Let’s Have a Discussion about Transportation Funding

Posted by on May 8, 2013

Alabama’s highway system includes 11,000 centerline miles of which 905 miles are interstate and 5,745 bridges. In order to expand and keep these thousands of miles safe and operational, transportation funding is crucial.

But our system for funding transportation infrastructure in the U.S. and in Alabama is broken. I think a lot of the problem has to do with inaccurate public perception and the lack of leadership from our politicians.

Much of the public seems to think that as the price of gas goes up, we get more tax money for road improvements and infrastructure.  In fact, it is the complete opposite.

Gas taxes aren’t a percentage but involve a predetermined amount of cents per gallon. When the price of gas goes up, people tend to drive less and thus consume less gasoline, which means less money coming in through the gas tax. If the tax was a percentage, it would be a somewhat better situation.

This funding system has not changed for many years.  In fact, the last state gas tax increase in Alabama was 5 cents in 1992. We get a flat amount or less from gas taxes, but the cost of transportation infrastructure improvements continues to rise.  Construction costs are at least two times more than they were 20 years ago.

The funding is not adequate for meeting the infrastructure needs of our transportation system.  Raising the state’s gas tax is one way to start correcting this problem, and I think there are a lot of advantages to this approach. It would help fund improvements to infrastructure and it would create a lot of jobs.

According to this article, a new report by the American Road & Transportation Builders Association’s (ARTBA) shows the money invested in transportation construction generates $354 billion in annual U.S. economic activity — the equivalent of 2.25 percent of the Gross Domestic Product (GDP).

A recent report released by the U.S. Department of Commerce and presented by the Alabama Department of Transportation (ALDOT) says that for every billion dollars invested in transportation infrastructure, 30,000 jobs are created.

But the necessary investments aren’t being made. In the 2013 ASCE Report Card for American’s Infrastructure, the nation scored a D+. This below average score demonstrates that there is a lot of improvement that needs to be done on the current condition of our nation’s infrastructure. When investments are made and projects move forward, the grades rise – it’s as simple as that.

ALDOT recently reviewed their 5 year plan and really tried to make it more fiscally balanced.  Alabama and many other DOTs are putting much of the funding they do have toward system preservation/maintenance rather than building new roads.

To combat these issues, some states are raising their gas tax to boost transportation revenues. Alabama hasn’t done that yet, and there don’t seem to be a lot of people on the federal or state level who want to raise taxes for infrastructure.

Another problem is that in Alabama, ALDOT doesn’t even get all of the gas tax we currently collect. It’s debatable and people have different opinions on this, but some of the funding raised from gas taxes is actually going to the department of public safety, the court system, state park maintenance and other programs.

And yet another issue is that as there continues to be more and more emphasis in the auto industry on fuel efficiency, people are buying less gas. We’re all for that, but with the way our gas tax system is set up, it will mean less funding for transportation infrastructure.

A lot of people have no clue about how this works. They see gas go up to $4 gallon and think there will be more money for transportation infrastructure. But that’s not the case.

These days, when any kind of tax increase is mentioned it is scrutinized very carefully because of the economy. When it comes to getting changes made, it’s important to educate the public and help people understand these issues.

We hope to help foster a discussion about transportation funding and explore options about how the system can be improved. We would love for you to comment and let us know what your thoughts are.

Jim Meads, P.E., President/CEO of Sain Associates, has worked as a civil engineer in the transportation industry for almost 30 years. He has participated in projects throughout the Eastern U.S. and is the Transportation Committee Chair of ACEC Alabama.

Sain Associates, Inc., is headquartered in Birmingham, Alabama, with offices in Cullman, Alabama, Pulaski, Tennessee and Mandeville, Louisiana. Sain is a site engineering, traffic/transportation engineering and planning and land surveying firm with experience in more than thirty states.

5 Comments

  1. Doug Seagle
    May 9, 2013

    Jim -very thoughtful comments. You mentioned the problems and offered some reasonable solutions. As for leadership, one problem is when politicians campaign and pledge no new taxes and are elected, they feel compelled to honor that commitment, as they should. That might be good election strategy and what everyone wants to hear, but as you discussed, without additional funding the system is left to do more with less, which is not practical.

    I believe our industry has not done enough to communicate the importance of addressing transportation funding. You are absolutely right about the need for public education as well as lobbying our elected officials on this issue. It needs to be a priority sooner rather than later.

    Several municipalities in Alabama have recognized the need to do more and are increasing sales taxes as a way to fund capital improvement projects. The city leadership has done a good job of explaining how this additional revenue will address the needs of the community. This is encouraging and shows raising taxes is not necessarily unpopular if the public understands how the money will be spent.

    I would like to see a different approach rather than an increase in the existing gas tax. One that would be more sustainable for the long term. One idea some states are considering is a sales tax on gasoline and other petroleum products. This seems to be a way to provide revenue increases and avoids the challenges of a user fee based method.

    Reply
    • admin
      May 14, 2013

      Excellent comments Doug. Many of our Cities and Counties have provided alternative funding sources to implement Infrastructure projects, including sidewalks, trails and parks. These projects have certainly added to the quality of life in their communities. Thanks, Jim Meads

      Reply
  2. Jill Hannah
    May 10, 2013

    Jim, Thank you for the very good article and some helpful insights into this situation. The funding situation for transportation is also a nation wide one, where we have the same problems bu on a larger scale. Unfortunately,it will take a few more bridges going out like the one in Minnesota a few years back to bring this problem back into the forfront of the nation’s and state’s political agenda. With the nearly 6,000 bridges in Alabama, this could happen sooner, rather than later.

    How about this? ALDOT partners with cities and counties to charge business to decorate center dividers, or even medians? If billboards are allowed, how about if the DOT get a percentage of the revenue?

    Reply
  3. Interested Reader
    May 12, 2013

    In the past the gas tax worked because the people who paid it were the same people who used the roads: car owners. This was a relatively efficient user tax. Now much of the gas tax that is taken in is used for other purposes…mass transit, and others that you mentioned. I believe the way forward is not necessarily a higher or better tax, but an exploration of the innovation that comes with market forces. The government monopoly of transportation has built a behemoth roadway system, but has no efficient mechanism to maintain or improve upon it. There are promising developments on the transportation horizon, namely the driverless vehicle, that offer amazing opportunities to re-think how safe and efficient our roadway system could become. It seems to follow that if the private sector leads the way into the integration of the roadways and the cars that use them, it should begin to assume the cost of the roadways where there is the potential for profit. The problem with this admittedly “outside-the-box” solution is that it serves only the companies that innovate and the customers that they serve, leaving the politicians with nothing but a very large empty pork barrel. Of course, to me, that sounds like the best part.

    Reply
  4. Chris Carwie
    June 17, 2013

    Jim,

    Two words: User Tax. Particularly for large on- highway trucks, which studies have shown are the main culprit for tearing up our roadways.

    Reply

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