Roads and Your $$$$...

I've talked before about how our Highway Distribution Account (HDA) works and the taxes we pay that go into it, fuel and registration taxes. The Federal fuel taxes also flow into our HDA that we use to take care of our road, air and rail transportation infrastructure.

I used to believe that all taxes went into a big bucket and were doled out by the politicians based on their power and who they needed to get votes from... I've had a lot of tax education from those days and know that's not the case. In Idaho, most taxes are user fees related to the use of the infrastructure involved in that activity.

There are no general fund taxes used for transportation. General funds come from sales tax, individual income tax (these two alone comprise about 90% of state general funds), corporate tax and other misc fees. These General funds are then spread out over Health and Welfare, Education (K-12 and Higher Ed), Corrections, Veterans Services... the list goes on. They are not used for the Department of Fish and Game or the Department of Transportation, these two departments use only what are called "dedicated funds" that come from user fees or taxes and federal funds based upon user fees or taxes.

Because of the reduction in sales taxes and personal income, revenue for the General fund is down, thus funds available for those departments will also be down, their budgets reduced.

The Department of Transportation has experienced inflation costs with building materials over many years without us addressing their revenue stream (fuel taxes and registration fees). We requested a Performance Audit last year that revealed some things that the department and the legislature needed to do in order to ensure we got the biggest bang for the buck in the future.

We do need to make some adjustments in the revenue provided to ITD so that they can better plan maintenance and preservation activities as well as do those activities. They are currently in the mode of fixing "worst first" and not doing preventive maintenance due to the lack of funding available. They do not have a preventive maintenance planning program for our roads that went by the wayside when getting a new financial software system. They need some new software tools to be able to better schedule and perform preventive work instead of being reactive only to work as our infrastructure fails.

Now the big question: How much do they need? There are quite a few numbers being kicked around and how to create that revenue from various forms of increased fees and taxes. Some of those forms take 5 years to implement, some only 1 year. We have heard from a number of lobbyist's, the Governor's office and, of course ITD on the issue, but we've only heard from one... yes just one citizen on the issue in committee. Mr Hart, a precinct chairman in District 19 took the time yesterday to testify before the committee about what he is hearing from the folks in his precinct. That was refreshing and needed.

Of course we get emails and phone calls from citizens saying to invest in the infrastructure and to raise no taxes at all...

I would love to hear from you as would all of the members of the Transportation and Defense Committee in the House. Let us know your thoughts and how you feel we should best proceed. This infrastructure belongs to you, you pay for it's upkeep and for the people that do that upkeep... how would you proceed?

Let us hear from you.

The Idaho Stimulus...

Margaret Thatcher once said, "The trouble with socialism is that you eventually run out of other people's money"

We are trying to determine the current revenue rate of the state for 2010 to set our budget. As required by the Idaho Constitution, we are required to have a balanced budget at each year's end. Forecasted revenue for 2010 is down, way down and budget setting was to begin next week. That budget would be reflective of Idaho's economy and would become, as is the 2009 budget, the baseline for budgeting in 2011 and so on.

With the new stimulus package from Washington DC being set up for the Gov's office to request funds in the next 45 days, creates some issues. The Executive branch will have to understand what the 1100 page law now is and how to use those funds to meet the needs of Idaho, while not wrapping Idaho up with federal strings that typically come with "free money". But the Gov can not execute those funds unless they have been authorized by the Legislature (and in the stimulus bill, they kind of forgot to include that process).

We have put the normal budgeting process on hold to better understand just how the Legislative and Executive branches can most effectively and efficiently meld the funds into our process to move forward.

In my humble opinion, we need not knee jerk and do something silly before we truly understand the size of the tiger's tail we are about to grab. It makes sense to me to set our budget on what we know today and follow that up with a "stimulus supplemental" bill to keep the two separate. I don't think we will continue to get "socialist money" forever and need to ensure we are able to keep sight of what our true Idaho revenue and costs are to run our state.

One-time money rolled into our budget will cloud our process and our thinking.

Your thoughts?

