BULLHEAD CITY — State transportation funds face a $30 billion shortfall over the next 25 years.
“Over the next 25 years Arizona Department of Transportation is anticipating about $53 billion in needs on the state highway system and about $23 billion in available funding,” said Kevin Adam, Rural Transportation Advocacy Council legislative liaison. “It’s an extremely bleak picture for the highway system.”
The RTAC is a consortium of local governments, councils of government and metropolitan planning organizations representing transportation concerns of rural Arizona. The organization’s primary duty is setting legislative priorities.
Adam offered his assessment of future funding for highway infrastructure plans Tuesday during a meeting of the Tri-City Council.
The anticipated shortfall has forced Arizona Department of Transportation to make recommendations in its upcoming long-range transportation plan on how specifically to use the anticipated funding, Adam said.
The long-range plan, which covers the next 25 years, identifies three spending areas: new construction, modernization and preservation, and ADOT is recommending whatever funding is available should be allocated to maintenance of existing infrastructure, Adam explained.
“Essentially, five years from now, there will be a freeze on new construction so we won’t see any new projects in greater Arizona,” Adam said. “What’s probably just as discouraging is that even with full-on preservation, the department is indicating (available funds) won’t even cover the preservation. We’re looking at the deterioration of our pavement conditions and probably some bridge replacement or rehab work that’s probably not going to get done.”
While the state economy is doing well and seeing a lot of economic growth, it hasn’t translated into a significant increase in public revenue, Adam said.
“A lot of that is self-inflicted,” Adam said. “Over the course of the recession there were tax cuts enacted, particularly on corporate income taxes, so there were extremely significant reductions in corporate income tax collections, which sort of offset all of the growth that we saw and affects revenue.”
Another significant issue for highway infrastructure funding is the transfer of existing funding to other programs, Adams said.
“The top priority — and what should be the low-lying fruit — is stopping them from taking the existing funding that’s supposed to be dedicated to transportation,” Adams told council members.
Gov. Doug Ducey’s budget, released last Friday, did acknowledge the state is under-investing in infrastructure and that more needs to be done for preservation, Adam said.
“While he gave it lip service, we didn’t see much in the way of actual solutions,” Adam said. “ADOT was able to identify $5 million in recurring costs that save money in the state highway fund and rather than redirect that additional funding — or savings — back into the infrastructure investment and addressing some of that massive shortfall that we have, his budget proposes that those savings get redirected to the general fund rather than transportation.”
The governor and many state legislators remain committed to minimizing impact on Highway User Revenue Funds distributed to cities, towns and counties for road construction and improvement, Adam said.
A package of House and companion Senate bills have been introduced to the Arizona Legislature to address some revenue issues, Adam said. House Bill 2166 would create a highway safety fee to be collected with vehicle registration applications and renewals on alternative fuel vehicle — electric, solar, liquefied petroleum gas, natural gas, hydrogen or a blend — that would fund the Arizona Highway Patrol, Adam said.
“ADOT director would be tasked to set the amount at a level that will cover 10 percent of highway patrol annual operation, which right now is about $130 million,” Adam said. “If that revenue is generated for highway patrol, that essentially eliminates or alleviates that pressure on HURF money so it would stay with the infrastructure.”
Another bill, HB2165, would give county supervisors the ability to place on the ballot a regional transportation plan funded by an excise tax of up to one cent, doubling the current limit of a half-cent.
One of the issues that may trigger a larger revenue measure is if something happens at the federal level, Adam said.
“There is a lot of turmoil and volatility back in Washington right now,” Adam said. “We’re very much concerned about what happens with the budget going forward. It does appear that there is a risk of a government shutdown at the end of the week if they’re not able to come to an agreement. As long as we continue to operate on continuing resolutions, that also precludes an increase in federal funding that was authorized by the FAST Act.”
Fixing America’s Surface Transportation Act is a funding and authorization bill passed in 2015 to govern federal surface transportation spending.
“We’re very much watching that but also this infrastructure package that the president has talked about since inauguration,” Adam said. “[It] does appear that with tax reform done and out of the way they are fairly close to putting the infrastructure package on their agenda. We’re anticipating the administration releasing a very detailed plan by late January or early February.”