Running on fumes

The executive director of the Mississippi Department of Transportation opened a can of worms in July when he suggested that the state’s 18-cent-per-gallon gasoline tax rate needs to be raised to meet highway construction needs.
Mississippi is running at less than full on the financial fuel tank for construction and maintenance, and completion of the Vision 21 highway program – which includes key arteries in Northeast Mississippi – is nowhere in sight as a result.
In the meantime, road construction costs continue to rise.
Views vary on what to do, beause raising any tax is politically problematic during tough economic times.
The 18-cent state rate for gasoline and diesel fuel hasn’t changed since 1989, the final incremental increase in the 1987 Highway Program legislation.
In raising the tax issue, MDOT Executive Director Larry “Butch” Brown was pointing out that in 1987, the 18 cents represented about 18.4 percent of the cost of a gallon. Last summer it was down to less than 5 percent when $4-per-gallon gas hit the pumps.
The per-gallon revenue is fixed, not rising with the increase in gasoline and diesel prices, and not reflective of inflation.
The tax percentage has risen as prices have dropped in late 2008 and 2009, but the number of miles driven by Mississippians is declining, pushing revenue down.
During the years from enactment of the 1987 highway programs and 2009, the estimated cost of four-laned construction has risen four-fold – from $1 million to $1.5 million per mile in 1987 to $6.5 million for new roadways in 2009.
MDOT Tupelo District Engineer Bill Jamison said the $6.5 million figure is for rolling, rural countryside.
“That’s about what we have around here,” Jamison said.
The cost for new two-lane highways is much lower, about $1.5 million per mile, but most of the major highway projects in Mississippi’s key plan, Vision 21, call for four lanes.
State Sen. Hob Bryan of Amory, a 25-year veteran of the Legislature, insists the deeper problem is the tax structure for fuel.
“The main problem is that it is based on cents per gallon, and not a percentage of the price, which means inflation will eat up the revenue. Look at standard inflation rates since 1989 and that’s how much it has gone down. That’s a structural problem,” said Bryan, a former chairman of the Finance Committee and current chair of Public Health.
“You can’t build or maintain on that amount, and that is why you have maintenance and building delays.”
The 1987 program in fact ran short of funding because of the inflation factor, and supplemental bonding authority was authorized, official MDOT documents show.
The revenue stream is smaller by proportion to the task than in 1987. The steady state funding for the Vision 21 highway program, successor to the 1987 program, is $200 million per year. In Northeast Mississippi alone, new highway needs are projected at about $1.5 billion.
State Sen. Alan Nunnelee, R-Tupelo, chairs the Senate Appropriations Committee, and he shares Bryan’s concern about inadequate funding, but he doesn’t necessarily agree that changing the structure is the solution.
“I think we need to take a long-term look at what might be done,” Nunnelee said. “I am absolutely opposed to raising anybody’s taxes for anything during this recession, but 2010 is a very good time to study the issues.”
Bryan, like other legislators, is not a neutral observer about highways.
He and other legislators are committed to completing the Vision 21 program, successor to the 1987 program. Vision 21 includes four-laning Mississippi Highway 25, Highway 15, Highway 9, Highway 7, Highway 6, Highway 41/278 in part, and Mississippi 12 in Northeast Mississippi, and hundreds of miles of other new highways in other state regions.
Vision 21 gets $200 million per year under the existing funding formula, a drop in the bucket compared to needs just in Northeast Mississippi of about $1.5 billion for completed, new and already approved roads.
Informed estimates calculate the completion under the $200-million-per-year scenario at more than 50 years.
Bryan, along with Rep. Steve Holland, D-Plantersville, another 25-year veteran who was present at the creation of the 1987 program, and others believe the state should seriously examine building highways under lease and operations agreements with private contractors, paying off bonded debt with regular highway revenue streams.
“I know the revenue situation is not good,” Holland said. “That’s just a fact of life, but we have to revisit transportation. It has been 22 years since 1987, and we don’t have enough money. You never have enough money. I believe it would be a shame not to continue building highways at the level and with all the improvements we have made. I am willing to put up a hell of a fight in the House.”
“You know it also might be like the hospital tax this year,” he said. “You know, you have to have three to tango now, and I don’t know if Haley (Barbour) would even consider it. But I believe we could do something in the House.”
Former Sen. Bill Renick of Ashland hopes the statewide group he heads, GetSMART – Start Mississippi’s Approved Roads Today – gets a full hearing before the Transportation Committee and other panels during the 2010 session.
The idea spun its wheels legislatively in 2009, the first full year of GetSMART operations, but Renick and others say they will persevere.
Renick said GetSMART supports a Transportation Bank empowered to issue bonds for road construction under the Vision 21 program, partnering with private companies.
Renick says the $200 million revenue stream continued indefinitely can finance an adequate, long-term statewide program without additional revenue, but acceptance of innovation, and leadership, would be required.
But he is only modestly optimistic the 2010 Legislature would tackle the issue.
“I just don’t see a champion for highways in the Legislature, as we had with John David Pennebaker (a Union County legislator) and Billy McCoy during the 1987 session that passed that program. I hear people talking about needing a groundswell. I think we need legislative leadership to create a groundswell,” Renick said.
“A statewide highway program would be Mississippi’s own stimulus program, creating jobs and building economic strength. And we wouldn’t be waiting on a free lunch.”

Contact Joe Rutherford at (662) 678-1597 or joe.rutherford@djournal.com.

Joe Rutherford/NEMS Daily Journal