Are Taxes Based on a Real Need?...

We had an interesting briefing today with ITD and the Governor's office requesting an increase of $200M for additional needs for "transportation" and $134M for additional (to the$450M already approved) GARVEE funding. This is a hard pill to swallow (as I've written about in previous posts) without understanding the real need and where these funds will and are going towards.

Let's just consider the $200M of "New Money" requested (and by the way, that means additional taxes or fees of $143 per man, woman and child of our state). Some of us are asking how this need was determined. Was it vetted through a public comment process where the public would understand the project and the costs to them of the highways, overpasses or public transport systems being recommended to them?

I'm wondering if we are now in an era where we can use communication tools like the Internet and other tools where the public could be better educated about the costs associated to their choices. If a pollster were to ask me if I would like to have a really nice 6 lane highway, I would likely say "sure!"... but if asked that same question while also telling me that it will cost me another $143 per year for every member of my family for the rest of our lives, I would have to reconsider and ask for other options...

There was some polling of citizens was done prior to the Legislative session asking our folks if they would approve of increased registration fees to add money to our transportation funding, 52% approved of that. I suspect that had they known that the bill they were looking at funding was $200M and their share was $143/person... the results would have come out just a bit differently. I wonder why that wasn't part of the question asked in the poll?...

I don't disagree that ITD needs more funding to meet it's current commitments, I just have to ask if those commitments are really meeting the needs of the people and if the people understand the costs of what they are now signed up for... are those commitments really the requirements?

Your thoughts?

Local Option Taxes...

Lot's of rumblings around the Capital Annex these days regarding Local Option Taxes for targeted transportation and mass transit needs. We've got a couple of bills floating around that I suspect are or will be heard soon. (You can track or find bills up for adoption here)

I've listened to quite a number of folks about their desire to enable a community to tax themselves to fund infrastructure that the majority of the community feels are needed. I tend to agree with that, however, we need to ensure some pretty stiff sideboards are in place for spending these local community taxes and for the protection of the folks that will be paying them.

Currently, the taxes that are being focused on are local taxes to improve roads and public transportation. I've asked everyone that seems to support this tax what their incentive is for such a tax. By far the most consistent answer is "because our local transportation infrastructure needs fixed and we can do that with a local tax".

I love Idahoans, we don't hesitate to step up and take on issues that just need fixing, but in this instance, I think our focus is short sighted.

We currently provide tax Dollars to the Idaho Department of Transportation through our fuel taxes, registrations and a number of other revenue means that are to be focused on our transportation infrastructure. I've described the Highway Distribution fund in other blogs, and it's this fund that is currently the funding source that is to be used to fix those problems that we all see everyday.

If you were running a company that had a department that was "under performing, not meeting their goals" would you be better off still providing funds for that department while starting another department to fix the problems of the first couldn't seem to handle? Of course not, you would first focus on the under performing department and find the roadblocks keeping that team from meeting their goals.

We have a department that is charged with constructing, managing and maintaining our public transportation systems in Idaho. From airports to highways, ports to public mass transit systems... shouldn't our focus be on the team charged to spend our tax money today on the issues that are of most interest to us? Ensure they are as effiecient as possible before we look at increasing tax Dollars to be spent by that department?

If we decide to go down the road to tax ourselves with a Local Option tax to "fix our roadways or improve our public transportation systems", were do you think that new tax money will go? It will go to the same folks that are currently charged with that task now... what's the real gain?

Putting a band aid on a broken arm will not heal the arm, it will just make you feel better that there is at least something there... the arm is still broken, it will heal, but never be as good as it was. Throwing more tax Dollars at a system that is not efficiently spending those Dollars will do nothing more than continue to empty our pockets while still not making effective use of our hard earned money.

ITD is the third largest department in the state with a huge task of managing all of our transportation needs... the laws governing/restricting how they do that (legislative), policies directing the department (executive) and leadership and management of how they address the issues (The Commission) all need some "tweaking" to ensure our Department can be focused on the needs of the citizens of the State.

