Slower Gas Tax Collections Means Brakes To Be Put On Some Miami Projects
Written by Risa Polansky on January 8, 2009
By Risa Polansky
As gasoline tax collections decelerate, the Florida Department of Transportation must slow down as well, cutting projects to accommodate shrinking resources.
The local five-year, $3.15 billion work program for 2010 through 2014 is $400 million smaller than the program set last year, local district Secretary Gus Pego said.
During the past two years, the state has reduced its five-year program by $7.2 billion, said Kevin Thibault, assistant secretary for engineering and operations.
"We, like other state DOTs [departments of transportation], are facing challenges related to transportation funding," he said.
The department is funded through the state’s Transportation Trust Fund, fueled by gas taxes, vehicle fees and federal apportionments and grants.
"When people consume less fuel or are not buying new vehicles, you see less revenue coming into the Transportation Trust Fund," Mr. Thibault said.
Documentary stamp taxes — paid on deeds, bonds, notes, mortgages and other documents — also in part support the department. In today’s shaky economy, documentary stamp collections are also declining.
The result: putting the brakes on some projects.
"With our funding shortfall, our capacity projects became the first ones to move out," local secretary Mr. Pego said.
The department prioritizes projects by type. Safety comes first — "you want to do safety projects no matter what" — preservation second, capacity third and aesthetics last, he said.
Projects including some capacity expansion initiatives on Krome Avenue and the second phase of the Northwest 25th Street viaduct project — building a two-lane bridge over the north side of Northwest 25th Street — did not make the cut for the five-year work program. The $115.4 million viaduct project was expected to be complete in 2011.
A tunnel to the Port of Miami, which officials expected to finish by 2013, has also been shelved.
But not because the money’s not there or because bond markets are shaky, Mr. Pego said, citing instead financial issues with the selected contractor.
"The tunnel is not a casualty of this," he said.
Mr. Thibault also said the tunnel remains funded in the department’s five-year plan.
But other projects have had to go.
"We have to have a financially feasible plan," Mr. Pego said, and as revenue estimates drop, the department has to amend its work programs to adapt.
Across the country, states are delaying or killing transportation and public works projects because of budget shortfalls and difficult bond markets, media reports say.
The Florida Department of Transportation doesn’t see state general revenue, meaning it’s not tied directly to the financial crisis Florida’s government faces now.
Legislators convened a special session Monday to cut more than $2 billion from the state budget.
Because the Transportation Trust Fund supports the transportation department and the department funds projects on a "pay-as-you-go" basis, it’s also able to steer clear of the bond market for the most part, Mr. Thibault said.
The state has committed to more than $7 billion outstanding projects and has about $500 million in the trust fund, he said.
But the department pays contractors for projects over time, not in a lump sum — the only state agency allowed to cash flow its budget that way, he said.
"In our case, because the projects span multiple years, and how it’s paid out, we’re allowed to do that, which gets more transportation work done."
The department does plan to sell some bonds, potentially $210 million for a bond program that backs bridge replacements and right-of-way purchases, and $100 million in grant anticipation revenue vehicle bonds, which are sold in advance of receiving federal funds that are later used to pay back the bonds.
But the plan is not to go out to market until next fiscal year.
"So it’s not affecting us today," Mr. Thibault said.
However, Florida’s Turnpike Enterprise, an entity within the department of transportation, does go out regularly to the bond market, he said.
The Turnpike issues bonds backed by toll revenues, typically in the fall and/or spring "based on cash flow needs," Spokeswoman Sonyha Rodriguez-Miller said in an e-mail.
"The Turnpike did not issue bonds in the fall of 2008 because bond proceeds from the previous bond sale had not yet been fully utilized," she said. "This delay in the bond sale was fortunate given that the credit markets were in turmoil and uncertainty.The Turnpike is planning to go to the bond market in the spring."
Because the turnpike system holds double A bond ratings, officials expect "that its revenue bonds will continue to attract strong demand from the investment community and that it will continue to receive favorable interest rates when it goes to the market," she said.
Though Florida has escaped some of the major bonding issues facing other states, it does have its shrinking Transportation Trust Fund to deal with.
Now, "what we’re trying to do is obviously try to protect as many projects as we can," Mr. Thibault said.
The department is "trying to look at ways to streamline efficiencies."
One idea is to postpone the upgrades that sometimes go hand-in-hand with projects and instead focus mainly on the most necessary improvements.
Officials are "seeing if there are ways we can do business a little differently to get to the same goal," he said.
Despite funding constraints and a multi-billion dollar pullback in projects, the Department of Transportation and Gov. Charlie Crist have rolled out an accelerated road construction plan designed to fast track about 180 projects statewide, representing about $1.4 billion.
The aim is to jumpstart the economy with road resurfacing, bridge rehabilitation, safety enhancements and other projects set to employ 39,000 workers and generate $7.84 billion in economic benefits, according to a department announcement.
The plan includes several projects in Miami-Dade, such as adding four lanes on Northwest 87th Avenue from Northwest 58th to Northwest 74th streets.
The 180 projects are fully funded and able to move ahead one to five months faster than planned "so people can get to work quicker," Mr. Thibault said.
But as gas tax collections decline, it’s time to start discussing alternative funding, he said.
"We need to figure out another way to get a reliable revenue source."
Other states face the same issue.
Oregon’s governor has called for a new tax based on miles driven, not gas purchased.
Increasingly popular Hybrid cars allow drivers to use less gas — a plus for the environment. But these drivers still use the roads just as much, meaning states take in less gas tax revenue and still need to provide roadways for just as many residents.
In Florida, "it’s really how do we take that next step?" Mr. Thibault said. "It’s going to take some vision."