By John Celock
Kansas lawmakers moved forward on a transportation-spending plan that would expand borrowing to cover preservation programs.
The House Appropriations Committee voted to accepted proposal from the Transportation and Public Safety Budget Committee that would expand the Department of Transportation’s bonding for the next two fiscal years citing funds being swept out of the highway fund. The committee also rejected a proposal for a five-cent gas tax hike to cover highway spending.
“This is not ideal, this is available,” Transportation and Public Safety Budget Committee Chairman J.R. Claeys (R-Salina) said about the bond proposal. “The other options that are out there including an increased costs down the road by not investing in preservation those are not preferable either.”
Under the proposal the Department of Transportation’s bonding cap would be raised for the next two fiscal years in order to cover preservation projects. Debt service payments would begin in 2020, using funds from the sales tax portion of the highway fund. The proposal comes after lawmakers and Gov. Sam Brownback (R) have used money from the sales tax funded part of the highway fund to plug holes in the state general fund as part of the state’s deteriorating fiscal situation. Money in the highway fund that comes from the state gas tax cannot be used for any non-transportation related spending. The current spending plan from Brownback continues sweeps out of the highway fund.
Claeys said that it would take $380 million for the state to maintain the highway system in its current state. He said that the proposal would allow for the sales tax portion of the highway fund to be dedicated solely to transportation projects, since it would be set aside for the state to pay the debt service for highway projects.
Claeys said that the debt service proposal would allow for the state to bridge the gap on highway funding the time being and then allow for the state to address bringing more funds into the highway fund.
Transportation and Public Safety Budget Committee Ranking Minority Member Henry Helgerson (D-Eastborough) said that the committee reviewed a variety of alternatives for funding the highway preservation projects and found consensus around the debt service proposal. He said that the plan, proposed by Claeys to the transportation spending panel, would allow the state to perform necessary work on roads and bridges. Helgerson also noted that the committee could have prevented money from being swept out of the highway fund in the coming fiscal years but that would cause other budget issues.
“We don’t have to do the transfer. We as a committee can decide to do that right now and being $600 million in the hole with SGF,” Helgerson said. “What the chairman is doing is trying to preserve the highway program. Rather than deteriorating anymore, we are saying it is worth the bonding issue. We are not happy with the alternatives.”
Appropriations Committee Vice Chairwoman Erin Davis (R-Olathe) questioned the need for the debt service and asked about the terms for future bonds that the proposal would cover. She also asked on how long the projects being funded by debt service would last. Claeys said that many of the projects would cover state owned bridges and are designed to last 50 years. He said others would cover roads and are long-term preservation projects. He also said the proposal was designed to allow the state’s bond counsel flexibility in negotiating the terms of all bonds with Wall Street.
House Transportation Committee Chairman Richard Proehl (R-Parsons), an Appropriations Committee member, said that the bonding for preservation plan was not the best overall but the best for the current situation.
“Bonding is not ideal,” Proehl said. “However we have kicked the down the road on preservation. It is time we stepped to the plate and fixed some of these things before they deteriorate anymore.”
Rep. Jan Kessinger (R-Overland Park), who serves on the Transportation and Public Safety Budget Committee, said the panel reviewed other plans but found consensus around the bond plan. He concurred with others that it would save money for the state long term.
“In the budget committee we took a look at all sorts of innovative ways to maintain the roads. How can we change the oil in our car today so we don’t have to replace the engine down the road,” Kessinger said. “It may not be the best decision, but it is one that allows us to avoid great expenditures down the road.”
Helgerson also proposed raising the state’s gas tax by five cents in order to address long term funding for the highway plan. The gas tax plan had also been floated in the Transportation and Public Safety Budget Committee, where it received a 4-4 vote.
Helgerson said that lawmakers needed to address the long-term revenue stream of the highway fund and address the need to bringing more dedicated funding in. He said that it would address the issue no matter whoever is in the governor’s office. Helgerson noted that the proposal was to kick start a discussion of a gas tax hike. Other gas tax hike legislation are pending before the House and Senate tax committees. Both panels are looking to address the state’s long-term revenue issues.
“If you look at the financial picture is we will keep robbing it,” he said. “We need to have a discussion for the appropriate funding for highways.”
Kessinger said that projections from fiscal analysts show that a five cent hike in the gas tax would bring in $90 million a year in additional revenue for the highway fund.
Claeys said that he was neutral on Helgerson’s recommendation but noted that it could have long-term benefits for transportation spending.
“There is some benefit to having motor fuels tax as a source of revenue for the highway fund,” he said. “The sales tax cannot be counted on as a dedicated revenue stream.”
Rep. Barbara Ballard (D-Lawrence) said that she wants to address the fact that the state keeps using the highway fund as a way to fund shortfalls in the general fund. The practice, which has been called “the bank of KDOT” by opponents, has drawn criticism from Democrats and moderate Republicans, along with the state Contractors Association, which say that it is costing jobs and highway conditions in the state.
“Whenever we need money we go to KDOT and it has got to stop,” Ballard said.
The Appropriations Committee rejected Helgerson’s proposal.
Claeys stressed that the debt service plan for transportation spending would preserve the state’s highway system, which has been ranked as one of the best in the country. He also noted that preserving roads and bridges have long-term economic benefits for the entire state.
“This is not the choice we want to make, but it is the necessary choice we must make, We have a top five highway system and our highways mean economic development and our highways mean jobs,” Claeys said. “In the western part of our state, we have the top rural highway system in the United States.”