One can't blame the department or the legislature or the executive branch as the root cause of our problems, but all of us are part of the roadblocks to getting the department operating at an efficiency where we would not need more tax dollars to allow them to meet the goals that we have set for them. We are so focused at being reactionary to the lack of funding to meet required demands, we are not being proactive in looking at other ways to meet those demands.

I have yet to see a tax in our great State go away once it's enabled. It sure seems to be easier for our government to increase taxes than it is to ensure government is effeciently spending those Dollars in the first place... our first reactions seem to be to throw more money at the problems and hope they go away.

We have a constitutional requirement for a balanced budget at the State level, how would this work with a local taxing district managed by a non-elected board? Who would hold them accountable for the use of the people's money? Shouldn't we focus on how our money is spent today before we just assume throwing more money at an issue will solve our problems and raise more taxes?

Sideboards on Local Option taxes are extremely important if we are going to use them... using them as a band aid covering up larger issues, in my opinion, would we way outside any sideboards we could set.

Your thoughts?

A Road Less Traveled....

As I was returning to my office this morning from the Urban Land Institute meeting in the Grove Hotel I noticed something. After a full morning of discussions regarding how we are going to fund more transportation infrastructure (i.e. raising this tax or that fee) I suddenly realised that I seemed to be going almost twice as fast going back to the office at 11:00 am than when I came to the meeting at 7:30 am...

We discussed local option sales tax increases of up to 1 cent, increasing registrations, increasing fuel taxes, increasing property taxes... the "increasing" discussions seemed to be never ending. Everyone seemed to have a plan to fix our woes with some sort of increased taxes. We know that we have issues that need to be funded, but it was not until Gov. Otter's Chief of Staff (Jeff Malman) got up and mentioned that we are now also working on how we can better spend the dollars we do have... I know it's easier to just raise a tax here or there and throw money at the issue, but if we are not spending the money we have wisely, aren't we putting a band aid on the real problems?

Getting back to my drive back to the office... why was it that I had a much easier commute back to Meridian later in the day than I had to Boise in the Morning? Well anyone and everyone knows it's because we all need to get to work in the morning and then come home at night at about the same time.

This lead me to think that we might also have "social engineering" issue that compounds our infrastructure issue. Why do we all (repeat... ALL) need to use our roads at the same time? Typically it's due to local business desires to have their folks change shift or start their work day all about the same time.

We do have infrastructure issues that need funding and we are going to have to find those dollars somehwere. Within the mix of "increased tax solutions" that are on the table, shouldn't we consider some "social engineering solutions" as well? Just how much would it cost the state to provide incentives to business encouraging/requiring "flex" hours or a change their shift schedules to times outside of the standard morning and evening commutes? Can we compare this cost of influencing our social behavior to the millions we are talking about spending for (in the Treasure Valley) 4 to 5 hour period each day that our roads are jammed with traffic... ?

As an example, how many people at Micron alone are beside us in traffic the mornings trying to get to work? What if a company the size of Micron were to move their shift change from 7:00 am to 7:00 pm to say... 9:00 am to 9:00 pm? And what if they were to encourage their normal "8 - 5'rs" into a more flexible schedule? That single action alone could take thousands of cars out of the early morning and evening commutes and spread the higher utilization of the roadways over a larger period of time. Less time commuting means less impact on our air quality, better fuel economy and happier drivers.

Employers aren't going to resolve our lack of funding issues, but do play a major role in why we have traffic issues at certain times of every day. I hate to see us pay for and build a huge infrastructure that will only be flexed 4 to 5 hours of every day because we choose to be inflexable in our travel requirements.

We need to put some "social engineering" options on that table to resolve our transportation issues... it's going to take a package of things, this needs to be one that's considered.

Thoughts?

Mass Transit in the Treasure Valley...

A number of us from the Legislature in the Treasure Valley were invited to attend a briefing in Salt Lake last Monday regarding how their mass transit system has evolved. My intention was to learn costs per person, state funding, subsidies required and ongoing costs for maintenance and how that is managed.

