The Birmingham News: Funding for Alabama’s Northern Beltline uncertain
media mentionPublished: Sunday, April 15, 2012, 9:00 AM Updated: Sunday, April 15, 2012, 4:56 PM
By Thomas Spencer
As the Alabama Department of Transportation prepares to embark on one of the most ambitious interstate building projects in the nation — the 52-mile, $4.7 billion Northern Beltline — both the state and the federal government accounts that pay for roads are running out of gas.
Fuel tax revenues haven’t kept pace with ballooning costs of building and maintaining the nation’s transportation system.
Neither the state nor the federal gas tax has been increased for 20 years, but cars have become more fuel efficient, a trend expected to continue. That means the amount of revenue collected per mile driven has dropped. At the same time, the road system is aging and the need to spend on repairs is growing.
In the coming years, Congress and state legislatures will have to close that gap, according to ALDOT Director John Cooper.
“My own view, we have both a financing mechanism and a gauge that is 20 years old,” he said. “It doesn’t work and that is obvious. How the people that determine policy are going to fix that is an interesting challenge. But it is not my call.”
Earlier this year, the Congressional Budget Office predicted the federal Highway Trust Fund would run out of money by 2014. Since 2008, Congress has transferred more than $30 billion from general revenues to supplement the fuel taxes that historically paid for transportation.
Traditionally, Congress has passed six-year transportation funding bills, giving states some ability to plan for long-term projects. But the last long-term federal transportation bill expired in 2009 and Congress has been struggling to pass a new one ever since.
At the end of March, Congress passed yet another short-term extension for transportation spending, setting up another battle in June.
At the state level, Gov. Robert Bentley has launched a plan to borrow $300 million a year for up to three years for road building needs, and to pay that money back with anticipated future revenues. The Alabama Senate has passed a different plan that would borrow $650 million in bonds to be repaid by a portion of the state fuel tax.
ALDOT reported to legislators this session that it has a backlog of 343 miles of interstate and 3,984 miles of non-interstate roads in need of rehab, and that backlog grows every year. Also, of the state’s 5,745 bridges, 1,021 are classified as structurally deficient. That backlog is growing, too.
ALDOT told legislators it needs to spend hundreds of millions more each year to keep from slipping backward.
‘Built to fail’
Alabama is one of 36 states with a per-gallon tax rate that is “built to fail,” according to a national study by the Institute on Taxation and Economic Policy.
Alabama’s gas tax would have to go up 10.7 cents a gallon to generate the same bang for the buck the state got back in 1993, the last time the rate was increased, ITEP estimated. Alabama’s gasoline tax is 30.9 cents per gallon. The federal tax is 18.4 cents.
According to ITEP, several states in recent years have diverted money from their general funds to pay for roads programs. Some states have come up with different approaches that tax gas at a percentage of its cost, like the common sales tax.
While that approach does a better job of keeping up with general inflation, it produces wider swings in revenue as gas prices rise and fall. It also makes the pain at the pump more acute when gas prices rise.
Cooper said his department has to accept the current level of support and manage around it, pressing forward on the most urgent needs for preserving the current system but also embarking on projects that address traffic congestion problems.
“We have to balance system preservation and system capacity,” Cooper said.
In terms of preservation, Cooper said ALDOT has plans to completely resurface I-459. I-20 also is being reworked. This summer, ALDOT plans to rebuild the decking of the elevated I-20 through downtown. Work on I-20 will continue all the way out to its connection with I-459.
ALDOT’s also continuing work on its biggest project to date, a complex connection of Corridor X to I-65 just north of Birmingham.
What does all this mean for the Northern Beltline?
One simple fact keeps the Northern Beltline project going. Congress has designated it as part of the Appalachian Development Highway System, which provides a separate source of federal money for the project that can’t be diverted. The ADHS was designed to build highways through the once isolated and impoverished section of the country.
It’s been the source of money for building Corridor X and, thanks to a deft legislative move by U.S. Senator Richard Shelby, the beltline was added to the system as an extension of Corridor X.
Once Corridor X is complete, virtually all Alabama’s share of ADHS money can be spent building the Northern Beltline. With the federal money and a 20 percent match provided by the state, ALDOT should have $160 million a year to spend on the beltline.
While that sounds like a lot of money, the beltline is such a big project it would take decades to build. Using a formula that builds in inflation and makes allowances for unforeseen expenses, the 52 miles of road are expected to cost $4.7 billion to build.
The uncertainty over the long-term transportation bill does create uncertainty in budgeting for road work. But so far, all the proposed drafts of the transportation bill keep the ADHS alive.
ALDOT chief engineer Don Vaughn said there had been some hope there would be a boost to the system, but now they’re hoping just to keep the same amount of money in the pipeline.
“Our best scenario is that we don’t lose money,” he said. “We have significant money and it is time to move ahead.”
Under the current schedule of work, construction on the first stretch of the Northern Beltline, a 3.4 mile segment between Alabama 75 and Alabama 79, is supposed to begin later this year. The schedule calls for completing the northern arc to link between I-65 north of Gardendale to I-59 near Clay by 2026. Only after that would work begin on building the east-west link between I-65 and I-459 and I-20/59 near McCalla. ALDOT doesn’t expect to make that connection until 2048.
Schedules that far into the future are extremely difficult to predict, Vaughn said. The state may have more money to work with or less, which would either speed up or slow down progress.
Whenever Congress does pass a long-term bill, ALDOT will have a better idea of what can be accomplished.
“We will rethink what we are doing depending on how much money we have to work with,” Vaughn said.