Just recently I received an e-mail from a constituent asking me to oppose Senate Bill 367, which called for raising the gas tax in New Hampshire. He gave some compelling reasons for his argument (including the concern that as the I-93 expansion gets the bulk of funding, our rural roads and bridges are suffering). On the other end of the spectrum, there have been pleas from the Commissioner of the N.H. Department of Transportation (NHDOT) to not only raise the gas tax, but to also support the passage of gambling — both to be used as revenue sources to fund NHDOT.
I think everyone agrees that good roads and bridges are critical to our safety, quality of life, and overall economy. And not unlike many other states across the country, New Hampshire faces some real challenges in determining how to fund our transportation system in a fair and cost effective way. With limited resources, we need to manage the maintenance and repair of existing infrastructure and determine what projects are a priority.
As background, New Hampshire has two road systems, each funded differently. Our turnpike system has about 89 miles of highway and 164 bridges and various toll plazas. The Turnpike Fund provides revenue for this system through tolls and is in good financial shape. (There have been two toll increases in recent years.)
The other road system includes about 4,300 miles of state roads and 2,129 state bridges. The sources of revenue to pay for this system are road tolls (aka the gas tax), motor vehicle related fees and surcharges (e.g. registration fees), and federal funds. The Highway Fund is the sole source of revenue for funding the maintenance of the state's highway infrastructure, as well as the construction projects contained in the state's Ten Year Transportation Improvement Plan.
In addition, under state statute, towns and cities collectively receive 12 percent of the preceding year's total road toll and motor vehicle fee collections. Finally, there is a diversion of highway funds to other agencies including the Department of Safety, the Judicial Branch, the Department of Justice, and the Highway Safety Agency. (In the 2016/17 NHDOT budget projections, the diversion amounts to $83 million and $85 million respectively (Projected Highway Fund revenue for 2016/17 is $231.9 million and $231.3 million respectively).
For the period 2006 through 2015, total spending by the NHDOT increased by over $120 million. Fueled by a historic spike in road construction projects funded by the American Recovery and Reinvestment Act (ARRA), unprecedented bonding for capital projects, and increased operational expenses, the NHDOT total spending climbed nearly 20 percent over the last decade. Salaries and benefits are budgeted to increase approximately 12 percent over the next two years alone, costing $26 million. Employee benefits are among the fastest rising pieces of the NHDOT budget. While personnel expenses have actually fallen slightly from their peak during ARRA, benefits continue to rise.
According to NHDOT current projections, the Highway Fund will be cumulatively negative $50.8 million by the end of fiscal year 2016 and by $103.1 million by the end of fiscal year 2017, just in the operational portion of their budget. The department also estimates the cost of certain capital projects (completion of I-93, paving, state bridge program, etc.) could add approximately $100 million per year.
While Senate Bill 367 (the 4 cent increase in the gas tax) attempted to solve the NHDOT funding problem, it unfortunately fell short of the mark. SB-367 was estimated to raise $32 million annually, which would not even cover the operational shortfall that NHDOT projects, let alone fund any additional capital projects. Based on NHDOT projections, in order to cover the anticipated operational costs and fund $100 million in additional capital related projects per year, it would take an approximate $0.20 increase in the gas tax beginning in fiscal year 2016 for the Highway Fund to end the fiscal year 2016-2017.
Further, transportation experts agree that the traditional per gallon gas tax is not a long-term sustainable funding source. For nearly a century, gas taxes helped build America's transportation system. But today, gas tax revenues are declining. Americans are reducing their gas consumption by driving less and when we do drive, we are using fuel-efficient and alternative-fuel vehicles more frequently.
The need for infrastructure improvements far outpace the funding available and raising taxes amid the specter of a still struggling economy is burdensome. Rather than pass a tax that does little to address the projected shortfalls, we need a thoughtful and comprehensive solution.
To that end, I have co-sponsored legislation (SB-416) with Sens. Bradley, Morse, and Odell to prohibit certain allocations of highway funds and to establish a committee to study methods of maintaining highway fund integrity. Once this committee is established, it should look at setting priorities (a fix-it-first before starting new projects approach), Best Management Practices (e.g., vendor contracts, latest technology, etc.), and private-public partnerships, as well as possible revenue sources.
(Republican Jeane Forrester of Meredith represents District 2 in the N.H. State Senate.)