UPDATE: Developments in Transportation Funding

Greetings as 2017 brings more sobering news from Topeka. Lawmakers are scrambling to make sense of the fiscal situation that continues to grip the state budget. More dollars are being drained from KDOT leaving the remainder of T-WORKS projects unfunded.

As you’ve no doubt read, Kansas faces a current year fiscal hole of some $340 million (with no more money available to take from KDOT after already taking over $500 million for this year’s budget) and a deficit nearly double that for FY 18. Governor Brownback gave lawmakers his budget recommendations for the next two fiscal years again calling for every penny that could constitutionally be transferred from KDOT (i.e., all of the sales tax revenue) to be used to fill the budget deficit. In addition to taking over $500million each year in sales tax dollars dedicated for transportation, the Governor’s budget proposal also called for raising consumption taxes on alcohol and tobacco, selling off tobacco settlement funds intended for children’s education, borrowing from other funds and not making debt payments on money owed to the state’s retirement plan.

And the news got worse last week at the Senate Transportation Committee where KDOT officials reported the result of draining the sales tax revenue from transportation. The T-WORKS program called for $8 Billion in transportation expenditures over 10 years, approximately $800 Million/year in preserving and improving our system. Newly confirmed KDOT Secretary Richard Carlson informed lawmakers that only $43 million will be let preserving the highway system in the coming year. And over $500 million in T-WORKS enhancement projects have been shelved. If KDOT was delivering an obituary for T-WORKS, the only details left out were where to send memorial contributions.

It is beyond sobering. If this situation isn’t corrected, Kansas roads will deteriorate to the same condition as they were in the late1980’s when Governor Mike Hayden got the Comprehensive Highway Program enacted. The damage that’s being done with the steady financial drain from the highway fund will not only result in poor road conditions, it means hundreds of millions of dollars a year aren’t circulating in the Kansas economy through workers’ wages, equipment and materials purchases and income and sales tax payments. The ripple effect will keep the Kansas economy stagnant.

But the good news – yes, there is some– is that newly elected state legislators are NOT embracing the options the Governor laid out. Many of the men and women serving in the Kansas Legislature understand that transportation is also a JOB CREATION program and if we don’t stem the continued drain from KDOT, the jobs and economic growth that result from these investments will NOT occur.

Raising the motor fuels tax to bring oxygen to the transportation program is being proposed by some, including the Kansas Contractors Association as part of a fiscal solution. The fact is that a nickel/gallon fuel tax would replace only a fraction of the revenue being drained from KDOT. Other constituencies want the sales tax revenue directed to the general fund instead of KDOT. That’s not a good trade. Fuels taxes are a steadily declining revenue source given the ever-increasing gas mileage of automobiles. Other measures need to be considered. Many legislators – especially those on the border with Missouri – believe that a hike in motor fuel taxes will lead to lost sales and economic activity to surrounding states. A fuels tax fix now could also hinder its use when a new program is considered.

So what do we do?

First, the Governor needs to put down the shovel and stop digging the hole deeper. State finances can and must be put on a more solid foundation by fixing the income tax instability created by the 2012 tax plan. The three-legged stool of fair income, property and sales taxes needs to be restored.

Additionally, time-tested and affordable financing tools could allow significant funding to address our transportation needs and bridge the current revenue gap while fair tax solutions are worked out to generate revenue which allows sales tax to remain a part of transportation funding going forward. That’s sound policy which Kansas has recognized for 30 years.

There is a lot to consider and work to be done. And we will need your help to make sure lawmakers understand that difficult decisions can be supported by constituents “back home”.

The cost of doing nothing is high. We plan to provide you with information on impacts of the current situation and options Economic Lifelines could recommend and support to address them. We plan to have a meeting in Topeka February 13th to discuss those options and ways you can help in advocating for our state’s transportation needs. We hope you will be able to attend.

New Leadership

We are delighted to announce that Tara Mays is the new Executive Director of Economic Lifelines. Tara has worked closely with Kansas’ transportation entities for the last seven years. She has broad knowledge of policy development with both the Kansas Department of Transportation and the Kansas Turnpike Authority. Tara’s work in Kansas government spans more than a decade centered around the development and implementation of the Transportation Works for Kansas (T-WORKS) program and the advancement of transportation partnerships. A Topekan who graduated from Washburn University, Tara began her career in state service in 2004 and has worked on governmental policy development since that time. She has a passion for transportation issues and we look forward to her advocating for long-term policy development that will benefit the users of our state’s infrastructure. She will be a great addition for Economic Lifelines and your paths will soon cross with her.

The work we have in front of us is daunting, to be sure. But with your help and that of others in communities across the state, we can restore vital funds for Kansas’ transportation needs. Thank you for your involvement and we look forward to Economic Lifelines’ efforts making a real difference in preserving our transportation system.

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