Analyzing Transportation Trust Fund's future

March 24, 2014

Well before and since completion of the work of the 2011 Transportation Trust Fund Task Force and the publication of their findings, the Delaware Transportation Strategy Group has strongly advocated four actions required to restore the Transportation Trust Fund to a financially sound footing to support the transportation infrastructure needs of Delaware. These actions are:

• Reduce and better manage the department’s debt.

• Establish budget controls and better manage the DART Paratransit subsidies.

• Properly price DART transit services.

• Raise new cash revenues to keep pace with the cost of inflation.

We are pleased to acknowledge the actions of the department in recent years to reduce their debt, control their operating costs, establish limits on the transit subsidies, and increase transit fares for the first time since 1989. These actions by Secretary Bhatt and his staff have done much to address the first three items on our list and, in doing so, restore public confidence in the management of the Transportation Trust Fund.

We were pleased to see that Governor Markell, in his budget proposal for FY 15, has shown the political courage to take the lead and propose a plan to increase the revenues of the trust fund, the fourth item on our original list. His proposal, however, while adding $50 million to the trust fund, will also remove the $40 million transferred annually from the General Fund to the trust fund, therefore, resulting in only a $10 million (two cent gas tax) net increase to the trust fund. In other words, the revenue generated from eight cents of the proposed gas tax increase is really going to help add revenue to the general fund. The governor’s proposed net increase to the trust fund, therefore, is insufficient to meet the department’s future needs identified in the 2011 Trust Fund Task Force Report. We also do not believe that adding only $10 million in new cash revenue, while borrowing $50 million per year, will produce a sustainable program. A better mix of new cash and borrowing is needed to create a long term transportation capital program.

Nevertheless, the governor does deserve credit for putting a long overdue revenue increase on the table. We know that many legislators will also need to show political courage and leadership, if the need for additional trust fund revenue is to be addressed. We encourage the members of the General Assembly to work with the governor and finalize a new revenue plan that addresses the needs of the Transportation Trust Fund. While we support an increase in the gasoline tax (which hasn’t been increased for 20 years) as one way to address this need, we realize there are many ways to raise revenues for the trust fund. The 2011 Trust Fund Task Force Report identified 95 different ways to raise revenue for transportation and certainly there is some combination of increased revenue ideas that a majority of legislators can agree on to address the current Transportation Trust Fund needs. We encourage all sides to find that solution.

Finding the dollars, however, is only part of the story. Whatever is finally agreed upon, steps need to be taken to prevent debt service from rising unabated again and to provide a reasonably consistent revenue stream into the trust fund. To insure this, the administration and the General Assembly need to take the following actions:

• Place a limit in the Delaware Code on the amount of debt the Transportation Trust Fund can incur. We have suggested limiting the department’s annual debt service (including Garvee Bond debt service) to 20 percent or less of the department’s annual cash revenue, excluding transit revenue and federal aid.

• Place a limit on the amount of the trust fund revenue available for transit subsidies. We believe this can be best accomplished by establishing fare box recovery rates for the various modes of mass transit in the Delaware Code.

• Pass legislation that will begin indexing the department’s revenues to inflation.

• Revise the methods utilized to determine state wage rates to make them fairer to the taxpayers.

We citizens of Delaware never like it when our costs for services are increased. However, we also really know that there are times when the costs we pay must be increased to keep up with inflation and maintain our quality of life. Since well before the revenue issues of the Transportation Trust Fund were identified in the 2011 Transportation Trust Fund Report, we all have paid a price in deteriorating transportation infrastructure, loss of construction jobs and the loss of possible job creating development. For our greater good, our political leaders now need to find the political courage to lead us to a better future. The governor has proposed a good start and we encourage the General Assembly to do their best to help him find a workable solution addressing this longstanding problem.

Joe Wutka
ransportation Trust Fund Task Force

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