Worley to just south of Sexton Road, $300,000.

Source: Missouri Department of Transportation

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He pointed to a new student apartment complex across the street.

“That was woods when I got here last February,” Scrivner said. “There were trees that hadn’t even been cleared yet, and now we have three buildings that will all have students in them in August.”

The economic impact of roads and other transportation systems has become a selling point for the Missouri Department of Transportation and others promoting a three-quarter-cent sales tax on the statewide ballot Aug. 5. If passed, the tax would generate an estimated $540 million a year for 10 years.

A long-considered extension of Stadium Boulevard from its eastern terminus near U.S. 63 is among $70 million in projects planned under the tax in Boone County.

Cliff Jarvis, engineering transportation supervisor for Columbia,said the road would likely give rise to new development similar to what has occurred along Grindstone Parkway.

"Anytime you’re opening up real estate for development and expansion, then that seems to be the place that everyone grows to," he said.

Mike Schupp, Boone County area engineer for the Missouri Department of Transportation, said economic development and new roads go hand in hand.

"If you build more roads, more money comes into the city,” he said.

According to a project list released July 9, the state would use $17.2 million of revenues from the proposed tax for a scaled-down version of extending Stadium that would connect it with Route WW rather than Interstate 70.

Columbia Director of Community Development Tim Teddy said it's unlikely the state would finance all of a project on the scale of the Stadium extension, and the city will probably pay for sidewalks and shoulders on the road.

Schupp said the Stadium extension would open up new land for development, possibly for homes, but more likely for businesses.

The agency cites declining fuel tax revenues and less federal funding for turning to a sales tax for new money; some legislators and a group that's campaigning against the sales tax prefer user fees, such as an increased fuel tax, as a way to make those who use roads the most pay more. Opponents also say the sales tax increase puts an unfair burden on the poorest residents.

Gov. Jay Nixon has spoken out against the sales tax, saying it isn't fair to raise the sales tax after the General Assembly passed several special interest tax breaks earlier in the session.

Falling revenues

According to a 2013 report by MoDOT, the department's construction and maintenance budget was more than $1.3 billion in 2009. Without the tax, construction and maintenance is projected to fall to about $425 million by 2017.

The department nearly doubled the number of miles of major roads designated as in "good condition" from 47 percent in 2004 to 88.5 percent in 2013, according to the report. If funding falls below about $485 million, the report says, so too will that number.

Part of the projected shortfall is due to the decreasing effectiveness of the state fuel tax, said Bob Brendel, outreach coordinator for the department. The fuel tax is 17 cents of each gallon of gasoline sold and makes up about 70 percent of construction and maintenance funding, and it was last increased in 1996.

“We’ve had no change or increase in funding in Missouri, but the cost of everything continues to go up,” said Eric Schroeter, state design engineer at MoDOT. “The two conspire to make not such a good situation.”

Another problem is that cars have become more fuel efficient each year.

According to the Federal Transit Administration, Missouri has the sixth-largest road system in the nation, yet has the sixth-lowest gas tax, according to the American Petroleum Institute.

"When you look at funding per mile, MoDOT is one of the lowest in the nation in the amount of funding for each mile of roadway that we take care of," Schroeter said. "And the fact that the state gas tax in Missouri hasn’t changed in nearly 20 years now. That is a challenge."

MoDOT also doesn’t have the possibility of raising funds through bonding because, Brendel said, the agency has reached its bonding capacity and is paying about $300 million a year to pay off existing bonds.

“Bonding would not be a possibility because we’ve bonded projects in the past, and we’re paying those bonds off now,” he said. “Paying those bonds is a big part of our budget now. Until we pay those bonds off, that option wouldn’t be there.” 

Those bonds provided $1.98 billion for the department from 2004, but the last of the money was spent in 2010. What used to be an asset for MoDOT has turned into a $300 million yearly liability.

According to a report from the Missouri Budget Project, the final payment for the bonds will be in 2033.

