DALLAS — Kansas lawmakers will consider a 10-year, $8.2 billion comprehensive transportation program that authorizes an estimated $1.7 billion of state highway revenue bonds when they reconvene today in Topeka to develop a budget for fiscal 2011.
The Senate Transportation Committee has endorsed the program, outlined in HB 2650.
The effort would be financed by an increase in the sales tax to 5.6% from 5.3%, along with higher taxes on motor fuels and an increase in vehicle registration fees.
Proceeds from the bonds and revenue from the higher taxes and fees would provide an additional $2.7 billion for highway, rail, public transit, and airport projects over the next 10 years over the $5.5 billion expected to be generated by existing levies.
Kyle Schneweis, chief of governmental affairs at the Kansas Department of Transportation, said he expects the measure to be considered by the full Senate sometime this week or next.
Schneweis acknowledged that the highway measure will be scrutinized by lawmakers who must deal with a revenue shortfall in fiscal 2011 estimated at more than $500 million.
“We know that with the current revenue picture, this bill will get a lot of attention,” he said. “We are just happy it is part of the mix to be considered.”
The department said it got the idea to use social media, including Facebook and Twitter, to garner support for the program from a similar outreach effort by the Michigan Department of Transportation.
In the latest four-minute video presentation, Kansas Transportation Secretary Deb Miller outlined the need for additional revenue to maintain the state’s highways. She said recent budget cuts due to declining revenues have reduced KDOT’s construction and maintenance efforts to low levels not seen since the 1970s.
Increases in spending would protect the billions of dollars that have been invested in transportation infrastructure, and provide a much-needed boost to the state’s economic activity, according to Miller.
“It hurts me to see this investment lost,” she said. “We need a revenue increase to preserve the investment that Kansans have made in infrastructure, and spur economic development in the state. I know we’re in tough economic times, but past transportation programs have helped generate economic growth and helped this state weather economic downturns.”
Schneweis said the legislation would give KDOT the authority to issue bonds totaling up to 18% of the department’s annual revenues.
The 18% cap would support up to $1.7 billion of bonds over the 10-year span of the program, he said, based on current revenue projections.
“Right now there is not statutory cap,” he said. “We have to go to the Legislature for the authority to issue revenue bonds. With this provision, the department could issue the bonds as proceeds are needed, on its own.”
“The department could issue bonds up to the capacity limit, and then additional bonds could be issued as we pay down the outstanding debt,” Schneweis said.
The measure would also allow the state to issue revenue bonds that would finance local transportation infrastructure projects, with the local governments pledging to reimburse the state with revenues generated from new economic activity.
“This new bond program would help cities and counties that have an economic development opportunity but lack the infrastructure to support it,” Schneweis said. “They would promise to pay back the state from the dedicated revenues from the project, such as the sales tax collected from new businesses.”
KDOT financed the previous 10-year, $13 billion transportation program in part with $1.3 billion of highway revenue bonds, and also received $210 million of proceeds of bonds supported by the state’s general fund.
KDOT revenue bonds have underlying ratings of AAA from Standard & Poor’s, Aa2 from Moody’s Investors Service, and AA from Fitch Ratings.
