How to Fund Road Maintenance

(WITHOUT RAISING TAXES)

How do lawmakers propose to deal with the fact that South Carolina’s roads and bridges are in suboptimal shape? The governing assumption behind most answers to this question (including one Senate proposal supported by Senate Finance chairman Hugh Leatherman) seems to be that, in order to pay for road and bridge repair, the state must take more money from taxpayers.

But are there other answers?

In fact, there are. Before getting to those answers, however, it’s worth keeping a few facts in mind. Despite having only the 40th largest land area and the 24th largest population among all states, South Carolina’s DOT is responsible for 41,459 miles of road in South Carolina – the 4th largest state highway system in the country. In addition to the massive amount of roads overseen by SCDOT, the agency has a massive budget to match. This year it has a budget of $1.4 billion, or roughly 6 percent of the year’s entire state budget. If the trend of recent years continues we can further expect this budget to expand at a rapid rate, as the SCDOT budget grew, despite the recession, by $355 million from FY 09-10 to FY 12-13.

Not only does South Carolina proportionally own far more roads than other states; the state’s funding structure results in some of those roads being overserviced and most being neglected. One of the chief reasons for this state of affairs has to do with how state highway departments receive federal funding. SCDOT receives federal money primarily through the SAFTEA-LU Act (we’ve discussed that formula in detail elsewhere), which reimburses state highway department for qualifying projects. The Federal Highway Administration reports that in fiscal year 2011 South Carolina was apportioned $651 million from the Administration. Unfortunately, however, these federal dollars can only be used on about half of the state’s roads, and often help promote new expansionary projects that generate more miles of road for the SCDOT to maintain. Making matters worse, SCDOT must divert funding from maintenance in order to meet the match required to receive dollars from the Federal-Aid Highway Program.

The incentives created by this system lead us to our current predicament. At a time when the legislature is lamenting the condition of our existing infrastructure, SCDOT’s most recent budget request asks for $933 million for construction but only $203 million specifically for maintenance.

The problem, then, isn’t a lack of revenue, and the answer isn’t to deprive citizens of more of their income. The problem is one of priorities.

First, the state should begin to cede some of its roads to municipalities, making them responsible for more of the roads in their own area. SCDOT is currently responsible for 63 percent of all state roads, according to SCDOT’s website. An excellent article in The State points out that the national average for roads controlled by state transportation departments is 19 percent. South Carolina government should attempt to emulate this average.

Second, the State Transportation Infrastructure Bank (STIB) should be abolished. The STIB only exacerbates the state’s infrastructure problems by diverting funds from maintenance to expensive and unnecessary construction projects in a few select counties. To be more specific: 35 counties have received no funding at all from the STIB since it was created; 33 percent of all STIB money has gone to one county, Charleston; 95 percent of STIB monies have gone to six counties; and 0 percent of STIB funding has gone to maintenance and repair.

Third, a requirement should be put into law that requires no funds be spent on new construction until a large majority of the roads controlled by SCDOT are rated in good or very good condition by another agency such as the Federal Highway Administration. Even accounting for the loss of federal funds this change would cause, SCDOT would benefit by saving dollars that would otherwise go towards matching federal funds for new construction projects. This of course would have the added effect of slowing the growth of new road miles SCDOT would need to maintain.

The solution to every new problem is not that taxpayers should pay more – and it’s certainly not the solution in this case.