The Treasure Valley Compass leaders ensured that we all met the major players in Utah that have been involved in setting up the transit system, expanding it and maintaining it. The Compass folks did a great job in ensuring that we got our questions asked and have promised to work with Utah in getting some of the data we requested.

There is no question that the public transportation system in Salt Lake is top of the line. They have a combination of bus, tram and light rail. Their system was originally started on a shoe string (much like the Valley Regional Transit Authority now), but was boosted through federal earmarks (around $500M if I recall correctly) and local option taxes of the six surrounding counties to Salt Lake of between 1/2 cent to 3/4 cent sales tax that is collected through the state. Utah has had local options taxes for quite sometime so you will find various sales tax rates throughout the state.

Utah's system thus far has cost the tax payers (both federal and state) approx. $1.5 billion dollars. The est. population in the six counties footing the bill (less federal earmarks) is approx. 1.2 million folks (just slightly less than the entire state of Idaho).

Inceases in local option taxes have been happening since the system was started, most run as a referendum that was done on a "quick sale" sort of effort by engaging with the public on the requirements shortly (within 4 weeks) before the vote was required. Their strategy was to ensure that any opposition would have little time to organize and coordinate an opposing view before votes would be made (sound familiar?) and worked absentee ballots hard as well to ensure passage of the increased tax.

No doubt that Utah's mass transit system is top of the line, however, I see no way that 500,000 people in the Treasure Valley would pony up the money for such a convenience.

One lesson that did hit hard was that Idaho must start early in purchasing easements for ANY kind of transportation planning, regardless if that's public trams, trains or roadways... it needs to be planned and purchased as early as possible. Land prices just continue to go up, waiting for "tomorrow" to purchase property for a bypass or a commuter train is just not smart business.

I appreciated being invited on the fact finding tour, I learned a lot. Utah started planning and funding these transit systems well before it was announced that they would be getting the Olympics, much to our surprise. I suspect that because they did invest in such a system, that it did bode well for their selection by the Olympic selection committee.

Idaho has transportation needs from city streets to the freeway, from buses to walking trails. We are going into debt now through GARVEE to get some of the issues corrected and, as I'm sure you've heard, we are still "$200M per year"short. We need to get creative, change the way we do day to day business in the way to manage our transit systems. I've posted some ideas previously (click here to read them) that we need to consider. Is it time to raise gas taxes, registration fees, fund transportation needs with General Funds or change our habits?

We don't have the answers or the money... do you?

Drop me a note at Marv@thg-inc.biz

Cheers,

H

Roads... Poor planning or booming econimic byproduct

We've all driven the I-84 "Oregon Trail" ruts between Meridian and Nampa. I remember not long ago when it was resurfaced where the asphalt used the first go-round didn't harden correctly and we had cars and trucks driving with 2" of asphalt stuck to their tires... seems this track of road just seems doomed to issues!

One might note when driving the rutted interstate, that the ruts line up with car tires and not truck tires, yup those ruts are made by our cars and not that truck traffic.

As you know, it is hard to get any more cars on that road during rush hour. Add some construction and we tend to mess up that commute even more. Notice as well, that Meridian is also not exempt from traffic issues... There are days, I just hate to go outside my subdivision here in Mallard Landing to go anywhere... I just dread the bumper to bumper traffic to get to the hardware store or to go out for a cup of good coffee. There is no doubt that we have traffic issues everywhere here in the valley, but what the heck happened to cause all these issues? Poor planning or something else?

Idaho has grown so quickly that we were 5th in the Nation last year for growth. The US Census Bureau has estimated Idaho's population as of July 1, 2006 to be almost 1.5 million... a gain of 2.6% over the numbers from 2005. Idaho non-farm employment growth has accelerated every year since 2002 with momentum pushing that growth to 4.6% in 2006. This is the strongest economic growth in our great state in over 12 years!

