How Louisiana Will Tackle Its Transportation Funding Backlog

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BRADENTON, Fla. – Louisiana faces another thorny funding issue: how to address billions of dollars in backlogged transportation needs.

A state panel Tuesday embarked on a six-month review to develop a comprehensive funding program that will allow Louisiana to pay for $12.7 billion in pent-up needs in its road and bridge program, as well as megaproject and multimodal funding.

The 18-member Task Force on Transportation Infrastructure Investment will explore all possibilities, including public-private partnerships, greater use of tolling, and developing new revenue to support a revenue bond program.

Raising the gas tax, which has remained unchanged for decades, and a mileage tax will also be considered.

"Everything has to be on the table," Department of Transportation and Development Secretary Shawn Wilson said Tuesday as he explained the backlog and his annual budget.

After expenses for operations and maintenance on existing facilities, as well as debt service for previous projects, in his $1.5 billion annual budget, Wilson said he only has $2.6 million to allocate for projects that add new capacity.

"We are pretty much at a standstill," said Wilson, who co-chairs the task force. "We are virtually in a preservation-only approach in terms of how we're managing our state system."

Louisiana's current $12.7 billion road and bridge backlog is projected to reach $35.99 billion over a 30-year span given current funding available.

Other modes included in DOTD's budget, such as airports, ports, waterways, and rail, will need another $20 billion capital infusion over the next 30 years.

Yet funding from the agency's largest source of revenue has remained flat for decades.

Louisiana's gas tax has remained at 16 cents per gallon since 1984, but time has diminished its buying power to 7 cents today, Wilson said.

"Had the tax been indexed it would be at 36 cents today," he said.

Currently, a portion of the DOTD's capital needs are financed with state general obligation bonds, although the agency's projects compete with other state and local projects financed in the annual capital outlay bill.

Although there is a backlog now, Louisiana has focused on transportation investments in the past.

In 1989, voters statewide approved an additional 4-cent-per-gallon gas tax to support the $5.2 billion TIMED program, an award-winning Transportation Infrastructure Model for Economic Development Program profiled on the USDOT Innovative Program Delivery website.

The combination pay-as-you-go and revenue bond program was designed to accelerate widening 536 miles of state highways to four lanes, widening and new construction of three major bridges, and improvements to the Port of New Orleans and Louis Armstrong International Airport.

All but two projects in the TIMED program were completed, and those are being funded "at a snail's pace" in DOTD's annual budget, according to Wilson.

DOTD is also absorbing debt service costs related to the TIMED program because its dedicated 4-cent gas and fuels tax was not indexed and revenue collections remain flat, according to Wilson. The bonds mature in 2042.

The state has also used federal hurricane recovery funds and money from the American Recovery and Reinvestment Act for transportation projects, although stimulus funding has long been exhausted.

Gov. John Bel Edwards has said his goal is to commit more than 25% of the state's annual capital outlay cash to construction for roads and bridges.

"It's going to take a very substantial and collaborative effort to get our transportation infrastructure where it needs to be," Gov. John Bel Edwards said in opening remarks to the task force he recently appointed.

"I know and you know that the Easter Bunny isn't going to deliver these transportation projects," he said. "Investment doesn't happen without the revenue to make it happen, and the existing streams of revenue available are inadequate."

Edward said he expects the panel to develop a comprehensive package of funding recommendations in six months, while balancing rural and urban needs fairly and considering economic development opportunities that create jobs.

He placed specific emphasis on considering "expedited ways to deliver" projects to tackle the state's needs faster than the current process, a nod to the use of P3s.

Edwards said the state already got a jump-start on some problem areas in the transportation budget during this year's legislative session by removing the Office of State Police from the DOTD's purview.

That office cost the DOTD nearly $300 million from the transportation trust fund between 2012 and 2016, according to a Jan. 4 agency funding review by Edwards Transition Committee on Transportation.

The state has also begun aggressively pursuing new federal funding through the USDOT's grant program known as FASTLANE, or Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies, Edwards said.

Louisiana won $60 million of the $100 million it sought in the first round of FASTLANE grant projects last week.

The money will be used to complete a 15-mile pavement replacement and lane addition project between the I-10/I-49 interchange and the Atchafalaya Basin Bridge – a major shipping and high-growth corridor.

"Bringing our federal tax dollars back to Louisiana to improve our infrastructure is a no-brainer," Edwards said when the grant were announced.

Under difficult circumstances earlier this year – as the state grappled with a historic deficit – officials began implementing a new strategy that focuses on the state's transportation system, Edwards told the task force Tuesday.

"It's only a good start," he said. "It's been about 30 years since the last time the state made a serious effort to advancing needs. I think this critically important effort in promoting transportation starts today, with you."

The task force's duties include making specific recommendations for increasing recurring levels of funding to address the state's highway and bridge maintenance backlog.

The panel will also make recommendations to be introduced in 2017 to fund a multimodal construction program that addresses immediate needs as well as funding for major transportation improvement projects in the Louisiana Statewide Transportation Plan.

Each such "megaproject" is a "very expensive or large scale transportation improvement that would have a regional or statewide impact and would require special funding outside of normal DOTD funding mechanisms," according to the state plan.

The DOTD's Statewide Transportation Plan includes 39 megaprojects estimated to cost $10.5 billion.

No. 1 on the list is completion of the Interstate 49 South project between Lafayette and New Orleans. Its price tag is estimated at $750 million.

The task force expects to meet monthly in Baton Rouge and at various locations around the state. Its final report is due Jan. 1.

On Tuesday, Edwards also signed the state's annual capital outlay bill, a list of state and local projects that are ultimately financed with a combination of cash or federal funds and state general obligation bonds. The amount earmarked for DOTD programs was not immediately available.

The $4.4 billion multi-year capital budget is based on cash and $1.6 billion in general obligation bond financing for priority 1 and 2 projects that exceed the amount available in the existing capital outlay escrow fund, Edwards warned in his veto message.

Edwards said he axed $44 million from the bill to eliminate "projects that the state simply cannot afford at this time."

Some 24 of 25 vetoes eliminated local projects requested by lawmakers for their districts. Those included $244,000 for a sports complex in Iberia Parish, $11 million for the St. Tammany Parish Cultural Arts District, $150,000 for a boat launch facility in Leonville, and $450,000 for playground improvements in Orleans Parish.

Edwards also struck local funding for road and water system projects, parks and street lighting, sewer system and fire district upgrades.

"My commitment to the people of Louisiana was and is to prioritize the state's construction budget and be realistic with the limited financial resources we have at our disposal," Edwards said Tuesday after signing the bill. "Given our historic budget shortfalls, the people of Louisiana stand to benefit most from better roads and other infrastructure."

The capital outlay process has, for too long, given "false hope to the people of Louisiana that construction dollars were on the way when, in fact, they were not," he said. "I've promised to budget openly and honestly with the people of Louisiana, and this capital outlay bill is representative of that approach."

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