By Douglas L. Whitley
The quality, reliability and reach of Illinois’ transportation infrastructure is in jeopardy as both the state and federal government programs to fund capital construction projects will expire next year. The “Illinois Jobs Now” program approved in 2009 ends in July. The federal funding “MAP 21” ends simultaneously with the federal fiscal year on Oct. 1, 2014.
In Illinois, it is projected that road and bridge funding will collapse by $2 billion. The impact will be a reduction in the number of annual construction projects by two-thirds and is expected to reduce construction related employment by nearly 20,000 jobs.
Neither of the last two federal surface transportation bills have had sufficient funding to fulfill the nation’s construction needs. The Congress has found it necessary to shore up the US Department of Transportation’s Highway Trust Fund with transfers from the general funds because the 18.4 cents per gallon federal tax on gasoline and 24.4 cents per gallon federal tax on diesel fuel in effect since 1993 have demonstrated no sustained revenue growth and there have been no revenue increases to bolster the fund.
As in many other areas of national importance, Congress has failed to offer a deliberate and stable approach to meeting the nation’s needs. Clearly, the message to state and local officials is that they should no longer look to the federal government to finance the majority of their infrastructure programs.
Waiting for Congress has proven to be a failed strategy. Today, Illinois Jobs Now! is reaching the end of its life. In Illinois, the typical funding cycle for publicly funded transportation construction work begins again every five to six years. That moment has arrived.
A new state capital plan is needed, one that doesn’t rely on uncertain tax revenue from video poker or other gimmicks. Both Illinois’ gas tax and the federal gas tax have been unchanged for more than 20 years. The lack of growth in road fund taxes is insufficient to meet the needs for state and local roads and transit systems.
Today’s vehicles are far more fuel efficient than those operating 20 years ago. Today’s motorists are paying a far smaller percentage of the price of fuel for road work than was paid in the early 1990s, while the costs of materials, equipment, and labor have only increased. The anticipated growth of hybrid, electric and other alternative fuels vehicles will further suppress the impact on construction funds from traditional highway user fees.
Over the next five years, Illinois will need $63.5 billion on the low end and $74.4 billion on the high end just to maintain our existing road and transit networks in a state of good repair. Despite the need, taxpayers will not support that level of funding, but some reasonable amount must be raised to sustain our fiduciary responsibilities to sustain the systems our predecessors have provided for us.
The good news with all of this is that we have the ability to improve our transportation infrastructure. In May, legislators introduced legislation that would eliminate the flat rate per gallon tax on gasoline and replace it with a 9.5 percent tax on the wholesale price of fuel. While this approach is more volatile and harder to predict receipts, the wholesale approach is expected to guarantee an increase in tax revenue, while reflecting market pricing that has consistently grown over the years.
A new state capital bill needs to do more than just increase funding. Even though the amount of money diverted continues to shrink, we need stronger protections to prevent future diversions and ensure that motorist’s user fees intended for transportation are actually spent on transportation.
The next state transportation program also needs to include a pay-as-you-go component to ensure that ongoing maintenance and repair programs have a steady stream of investment.
Without pay-as-you-go provisions, regular maintenance and repair is not only delayed but results in higher costs when they are performed. According to the American Association of State Highway Officials, one dollar spent to repair a highway while it’s in fair condition prevents costs of $6 to $14 to rebuild the same highway once it has reached poor condition.
Investing in infrastructure creates jobs, and not just for engineers and construction workers. Businesses rely on transportation. Warehousing, logistics, manufacturing, and service industries alike locate in Illinois because of our infrastructure.
However, all of these things rely on certainty. The certainty that an employee can arrive and leave from work at the same time each day along with the certainty that a truck can make it across the region in the same amount of time are strong economic contributors to Illinois’ economy.
Maybe because highways and trains aren’t sexy and thus are frequently taken for granted they appear to get little attention from policymakers until they collapse or gridlock brings commerce to a halt. If we lose our edge in transportation, the state will squander one of its greatest competitive advantages.
Douglas L. Whitley is president and CEO of the Illinois Chamber of Commerce