Is it a wonder that the population and traffic is exploding? We have jobs and are attracting employers to Idaho at an unprecedented rate... "If you build it, they will come" seems to hold true for Idaho. We have built good business tax advantages, broadband, transportation infrastructure and have an education system that has been meeting the requirements of those employers (we will discuss the Community College issue in a later blog). These things attract business and they have come. Our economic estimate is up from last year as expected because of this growth... State income as of the end of March was $1.809 Billion, where the estimated budget we used during the session expected $1.829 Billion.

Yes, there are a number of folks moving to Idaho and as the population grows, so does the traffic. I believe a little of both have had a compounding impact on how we can get around. The primary funds used for maintenance and repair are tax dollars received from fuel sales (both Federal and State). Even though the number of vehicles have gone up, the fuel used per vehicle has reduced over the years so the tax dollars received per vehicle has also been reduced at the same rate. Increased traffic with less dollars to maintain the roads, compounded by increased costs of maintenance is the recipe for what we are experiencing today.

As we experience the byproduct of our success to stimulate business and growth, we have to ask what the heck do we do now? We have many choices before us, I see few that will be a comfortable choice for any of us, but some must be made. Here are a few of the choices I see today:

1. Reduce ITD (ID Transportation Dept.) maintenance costs: (brainstorming here)...

ACHD, is it a value added organization or just a fluffy "middle man"? Should ITD provide road funds directly to the cities in Ada county for management of their road systems? Funds are allocated from ITD to ACHD for Ada county maintenance functions. Would we be better off cutting out some of the middle man infrastructure or would those costs just be duplicated in infrastructure Boise, Meridian and Eagle?

Studded tires, many of us used studded tires way longer than we really need to. Studs become little road grinders when we don't have ice on the roads... causing ruts, noise and dust pollution. Is there an alternative? OR and WA have completed studies that indicate they spend between $12M and $50M every year in studded tire mitigation and repair (ruts, new lines, noise and dust control). Does Idaho need to spend more money studying the fact that studded tires cause damage that requires extra maintenance costs annually? I believe we can safely assume that our annual maintenance costs fall within the $12 to $50 million dollar range as well (inclusive of city and county costs).

Public Transportation that would really reduce traffic. Adding more buses that have very low ridership doesn't seem to be the answer, they just add to the congestion. Would light rail that could be used all over the Treasure valley help reduce maintenance and growth costs by reducing the number of cars that travel on the roads?

... just a few thoughts here, any other ideas? I've asked ITD to look at some things that could reduce costs as well as increase revenue...

2. Increase Revenue: (again, Brainstorming here...)

Create an annual Studded Tire excise tax? These funds would be dedicated to the extra maintenance requirements caused by the damage done by studded tires or could be used to partially fund public transportation to help reduce local traffic and the damage caused by studded tires.

Increase taxes on fuel to help off-set some of those reduced taxes coming in per vehicle due to better fuel economy? That's a hard thing to do with fuel prices the way they are now. There are some folks that are stretched to purchase fuel to get to work as it is. (...and I hate to see any increased taxes)

Increase registration fees? Again, I hate to see us increase those fees and the Idaho Constitution keeps us from using all of those fee increases for just road maintenance. This action would likely need some sort of Constitutional amendment to re-apply some of the fees that were already increased for registration fees.

Increased Signage fees? Most will ask, "what the heck are you talking about?". ITD charges vendors for those little signs along the highways that point you to their business (lodging, meals, fuel... little blue signs with the vendors emblem on them). There are quite a number of these signs along the roadways and Idaho controls the rate of the fees paid for these signs. I have no idea about what type of revenue this could generate, but it's currently VERY cheap advertising for vendors (less than an ad in the yellow pages of your local phone book).

Is there a way to allocate revenue to where the traffic is while still taking care of the rural roads in Idaho that don't have the traffic to support their maintenance for public safety? Is there some sort of revenue stream that we haven't found to help with our road maintenance issues?

Our state's prosperity and growth allows us to enjoy many things here in the valley that 30 years ago, many of us couldn't even imagine. And for those visionaries that did imagine that prosperity and growth, it appears we missed planning for some of it's side effects...

Cheers,

Marv

Studies completed by our neighbors in Oregon and Washington:

Washington State Study

Oregon State Study