President's Message: Funding the Future of Transportation

By Pat McGarry President AGC of Washington

(Editor’s note: The following is a reprint of an article recently published in the Puget Sound Business Journal.)

A nickel just isn’t what it used to be. And that’s a major reason why the state is in a transportation funding bind.

In 2003 Washington voters agreed to tax themselves a nickel per gallon of gas and in 2005 agreed to tax themselves another 9.5 cents per gallon. In today’s political and fiscal climate it seems amazing that in the not-too-distant past people actually voted – twice – in favor of a tax increase but they did. Much of the credit for achieving the affirmative votes goes to the smart decision to pair the tax increases with lists of specific projects that would be built with the funds.

Inherent in that pairing was a promise that if the taxes were passed and projects built things would be tangibly better than they otherwise would be. WSDOT and the contracting community have kept that promise: Despite the ongoing scourge of traffic jams in our most crowded corridors things are indeed better on our highways. Travel times and fatalities are down 21 and six percent respectively over the last few years. Plus 94 percent of Washington’s highways are in fair or better condition as are 98 percent of bridges.

That was good politics and good policy as the “to-do” list has gotten shorter and shorter – 82 percent of the 421 specific projects are either complete or underway – with nearly all of the ones completed so far delivered on time and on budget.

Here’s the problem: As the slate of projects funded by the Nickel Gas Tax increase of 2003 and the Transportation Partnership Act of 2005 winds down the state will have very little money to do anything more.

There are two primary reasons for this. The combined 14.5 cent per gallon tax increase was dedicated to the sale of bonds so WSDOT had enough money on hand to build the significant number of projects. Every year and for at least the next 25 years those gas tax funds must be used to pay off the bonds sold to build the 421 projects. Taxpayers may understandably think that this gas tax money is accumulating each year to build another round of transportation improvements but it’s not the case. Once these projects are done there won’t be any more yet we’ll be paying off the bond debt and principal.

Meanwhile the money generated by the gas tax is shrinking. More fuel efficient cars and greater use of public transit means fewer gallons of gas are bought and less revenue for transportation projects. WSDOT expects $5 billion less in revenue over the next 16 years than originally projected.

The 2011-2013 transportation budget plans just released by the State House and Senate Transportation Committees reveal this new reality: For the first time the state’s biennial transportation budget will reflect less revenue than the previous budget primarily because of lower gas tax receipts.

Without new revenue several things will happen. Many of the projects remaining on the to-do list won’t be done. Mega projects like the 520 Bridge and the widening of parts of I-405 may go uncompleted. The 94 percent fair-or-better rating of the state’s highways will drop precipitously as preservation dollars are pulled into new construction. Congestion will get worse as the state’s population continues to grow.

Recognizing that the well is nearly dry a coalition of business labor local government and environmental representatives have revitalized the Transportation Partnership the entity that led the push for previous revenue packages to make the case for new transportation investments. Given economic conditions and the state’s budget crisis the Partnership understands that 2011 may not be the year to pursue new transportation funding streams. Rather members of the coalition are thinking creatively and considering options with the goal of coalescing around a revenue proposal in 2012.

Business is vital to this process. Clearly the state’s transportation system affects for good or ill the state’s business climate. Each day nearly $650 million in freight moves on Washington’s roadways and 46 percent of the state’s jobs are in freight-dependent industries.

Members of the business community are invited to share their views about preserving and improving our transportation system with the Transportation Partnership. Send an email to info@transportationpartnership.org.

Our state came together before and developed proactive solutions to major transportation challenges. We can do it again.

Pat McGarry is vice president of Manson Construction. AGC is a member of the Transportation Partnership.