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Industry Eyes Ga. Legislative Session for Funding Answers

Tue October 09, 2007 - Southeast Edition
Matthew Willett

On this everyone agrees: Georgia is becoming a victim of its own growth.

“Here in Georgia it’s no secret that we’re a growing state, growing fast,” said Georgia Department of Transportation Spokeswoman Carrie Hamblin. “The state has added a million people in the last five years and the population is projected to grow by over 3 million in the next five years. The Atlanta metropolitan area in the next 10 to 20 years is expected to be 7 million strong.”

Great, right?


Together, aging transportation infrastructure maintenance and approved transportation project debt costs in the Peach State account for more than 95 percent of the state’s total transportation funding, according to DOT, leaving little for congestion mitigation in the state’s gridlocked heart.

And if alternative funding isn’t found soon, more than $7 billion in transportation infrastructure needs statewide could go unmet. For contractors, the consequences could be devastating.

“If we don’t do anything, if we do not do some type of initiative to generate funds, the construction industry is not going to be as strong next year as it is this year. It’ll still be fairly strong, but we won’t reach the numbers we have this year,” Georgia Highway Contractors Association Executive Director Steve Parks said.

Funding for transportation, Hamblin said, is locked in 1979 and rooted in the federal fuel tax.

“There’s a 7.5 percent per gallon excise tax and also a 4 percent sales tax, so right now that’s about 18.6 cents per gallon, and, believe it or not, that 7.5 hasn’t changed, and that 4 percent has lost a lot of purchasing power from 1979 until now. It’s no secret that construction costs have increased — we’ve experienced a 28-percent increase overall just between 2005 and 2006.”

The good news for contractors, Parks said, is that demand remains strong. From the DOT perspective, however, that demand hangs like a millstone.

“Our construction work programs are based on a six-year time frame,” Hamblin explained. “In primary construction, we’re $7 billion short for the current six-year rolling program that includes the six years out in the future from now. Essentially what we had to do was take the last three years of the six-year program and lop that off and take the first three years and stretch it out. That resulted in over 510 projects being bumped from the six-year program.”

Projects like the $200 million turn lane improvements at Roswell Road and I-285 in Fulton County and truck-only lane construction on I-75, which alone totals nearly half a billion dollars, hang out on the proverbial limb. In the next 50 years, Hamblin said, the DOT is projecting a $447 million shortfall for road maintenance and safety projects alone.

That’s terrible news for state industries that depend on transportation infrastructure, according to Georgia Associated General Contractors Director of Governmental Affairs Mark Woodall, and the problem isn’t new.

“We have for years been on record saying that we need adequate funding for our highway projects and all our infrastructure needs and there have been talks for years that our funding process in Georgia is not keeping pace with our needs and growth,” he said.

Parks said the shortfall’s effect on the state’s economy as a whole means taking action in the legislative session beginning in late January is critical.

“This is the time that we have to make some bold steps and bold decisions and act on them,” he said. “If we don’t in Georgia the consequences are clear to me: down the road we’re not going to continue the economic development we’ve had. We’re bogging down in congestion in Atlanta and in the rest of the state and that makes the state less attractive to people who want to work and play here.

“I don’t think a lot of other things will work if we don’t have adequate transportation [infrastructure]. Emergency medicine, tow trucks, just getting back and forth from the ball game becomes inefficient. A lot of things don’t work if transportation doesn’t work; it has a profound effect from bread coming to the grocery store to kids going to their ball games, and if we don’t do something in the state of Georgia the economic engine is going to sputter.”

Having spoken at the legislature’s joint committee on transportation, meeting in September, Park said he’s confident that some action will be taken from among the solutions currently being tossed around.

Funding for state transportation projects could come in the form of a new or expanded tax, Park said, and the debate centers on whether the current tax may be augmented in the future by a regional or a statewide sales tax.

“We have some options,” Park said. “We’re a member of a group called the Get Georgia Moving Coalition, and we really believe in the idea that’s been put forth that there has got to be some kind of funding mechanism in place and that there’s no question that a sales tax is probably the most logical. There’s a debate over whether it should be an urban regional sales tax or statewide, but those are the basic moves forward.”

Park said discussions about funding mechanisms can become complex as competing programs and needs are considered. It’s the complexity, he said, that leads him to believe that a melange of solutions may be in the offing next spring.

“If I were king for a day what would I do about transportation?” he laughed, “With the Get Georgia Moving Coalition the full spectrum is represented and sitting there at the table so we can all understand each of our positions. I don’t know if we’re ready yet to say ’There is the magic key,’ but I think we have a broad array of ideas that are going to receive attention and debate and I hope that with the business community and other people behind it, the legislature will take a solid look at it and in the end weave all the discussion into what will be the best fit for the needs in Georgia.”

What will actually happen when the legislature convenes is still, however, anyone’s guess. Georgia House Speaker Glenn Richardson (R-Hiram) has advocated a vast tax system overhaul, and when asked about supporting a statewide sales tax to fund transportation projects, Gov. Sonny Perdue flatly responded, “No.”

The Atlanta Metro Chamber of Commerce already supports a bill that would allow regional sales taxes, and other state chambers in metropolitan areas have joined it.

State Transportation Board member David Doss’ “Big Idea,” leads the drive toward a statewide sales tax. The 10-year plan would produce $22.5 billion with a 1 percent tax increase. Others in the state have sought efficiencies in current procedures.

“There are things we can do,” DOT’s Hamblin said. “We want to deliver projects, and if that means we change the process to deliver projects we can do that now.”

Improvements within the DOT may be paired in the future with additional design support from contractors and additional participation by contractors in project planning.

“That means bringing the construction companies in on projects sooner,” she said. “[Contractors] know what it takes and what’s efficient and if it’s a possibility to bring in you guys earlier I think that’s good news. We’re hoping to partner with our construction companies to help us deliver projects, and I think that’s going to be a good thing for everyone.”

Parks welcomes the changes, but warns that without additional funding the panacea won’t be a cure.

“It’s a big topic now, public-private partnerships or concessions,” he said. “We as transportation builders based in Georgia and just about any experts you talk to have said that there’s probably a place for these but it’s not the silver bullet. We’re saying there’s a place for it, but approach with caution. It’s a delivery method where contractors are both designing and building and they’re combined, but, again, it’s a delivery method — it doesn’t get funding.”

Though debate over funding mechanisms could turn fierce next year, most agree that steps must be taken to ensure the growth of recent years in Georgia doesn’t lead the state to eat the whole peach in one bite.

“We as a state, and as a nation and especially as a metro Atlanta area have some serious road congestion issues and we need to adequately finance and fund our infrastructure needs or we’ll choke on our own success,” AGC’s Woodall said. “It’s one of the major issues to attract future industry here, and we need to find a way to continue the success and to continue to adequately fund to meet our needs and be smart with it.” CEG

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