Leading up to Missouri’s primary election on Tuesday, Missouri Business Alert is examining the ballot measures that will be put to voters. Today’s focus is Amendment 7, which would raise the state sales tax 0.75 percent to fund transportation projects.
Missouri Business Alert’s complete coverage of the ballot measures is available here.
Of the five proposed amendments to the state constitution on Tuesday’s primary ballot, only one will have a direct effect on Missourians’ wallets.
Proposed Amendment 7 would implement a 0.75 percent raise in the state sales tax in order to fund transportation projects statewide over the next 10 years. The ballot measure reads:
Should the Missouri Constitution be changed to enact a temporary sales tax of three-quarters of one percent to be used solely to fund state and local highways, roads, bridges and transportation projects for ten years, with priority given to repairing unsafe roads and bridges?
The math that follows is straightforward. The increase, from 4.225 percent to 4.975 percent of each dollar spent, would generate $5.4 billion over its lifetime. Ten percent of that would go to local governments throughout the state. The rest would go to the Missouri Department of Transportation, which in July approved a list of $4.8 billion in projects for the next 10 years in anticipation of the windfall.
The American Society of Civil Engineers painted a bleak picture in its 2013 report card, giving Missouri’s roads a C and stating that 31 percent of roads are in “poor or mediocre condition.”
ASCE gave Missouri bridges a C-, saying that 3,528, or 14.5 percent of bridges in the state, are “structurally deficient.” The report said another 3,365, or 13.8 percent, are “functionally obsolete.”
Pro-business supporters say the amendment’s passage will salvage aging infrastructure, alleviate a budget crisis for the Missouri Department of Transportation and create new jobs. Critics have reservations about using a regressive sales tax, which will charge everyone, wealthy or otherwise, equally.
The amendment would also prevent Missouri lawmakers from increasing the gasoline tax, which currently comprises nearly 70 percent of MoDOT’s construction and maintenance budget, or installing tolls on state highways for the lifetime of the sales tax increase.
The bill passed the House of Representatives with 58 percent of the vote in May, but Gov. Jay Nixon came out against the amendment in June, arguing that the measure would increase sales taxes for the entire state after the General Assembly passed several tax breaks earlier this year that disproportionately benefit wealthy Missourians and businesses.
An agency in trouble
Without some funding influx, MoDOT’s spending could take a hit. According to a 2013 report, the department’s construction and maintenance spending will fall to $425 million by 2017. That number would represent a significant drop from the more than $1.3 billion spent in 2009, when MoDOT was still bolstered by funds from $2 billion in bonds issued in 2004 and nearly $600 million from the federal government through the American Recovery and Reinvestment Act of 2009.
The act’s funding expired in 2012, bond capacity is tapped out, and the agency is spending $300 million per year to pay off its debt, according to MoDOT outreach coordinator Bob Brendel.
Brendel said that the fuel tax’s effectiveness has decreased in the last decade as well, as cars have become more fuel-efficient, and the price of staple building materials asphalt, concrete, and steel have doubled and tripled since the fuel tax was last increased in 1996.
Missouri’s 17 cent-per-gallon gasoline tax is the sixth cheapest in the country.
“By 2020, we won’t be able to match federal funding, meaning that the money from the federal Highway Trust Fund will be distributed to other states besides Missouri,” Brendel said.
Those factors would add up to only $425 million in construction and maintenance spending by 2017, potentially reversing improvements made in the last decade. Since 2004, the number of miles of major roads in “good condition” has risen from 47 percent to 88.5 percent, but maintaining the country’s sixth-largest road system costs a minimum of $485 million per year, according to MoDOT director David Nichols.
Nichols said, “$485 million will keep the system in its current state of repair, but there are areas in the state that we need to make more improvements instead of just maintaining it. By 2017, with no additional funding, we will be at $325 million. So you can see the gap.”
Right end, wrong means
Opponents of the amendment don’t deny the need for improvements to the state’s infrastructure, but they express the need for alternative ways to fund them.
Thomas Shrout is the treasurer of Missourians for Better Transportation Solutions, a political action committee opposing the bill. He says that the uniform taxation of Missourians, regardless of how much they use the roads, is unfair.
“I think there should be a user fee involved,” Shrout said, “and that could take the form of a fuel tax, toll roads or even what Oregon’s doing with miles traveled.”
Oregon has conducted two pilot programs, and in 2013 the state passed the first legislation in the United States to establish a permanent road usage charge system for transportation funding. Drivers use their smartphones and GPS devices to report their miles traveled and receive a fuel tax refund each month.
Shrout’s group has been badly outraised by Missourians for Safe Transportation and New Jobs, the PAC in support of the amendment.
The group backing the amendment reported more than $4.1 million in fundraising as of July 24, and it spent $2.1 million from July 1 to July 24 alone, mainly on newspaper and television advertising. The pro-amendment PAC had approximately $1.6 million on hand as of the same date, according to filings with the Missouri Ethics Commission.
Missourians for Better Transportation Solutions had raised just $27,279 as of Monday, and had spent slightly more than $22,000.
Nearly all of the pro-amendment PAC’s money has come in large donations from trucking and construction interests, as well as trade unions who stand to benefit from the additional contracting.
“They have a vested interest in getting this passed because if it is, there will be a lot of construction and paving work to do,” Shrout said.
The Heavy Contractors Association and its industry advancement fund have contributed slightly more than $650,000 through several donations to the cause. The International Union of Operating Engineers has given $325,000 in support of the amendment.
If Amendment 7 is passed, more than 800 projects will get the green light from MoDOT. The priciest improvements will be a $500 million reconstruction of Interstate 70 that would widen the highway to six lanes from Independence to Wentzville; $350 million in improvements to Interstate 270 near St. Louis; and $200 million to improve Interstate 70 in the St. Louis area.
An estimated $1.49 billion would go to St. Louis-area projects; $896.9 million will go toward projects in the Kansas City region.