Mo. faces highway funding shortfall

JEFFERSON CITY, Mo. -- Missouri is nearing a crisis in highway funding and may have to turn away hundreds of millions of federal dollars unless it comes up with more of its own money for roads, the state's transportation director said Monday.

Missouri's highway construction budget already has plunged from nearly $1.2 billion last year to $662 million this year as federal stimulus money expires and the state pays the tab for a burst of bond-financed highway projects built during the past decade.

The Missouri Department of Transportation now believes it must make about $300 million in cost cuts over the next five years just to free up enough state money to match the federal highway dollars due to the state, department director Kevin Keith said Monday. That's up significantly from a year ago, when the department set a goal of $200 million of savings through such things as eliminating employee positions, paring back stockpiles of materials, mowing roadside grass less frequently and waiting longer to repaint faded road stripes.

Even with the enlarged target for cost cuts, the department still won't have enough money to match its share of federal highway dollars beginning in the 2017 fiscal year, Keith said.

Missouri generally must put up $1 for every $4 it receives from the federal government.

Assuming federal funding remains steady, Missouri is projected to have to turn away $453 million in federal highway money in 2017 and hundreds of millions more in the ensuring years.

"By trying to manage differently, get smaller, save resources, we think we can buy five years where things will be, at best, OK," Keith said. "If nothing changes, as we get into '15 and '16, then we're looking at a crisis" in highway funding.

The gloomy forecast for Missouri's highway funding is not necessarily new, but it is gaining more urgency.

As early as 2006, then-department director Pete Rahn warned that Missouri's annual highway construction budget would drop significantly by 2010 as an influx of bond money that pushed that state's annual road budget well over $1 billion gave way to the reality of paying back the debt. He compared the impending decline to dropping off a cliff. That plunge came a little later than expected because of the federal economic stimulus money approved in 2009.

But that drop has now occurred, and the state's highway program could be cut in half again unless circumstances change. Over the next five years, Missouri is scheduled to award an average of $600 million a year in highway construction projects, which will consist largely of maintaining existing roads and bridges as opposed to expanding or building new ones. Financial projections provided by the department show the money available for highway projects could fall to $285 million in 2017.

"At some point, we're going to have to find funding -- not financing" through debt, Keith said.

The department has no plan to come up with additional money, nor does it intend to propose one. Keith said that is the job of either state legislators or citizens and interest groups through a ballot initiative, and it is the department's responsibility to deal with whatever revenue it receives.

Statewide tax increases have historically been a hard sell in Missouri, although voters in certain cities, counties or regions have approved tax increases dedicated toward local transportation projects or other purposes.

For the past two-and-a-half years, a coalition of business groups, economic development agencies, local transportation authorities and others have been holding public forums across the state trying to make the case that Missouri will soon need additional money for roads and other modes of transportation.

On Monday, for example, the chairman of the Missouri Transportation Alliance -- former state transportation commissioner Bill McKenna -- was traveling to Hannibal give a presentation to a Kiwanis Club. McKenna estimated he already has given more than 100 such presentations. He said the group believes the state needs an additional $600 million to $700 million annually to return to the robust highway and transportation projects that existed in recent years.

"We're trying to build a grassroots effort over the next six months or so to get people interested in doing something about it," McKenna said.

So far, the alliance has not proposed any specific funding package to be submitted to voters. McKenna said the group first plans to do polling to see which options have the best chance of passing. It might be difficult to have a proposal ready for the 2012 ballot, McKenna said, but anything later than the 2014 ballot could put the state's highway program in jeopardy.