DALLAS — A joint Kansas legislative committee has passed along two versions of a plan for financing the state’s next 10-year transportation effort to the Legislature, which will begin its 2010 session on Monday.
Both versions call for $300 million of new highway bonding capacity until additional taxes become effective in January 2013, and then another $2 billion of debt over the next 10 years.
The plans call for the additional debt because the Kansas Department of Transportation has exhausted the bonds authorized for the latest long-range plan that expired in June 2009, according to Kyle Schneweis, chief of governmental affairs at KDOT.
“We don’t have any authority to do more bonds at this point,” he said. “We will need those proceeds to do some of the bigger projects on our 10-year list.”
KDOT issued $1.3 billion of highway revenue bonds for the most recent 10-year plan, adopted in 1999, and also received the proceeds from $210 million of bonds supported by the state general fund. The department’s revenue bonds have underlying ratings of AAA from Standard & Poor’s, Aa2 from Moody’s Investors Service, and AA from Fitch Ratings.
The 18-member Special Committee on Transportation heard testimony on the two financing proposals on Monday, and opted to send both to the full Legislature without a recommendation.
The committee was established in 2009 to determine how to pay for a proposed $17.7 billion, 10-year comprehensive transportation program.
Schneweis said the interim transportation committee wanted to ensure a full debate on how to finance the state’s long-range plan.
“Both plans are innovative, and the lawmakers wanted to have a more vigorous debate,” he said. “If they had preferred one, it would have limited the discussions to that proposal. They decided to put both before the full Legislature so more options could be considered.”
Both proposals for financing the comprehensive transportation plan were developed by KDOT. The proposed tax increases in both plans would not be effective until January 2013, according to Schneweis.
“We want to give the economy some time to recover before the taxes go into effect,” he said. KDOT would focus on highway maintenance efforts over that three-year period, he added, with capital projects deferred until the next long-range plan goes into effect.
One option would reduce the state motor fuels tax to 19 cents per gallon from the current 24 cents but would also remove the 5.3% state sales tax exemption for motor fuels. Local governments would also be allowed to levy a sales tax on motor fuels.
“Removing the sales tax exemption for fuels would allow revenue to rise as the price of motor fuels go up,” Schneweis said. He said that option would generate $4.4 billion in revenue over 10 years.
The second option would retain the sales tax exemption for motor fuels. However, it would increase the state fuels tax by seven cents per gallon, with future increases tied to the consumer price index. Schneweis said the proposal would generate $3.74 billion over 10 years.
“The projected revenues for both plans are based on a lot of long-term assumptions, including the price of fuel and the amount of fuel consumed,” he said.
