Transportation Tempest Looms

By Scott R. Cooper, Crook County Judge
published in the Powell Butte Views, January 2005

No Simple Answer To Lack of Highway Funds

Just before Christmas, the president of the Oregon Senate and the Speaker of the Oregon House named the leadership and membership of legislative committees for the upcoming session. Crook County’s representatives, Rep. George Gilman (R-Eagle Point) and Sen. Doug Whitsett (R-Klamath Falls), both landed leadership assignments on the transportation committee—Gilman as House committee chair, and Whitsett as Senate committee vice chair.

For Gilman, it will be an opportunity to build on his experience in the 2003 session, when he was a member of the transportation committee. For Whitsett, who will be a freshman when the Senate opens January 10, the assignment to a leadership position is an important signal of the confidence from his peers.

In ordinary times, Crook County might have been “licking its chops” over the potential benefits of having both its legislators leading the same committee in both chambers. You can almost smell the batch plants heating up. Unfortunately, we don’t live in ordinary times, and the current revenue problems plaguing the state probably mean dedicated funding to four-lane highway 26 between Prineville and Redmond probably isn’t in the offing.

So if Crook County’s elected representatives in the legislature won’t be going after funding for the locals, what can we expect out of them in this session? My guess is that much of their time will be spent trying to once again nail down an answer to the question of why it costs the State of so much more to do its transportation business than it does any other entity and why it is that about why

At first glance, this doesn’t quite make sense. After all, the governor is recommending a budget that is nearly 7 percent higher than the last biennium and features a cash infusion of nearly $18.5 million. With just shy of $2.9 billion to work with, why does Oregon feel that its revenue requirements, in the Governor’s words, “have not kept pace with the transportation needs in the state.”

A big factor is the governor’s contention that the gas tax, at 24 cents per gallon, is not high enough. Gas tax has been around in Oregon for a long time. Oregon was the first state in the union to impose a gas tax in 1919. Since then, every state has followed.

But gas tax collections reached a plateau in the early 1990s. Since 1992, only 28 states have raised their gas tax., In tax-averse Oregon, the gas tax was last increased in 1991,when it reached 24 cents per gallon, putting the state’s rate at the 11th highest in the nation. In addition, with the advent of a new generation of more fuel-efficient cars, collections are actually projected to begin falling after about 2010.

Adding to the financial pressure is the fact that about 33 percent of Oregon’s transportation budget comes from federal largesse. Recent congressional enactments, put into place when the federal government was rolling in surplus money, shared billions with the states. Few, if any, people think that scenario is likely to repeat itself in the face of current deficits and the need to transfer money to national security concerns and the costs of maintaining an overseas presence.

A third consideration is borrowing to pay for our needs. Oregon started borrowing against future revenues during the 1999 legislative session. Another round of borrowing followed in 2001, and yet another in 2003. All over the state self-congratulatory highway signs have sprouted, signaling projects paid for by one of the three Oregon Transportation Investment Acts. Although the revenues for repayment of the bonds which underwrote these projects are secure (the funds will come from increased registration and titling fees), there is little capacity in the system for more borrowing, cutting off that financing avenue.

That leaves policymakers like the governor, Rep. Gilman and Sen. Whitsett with a problem. On the one hand, the public demands of its government as well maintained road system. On the other, the only funding mechanism available is shrinking. What do to.

But that alone won’t get the job done, and that’s where Gilman and Whitsett will be in the hot seat in the upcoming session.

One of the first ideas they will have to grapple with is a proposal which has been picking up steam for several years: a wholesale dumping of gas tax in favor of a vehicle mileage tax. The idea, floated and backed by environmental groups, is to more accurately tie taxation to the number of miles driven. The proposal would be slowly phased in. New cars would be required to be equipped with an electronic reader, which would report at the gas pump how many miles your car has traveled since your last fill up. Satellite technology would transmit this information to a computer in Salem, which would calculate the mileage you owe and add it on to your bill. Privacy advocates obviously hate this idea, as does anyone with a lengthy commute. Environmentalists say this is the economic incentive needed to push people off the highways and onto mass transit, benefiting air quality, reducing congestion and reducing dependence on fossil fuels. This idea was deferred for more study in the last session, but it is far from dead.

Another idea which deserves a close looks is the cost of doing business as usual. Oregon transportation officials use a rule of thumb that typical two-lane highway projects cost nearly $1 million per mile. Some researchers, including the Construction Research Labor Council, place Oregon among the more efficient states in its road-building costs. Still, any competent road contractor can find savings which bidding system and environmental compliance rules force the state to leave on the table. Finding those loopholes and plugging them is Gilman and Whitsett’s job this session.

A third option worth looking at is why Oregon diverts 2.3 percent of its gas tax collections from actual road maintenance to General Fund and non-highway uses. (The number comes from a Brookings Institute Study). That’s an extra $9.3 million—an amount which would more than double the Governor’s proposed contribution to roads from the General Fund. It isn’t the ultimate solution, but every penny counts.

I’m not sure where this state is headed on the issue of how to maintain and expand its transportation system. There are no simple answers, and the most obvious ones—raise or index the gas tax, defer construction and maintenance or borrow our way out of the problem for now—really aren’t viable.

I’m glad its Kulongoski, Gilman and Whitsett that have to figure it out. Unfortunately, whatever they put in place, ultimately will affect all of us in a very immediate way. It would be prudent to keep your eye on the ball in Salem for the next several months as the team grapples for answers to a problem with no obvious solution.