In This Issue

	Panel Recommends New Taxes to Fund Transportation
	Va. DOT Announces More Layoffs
	NJ Transportation Fund Faces Bankruptcy
	Seattle names New Transportation Chief
	Georgia Transit to Worsen without Funding Expansion
	Transit Agencies Upset by Gov. Schwarzenegger’s Plan to Divert Funds

Panel Recommends New Taxes to Fund Transportation

LITTLE ROCK – A state subcommittee has recommended a new excise tax on wholesale fuel sales along with indexing gas and diesel tax increases to inflation to help cover state highway improvement costs. The Blue Ribbon Committee on Highway Finance subcommittee will present recommendations to the full committee next week, including endorsement by a separate committee to transfer $425 million annually from the general fund.

"It's time to act," said Mark Lamberth, a Batesville member of the subcommittee that is seeking new revenue sources. "We need to present a couple of options that the state can sink its teeth into." The indexing on the motor fuel tax revenue would be based on the annual Construction Cost Index increase, which generally measures inflation associated with construction commodities, in order to keep the state's current purchasing power at a certain level.

The 19-member panel was formed last year by the Legislature to look at the state's highway system and make recommendations to the 2011 General Assembly regarding how to address transportation needs estimated to be more than $10 billion. Gov. Mike Beebe has opposed any recommendations to shift revenue from the general fund to pay for highway work.

Va. DOT Announces More Layoffs

Virginia – Officials at the Virginia transportation department announced a final round of staffing reductions because of a $4.6 billion transportation revenue shortfall, by laying off 678 employees. Many employees will remain with the department; however, staffing reductions and residency [office] closures must be completed before the July 1 deadline.

VDOT spokesperson Michelle Earl said the layoffs would not impact ongoing snow and ice removal efforts. “These employees are not folks who are out there driving our vehicles, and plowing snow,” Earl said. “There are some administrative-type positions that may be affected in the area headquarters, but this will not affect operations.”

The agency is closing 15 residency offices across the state. VDOT’s first round of staff cuts began last June, when 450 hourly-wage positions were eliminated. The next reduction occurred last fall, with 500 full time personnel laid off. The staffing reductions were recommended by state officials in response to the multi-billion shortfall.

NJ Transportation Fund Faces Bankruptcy

New Jersey – The new governor of New Jersey has a big challenge with the impending bankruptcy of the state’s transportation fund-- estimated to go broke by June 2011. Gov. Christopher J. Christie has yet to indicate a plan to replenish the dwindling fund, although he claims to be opposed to the most obvious options: raise tolls and taxes or borrow more money. The state has little borrowing room, with the third-largest state debt in the nation. In late December, the state officials announced a $1 billion deficit in this year’s budget, a shortfall five times higher than previously stated.

The state’s transportation woes include the ranking of the worst roads in the country, according to road condition data from the Federal Highway Administration. Another unpleasant reality facing the new governor is a rating from the Tax Foundation as the highest state/local tax burden in the country.

Christie is “committed to ensuring our roads are safe and viable” because a “strong infrastructure is critical to New Jersey’s economic growth,” governor spokesperson Maria Comella said. “However, the way to fund these projects is not by relying on borrowing and undercutting the purpose of having a fund that is meant to provide a stable, long-term financial resource,” Comella added. The governor will “reevaluate everything” to find ways to reduce the deficit, however, he maintains his opposition to toll and tax increases, she said.

This is not a new problem in New Jersey—just one that has been “punted” downfield for a number of years. A no toll or tax increase position doesn’t leave much room for the Governor to solve the problem. In spite of quite a few efforts across the country by elected officials to solve transportation funding problems by cutting staff, mandating furloughs or reducing administrative costs, ultimately none of these measures ever works. While publicly appealing and politically salving, these savings are puny compared to existing needs; it has been repeatedly proven that they don't finance a robust transportation system. TW

Seattle names New Transportation Chief

SEATTLE – The mayor of Seattle has named Peter Hahn, deputy public works administrator for the city of Renton, to be the new director for the Seattle transportation department. Mayor Mike McGinn announced Hahn to replace Grace Crunican, who resigned last week after eight years of service under Mayor Greg Nickels.

As deputy public works administrator for the city of Renton since 2006, Hahn oversaw Sound Transit facilities, new bus rapid transit services and coordination with WSDOT on I-405 Improvements in Renton. Hahn, 65, has lived in Seattle for 29 years and will begin work for the Seattle Department of Transportation on January 19. Crunican will spend three weeks helping Hahn transition into the new job, overseeing 750 employees and a 2010 budget of $310 million.

Hahn said he didn't have to pass a "litmus test" regarding his stand on controversial mega-projects, like the state's replacement plans for the Alaskan Way Viaduct- with a deep-bore tunnel. Hahn has publicly stated his agreement in Mayor McGinn’s philosophy in opposing the state’s plans for the viaduct.

Georgia Transit to Worsen without Funding Expansion

ATLANTA – The new transportation planning director for the state of Georgia is warning that cities in the state will become increasingly congested and ports will have a more difficult time moving freight unless new funding sources are soon found. The first report issued by new director Todd Long calls for increased resources amounting to 1 percent sales tax statewide, as well as “a robust approach to tolls” and a system of transit and managed lanes. The state could reap up to $480 million in rewards through economic benefits from doing so, and generate 425,000 new jobs over the next 20 to 30 years.

Todd was named transportation planning chief under a transportation organizational overhaul by the 2009 General Assembly. His responsibilities require a draft of the Statewide Strategic Transportation Plan be delivered to the legislature for comments and suggestions. Submitted last week, Long’s report looked at recent projects, what could be accomplished with additional funding and estimated the current revenue stream.

The report said that in 2006, state and local governments in Georgia invested only $380 per person in transportation (excluding bonds), which amounts to about half the national average and is far lower than states like Florida and Texas, which each spent $730 per person; Virginia, $630 per person; and North Carolina, $500. According to the report, many other states “draw on sources by employing expansive toll programs, toll credits and sales taxes and licenses and tag fees dedicated to transportation. In contrast, Georgia uses only motor-fuel taxes.”

Long’s report said that at current funding levels, basic revenue sources such as matching federal dollars could be difficult to keep. Depending on the matching funds stipulations in the next federal funding bill, Georgia’s motor-fuel revenues could be insufficient to match federal funds as early as 2012. Unless new resources are located, the state would forfeit significant federal funding programs.

Transit Agencies Upset by Gov. Schwarzenegger’s Plan to Divert Funds

California - Transit advocates are infuriated by Gov. Arnold Schwarzenegger's $83 billion budget proposal released Friday, which returns California to the state's spending levels of six years ago, in an effort to close a looming deficit that has grown to $19.9 billion. The governor's plan relies heavily upon the receipt of $6.9 billion in new federal funds for the state, which he says is owed to the state from various federal mandates.

The governor has proposed cutting the pay of 200,000 state workers by 5 percent while asking them to make additional payments toward their pensions, according to Schwarzenegger spokesperson Aaron McLear.

One of the biggest losers in the bill is transit agencies and their riders. A complicated gas tax swap simultaneously eliminates the sales tax on gas while raising the per gallon excise tax, and slashes roughly $1 billion from bus and rail funding. The transfer essentially guts voter-approved Proposition 42, which determines how gas tax money is currently divided up. Prices at the pump will go down slightly, and mass transit, which currently receives 20% of the taxes, will be completely removed from the equation.