Fiscal Focus: Transportation
Why the Public Should Invest Like 90% of Americans traveling this holiday season, my family and I utilized the interstate highways to visit family and friends. Our federally integrated network of highways, airports, canals and rail lines allow individuals to travel for the holidays, businesses to cheaply transport goods, and first responders to quickly respond to emergencies. Through strong state and federal collaboration, transportation infrastructure serves to connect all of us.
The Current Reality The Ohio Department of Transportation (ODOT) oversees infrastructure in the state of Ohio. In addition to our roads, ODOT oversees 166 public use airports and oversees Ohio’s rail lines through the Ohio Rail Commission.
The primary funding for transportation infrastructure and maintenance in the country comes from federal and state gas taxes. The federal governmenthas a gas tax of 18 cents and Ohio has a 28-cent gas tax. The majority of the Ohio tax goes to ODOT—14.9 cents—and the rest is divided between counties, cities, townships, highway patrol, other state agencies, public works, and debt services to fund infrastructure.
The ODOT budget in FY 2012 was $2.70 billion and $2.85 billion in FY 2013. However, this is down from $3.23 billion in FY 2007, a cut of 12% over five years. As part of the FY 2007 budget, ODOT allocated $838 million towards major new projects, compared to the current budget that has less than $100 million allocated for new projects.
We have already seen the negative impact of less investment in transportation. ODOT has delayed 34 major projects and has reduced staff by 400 people since 2011. Two of the most notable delayed projects are the I-70/I-71 split project in Columbus and inner-belt work in Cleveland. In addition, the Brent Spence Bridge in Cincinnati will likely be funded using tolls instead of state investment.
As our transportation needs change, Ohio needs to adapt. An opportunity was missed when the federal government offered Ohio $400 million through the American Recovery and Reinvestment Act in 2009 to fund high-speed rail service connecting Cleveland, Columbus, and Cincinnati (the “3-C rail project”). Unfortunately, Governor Kasich chose not to accept this funding. Local communities continue to explore non-automobile options but find it difficult with decreased state support.
The 2014-15 Budget In the 2014-15 budget, potential changes related to the turnpike – in addition to questions about funding for major infrastructure needs – will be important. Following a study, the Governor has proposed the issuance of $1.5 billion in bonds leveraged on the turnpike. This money will be borrowed now and paid back in the future by revenues generated by the turnpike. While the specifics are still being discussed, some have expressed concerns of toll increases and the diversion of revenue from the counties around the turnpike. The governor’s proposal will need legislative approval.
Revenue streams must remain up-to-date to reflect a 21st century Ohio economy. The gas tax is seen as a barrier to transportation funding and investments, because cars are becoming more fuel-efficient. It may be worth considering if this tax is an appropriate and adequate mechanism to fund infrastructure investments. We need to have open conversation of what transportation infrastructure will need to be in the 21st century for all of Ohio’s individuals and businesses.
It is also worth noting that as the oil and gas boom continues in Ohio, transportation infrastructure will be in drastic need of repair, expansion, and maintenance as a result of heavy truck use. Local communities will need state assistance in maintaining these roads and expanding some routes to handle the increased industrial activity. This is one potential use of an increased severance tax on oil and gas drilling. If we instead use additional severance tax revenue for an income tax cut, local community infrastructure will continue to be a concern.
Speak Up! If you would like to get involved as the state budget nears and our advocacy increases, please follow us on Facebook, Twitter, or sign up for our emails. Please read our past Fiscal Focus articles on K-12 education, state parks, mental health, senior services, or privatization.
If you’re interested in additional information on state parks in the state budget or have any other related question, please contact us.