Florida’s transportation system operates at a deficit with coffers so barren it will borrow to pay for almost all of its $9.1 billion in road and bridge obligations over the next year.
Making matters worse is that Florida could lose about $2 billion next year if a key federal transportation funding program isn’t extended this year. Even if it is renewed, the program’s long term prospects look bleak.
One possible remedy? Hiking the federal gas tax for the first time in 22 years to send additional money to the states, a long-dormant idea that has shown faint signs of life as gas prices have dropped to record lows.
Increasing the tax from its current 18.4 cents a gallon would raise billions more for the federal Highway Trust Fund, which is set to go broke on June 1.
“Our infrastructure’s on life support,” Ray Lahood, the former Republican U.S. transportation secretary in President Obama’s first term, said in November. “It’s falling apart because we haven’t made the investments. We haven’t got the money.”
But talking taxes is the conversation no one wants to have. Not in Washington, D.C., where anti-tax sentiments prevail. And definitely not in Florida, where a Republican-controlled legislative and executive branch dismiss the idea.
“I strongly urge Congress not to raise the federal gas tax or any tax and instead come up with innovative solutions to fund priorities as we have done in Florida,” Gov. Rick Scott said in January as he urged the nation to follow Florida’s lead in financing a “world class” system while cutting taxes.
Left unmentioned in Scott’s statement is that his state relies heavily on a federal trust fund that is nearly insolvent.
It’s the third week of legislative session, and few lawmakers in either party have raised concerns that the Florida Department of Transportation has enough cash on hand to cover only $340 million, or about 3.7 percent, of its $9.1 billion in obligations for projects across the state.
That’s nothing new. Lawmakers rarely delve into the Florida Department of Transportation’s complex finances and five-year-work plan, which contains the details of $40 billion in costs for 5,800 projects and more than 7,000 new or expanded lanes of roadway. But that lack of initiative to scrutinize the FDOT has led to virtually no discussion among lawmakers about how to close a widening revenue gap.
“(The gas tax) has been discussed, but at a very superficial level,” said House Minority Leader Mark Pafford, D-West Palm Beach. “There will be issues coming if we don’t think about ways to bring in different types of revenue. But nothing has been discussed in a serious way.”
Elsewhere in state government, deficits this large are cause for alarm.
From 2011 until earlier this week, Republicans pushed to overhaul the state’s retirement system because there’s only enough cash to cover 87 percent of the state’s pension obligations.
“Leadership means that we take action to solve problems before they become catastrophic,” House Speaker Steve Crisafulli, R-Merritt Island, said in his opening remarks on March 3 as a call-to-action.
But the DOT is treated differently. It finances its projects by borrowing money, paying back the loans with revenue from the federal gas tax and an array of state taxes on gas and real estate transactions, auto fees, and increasingly, tolls and partnerships with private companies.
“We have complete confidence in the (FDOT’s) ability to manage its cash,” said a March 2 report by Florida Transportation Commission, an FDOT advisory board appointed by Scott.
“Probably a reason you don’t hear about (the gas tax) a whole lot in the state capital is Florida has diversified its portfolio,” said FDOT Secretary Jim Boxold in a Times/Herald interview. “While (Washington) has a federal funding crisis, we don’t here in the state.”
Still, Florida’s financial outlook looks increasingly uncertain because of that federal crisis.
Once the state received about 50 percent from the federal government to build and repair its infrastructure. Now, because fuel efficient cars don’t consume as much gas, that share has dropped to 25 percent.
Most federal revenue is through a program signed into law in July 2012. The act expired on September 30, 2014, but was extended through May 31 of this year. Unless Congress renews the funding — a big “if” during this era of Washington gridlock — Florida’s share of federal funding will drop $2 billion in 2016.
What happens if the program isn’t renewed?
“I wish I had the answer,” said Howard Glassman, executive director of the Metropolitan Planning Organization Advisory Council, a statewide planning group. “I don’t know what’s going to happen after May 31.”
Boxold, who was appointed by Scott in December, dismisses the notion that the program won’t get renewed.
“This federal uncertainty is really nothing new,” Boxold said. “It’s sort of par for the course.”
But none other than Boxold’s predecessor, Arnanth Prasad, told the American Society of Civil Engineers last year that the possibility of the program expiring posed a problem to state transportation planning. He said the state had enough cash to finance projects for up to only three to six months after the program expired.
“Beyond that, you’re going to have a tangible impact that you can’t avoid,” Prasad said.
Yet that shortfall isn’t included in the state’s projections for next year. Instead, Scott and lawmakers assume that $2 billion will be there.
Few if any lawmakers have raised questions about this assumption. Compare that ambivalence to the uproar over Scott’s assumption that $1.3 billion will be included in next year’s budget for uninsured and underinsured patients in a low income pool (LIP), even though a federal official warned that the program where the money comes from won’t be renewed.
While the possible expiration of LIP has drawn media attention and sparked a debate about Medicaid expansion, lawmakers wave off concerns about federal transportation dollars expiring.
“It’s not an issue,” said House Appropriations Chair Richard Corcoran, R-Trinity.
“I don’t believe it won’t get renewed,” said Sen. Jeff Brandes, R-St. Petersburg, who chairs the Senate’s transportation committee.
Even Democrats are mostly silent on the issue.
But Brandes does fret about the state’s long-term transportation outlook.
“The current way we fund transportation is unsustainable,” Brandes said. “Most legislators don’t understand how serious the issue is.”
Florida’s federal money comes from the Highway Trust Fund, 90 percent of which is from a gas tax. First imposed in 1932, the tax hasn’t been raised since 1993. It’s also not indexed to inflation.
Among industrialized nations, only Mexico has a lower tax. Turkey, Germany, Britain, Finland and France all have at least a $3 tax per gallon on gas.
The state gets nearly 60 percent of its income from a variety of state taxes on fuel — which unlike the federal gas tax adjusts for inflation — real estate transactions and auto fees. The rise in fuel efficient motor vehicles is eroding the effectiveness of gas taxes overall.
Brandes wants to recoup some of those losses. He’s sponsoring a bill, SB 1186, that would tie a gas tax to the distance motor vehicles travel, not by the amount of fuel they consume. He said that would be a more precise way for all motor vehicles, especially hybrid and electric cars, to pay for the roads they use.
Still, that bill is only pushing for a pilot study. And it’s still not clear what type of reception a bill that would monitor vehicle miles, though not disclose locations, would receive in a conservative Legislature that prizes personal privacy over governmental surveillance.
Until a solution arrives, the gas tax will continue to wither, depleting the Federal Highway Trust Fund and requiring Florida to make up that missing money to keep its projects funded.
“It’s alarming,” Glassman said. “The state has to be aggressive in pursuing revenue streams, but at this point, they aren’t. We’re hearing no debate about this.”
Contact Michael Van Sickler at email@example.com. Follow @mikevansickler.