MoDOT also received significant funding from the federal government, according to the report. The American Recovery and Reinvestment Act of 2009 provided MoDOT with a total of nearly $600 million for three years. As a result, federal funding was expected to drop from $1.6 billion, more than half of the department's total budget in 2011, to $782 million in 2014.

Although most agree that the Transportation Department needs additional funding, there's debate about how that money should be collected.

Funding alternatives

“The question isn’t should we invest in our state infrastructure,” said Rep. Jon Carpenter, D-Gladstone. “The question is how we should do it. … We’ve never done it through a general statewide sales tax, so for people to suggest that’s the only option is dishonest.”

Carpenter proposed an amendment that would have removed the sales tax and replaced it with a 3-cent increase to the gas tax and 9-cent increase to the diesel tax. The change would have raised an estimated $180 million annually, but it failed.

According to the Missouri Constitution, money raised via gas taxes can only be used to pay for roads and bridges, which supporters say makes it less versatile.

Carpenter said this limitation could be remedied with a constitutional amendment while simultaneously raising the gas tax. He thinks a gasoline tax is a much fairer way to pay for roads because people who use them more will have to pay more through gasoline purchases. Carpenter was also concerned that a sales tax would hit lower-income people harder.

“The gas tax is essentially a user fee at the end of the day,” he said. “Passing a regressive sales tax would hit low-income people, including a lot of low-income people that don’t utilize the road system regularly. I don’t think it’s the fairest way to do that.”

Rep. Paul Curtman, R-Pacific, agreed with his colleague across the aisle. He said the sales tax increase could have “devastating effects” on the poorest people  in the state.

He said asking the people for more money for a core function of the government such as transportation infrastructure is a bad signal when state government has a budget of $26 billion. Curtman suggested reducing the size of government and reallocating the money to fund transportation.

Missourians for Better Transportation Solutions has been fighting the sales tax for similar reasons.

Thomas Shrout, treasurer of the political action committee, said the group believes that it is inappropriate to use a sales tax to fund roads and bridges. A fairer way to fund road work, he said, is through some kind of user fee, whether it's a fuel tax or a "vehicle miles traveled" tax similar to a pilot program in Oregon.

According to the group's website, the primary beneficiary of a sales tax is the trucking industry, which it says does most of the damage to the roads. Additionally, according to the site, "most truck traffic does not even serve Missouri business; those trucks will be getting an entirely free ride courtesy of Missouri taxpayers."

The group also cites a 2005 Missouri Freight Study that found that 55 percent of truck tonnage has no origin or destination within the state.

"A sales tax hits everyone hard regardless of how much they use," Shrout said. "And that's patently unfair."

According to the Tax Foundation, Missouri's average tax rate stands at 7.58 percent. A three-quarter-cent increase would put it at 8.33 percent, making it the ninth-highest in the country.

If the amendment passes, the General Assembly will be prohibited from raising the fuel tax or establishing toll booths while the tax is in effect.

Rep. Caleb Jones, R-Columbia, agreed that it would be better to redirect funding instead of raising taxes. He said it was interesting to him that the General Assembly would try and raise taxes even though the legislators cut income taxes already.

"We’re doing an across the board income tax reduction for individuals that will help them and, at the same time, every time they go out and actually spend money that they've gotten here in Missouri and spend it here in Missouri, there’s an increase in sales tax," he said.

How it would work

The tax would bring in an estimated $540 million annually — about $4.8 billion over the course of its 10-year lifetime, when it would need to be renewed.

Prescription drugs, certain groceries and gasoline would be exempt from the increase.

MoDOT's spending plan would earmark 90 percent of the new revenue, about $480 million a year, for construction projects and 5 percent to counties and 5 percent to cities, with each receiving about $27 million annually for transportation-related projects. The city of Columbia is projected to receive about $7 million over the 10-year period, and Boone County would receive about $4 million, Teddy said.

If voters approve the amendment, it will take effect Jan. 1.

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