Department of Transportation and Development Secretary Shawn Wilson told the Senate Finance Committee on Sunday that his department was able to build only 3.27 miles of new roads in Louisiana in 2016 because of the need to address the maintenance and repair demands on the 16,635 miles of state roads and the 938 miles of interstate highways that traverse the state.
How little new road capacity is that? Consider the fact that the town of Duson intends to seek a 1-cent sales tax so it can upgrade to hard surface 3.22 miles of gravel streets in the town.
Wilson also said that the state's ability to draw down federal highway dollars is about to get more difficult as Louisiana's toll fund reserves, which have been used for a portion of the state's share on federal projects, evaporates. Wilson said the removal of tolls on the Crescent City Connection in New Orleans has dried up funding for the toll fund.
DOTD plans to use $24 million in toll reserves to as part of the state match to draw down $816 million in federal highway funds in the fiscal year that will begin on July 1. Wilson told Allain that the state will need to find $30 million to replace the toll reserves money in the following year.
Currently, the only road in the state with tolls on it is the elevated section of LA1 from Leeville to Port Fourchon, Wilson said, adding that tolls on that road have not met projections. Wilson told the committee that the state is using Transportation Trust Fund dollars to subsidize that stretch of LA1 and that takes money away from other projects.
Individual committee members discussed various stalled projects in their regions ranging from interstate upgrades to construction of new state highways. Wilson's refrain was consistent: "We need the funding to do it."
Everyone wanted to discuss the potential for a proposed hike in the state gasoline tax to begin addressing the state's $13 billion backlog in construction and maintenance projects.
HB632 by Rep. Steve Carter narrowly cleared the House Ways and Means Committee last week and awaits action on the floor of the House. It is currently scheduled for debate on Wednesday. The bill would raise the state gasoline tax by 17 cents per gallon. The tax bill requires two-thirds approval of the House in order to advance to the Senate for consideration.
Wilson explained to the committee that each penny of the gasoline tax raises approximately $30 million. The current state on road fuels is 16 cents per gallon.
Wilson, who served as DOTD chief of staff before being named secretary last year by Gov. John Bel Edwards, says Carter's bill would make a significant contribution to the department's ability to address the backlog of road needs, but was still short of providing a quick solution.
"In an ideal world, we need about $700 million to begin really cutting into that backlog of projects," Wilson told the committee. "However, we believe the revenue generated by this tax would make a very significant contribution to that effort."
Senate President John Alario attended Sunday's committee hearing. He asked Wilson if the proposed gasoline tax increase would position the state to take advantage of provisions of the Trump administration's $1 trillion infrastructure investment program that is still in the development stages.
"We have some concerns about the program based on our conversations with the [U.S.] Transportation Department," Wilson told Alario. "Our first concern is that the proposal calls for a 50/50 match of state and federal dollars. Currently, the match on federal highway projects is 90/10 federal/state."
Wilson said that recent conversations with federal officials also indicate that the administration envisions relying heavily on public-private partnerships. "That's fine for large states with lots of people," Wilson told Alario. "It's harder for smaller states because the rates of return are not as robust." Wilson also noted that return on investment for road projects is not as clear as in other areas of infrastructure investment.
Sen. Brett Allain asked if bonding some of the money in the possible gasoline tax could be used to fund the state's match for I-49 South work.
Wilson said it would be a timing issue. "What we've been told is that the president's infrastructure plan will be ready in early spring 2018 and that it will be a one-time project," Wilson told Allain. "I don't know if we could go through the required steps of the bonding process quickly enough to meet that target." Then, of course, there's the matter of the tax making it out of the House on Wednesday.
Wilson believes that companion bills to the proposed gasoline tax would provide both the flexibility and assurances on the work that would enable the benefits to be spread across the state. Those provisions include the ability to bond revenue for so-called mega-projects that would include bridges and projects like the state's share of the I-49 projects in Shreveport and Lafayette. Wilson said he could replace a bridge in every parish with the money generated by the gasoline tax.
But, the problems that the road tax faces was made clear by two St. Tammany Parish senators who have TIMED projects that still have not been built nearly 30 years after the taxes for the projects were passed back in the administration of Gov. Buddy Roemer.
Sens. Jack Donahue and Sharon Hewitt asked Wilson about LA Highway 3241, which would provide another north-south artery in St. Tammany Parish. Wilson told Hewitt that his department is working steadily on the $250 million project but that it can only do so incrementally because of budget constraints.
Donahue said the long delays in the TIMED projects make him question whether he can support Carter's gas tax proposal if it makes it out of the House. "The cost of the work on the Huey P. Long Bridge cost more than the entire list of projects was supposed to cost," Donahue told Wilson. Wilson attributed some of the cost overruns on that project to spikes in global steel pricing that occurred in the middle of the last decade.
While the Finance Committee will not complete its work on the budget until after the Memorial Day weekend, the fate of HB632 should be known by midweek.