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Andrew Cline has been editorial page editor of the New Hampshire Union Leader since October of 2001. His writing has appeared in more than 100 newspapers and magazines, including The Wall Street Journal, The Washington Post, and National Review.The governor's strange proposal to raise highway money
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By CHARLES M. ARLINGHAUS
Wednesday, Mar. 11, 2009
The State of New Hampshire wants to pay itself $120 million with interest. This odd financial ploy from Gov. John Lynch's budget started as an attempt to get around legal restrictions on certain revenue and to avoid raising the gas tax. Instead, the New Hampshire House voted last week for the strange gimmick and to almost double the gas tax.
Gov. Lynch has traditionally opposed raising the gas tax and hasn't announced whether he would veto the House's hike. Instead, in his budget he came up with a clever way to get around legal restrictions on the use of transportation money by having the state sell a piece of road back to itself.
It's well known that the state constitution requires gas taxes, vehicle registration revenue and some other fees to be spent only on highways or traffic supervision. The money can support things like state police doing highway enforcement, but otherwise it has to go toward building and maintaining roads.
Tolls collected on the turnpikes are even more limited. Tolls are a user fee and can be spent only on the toll roads themselves. They are kept in a separate turnpike fund for use on what are legally defined as the turnpikes. After the toll increase two years ago, the turnpike fund is flush with money that can't be spent on any other roads.
Here's where clever accounting comes in. The eastern turnpike includes Interstate 95 up to the Spaulding Turnpike and the Spaulding Turnpike through Rochester. The state wants to take the remaining mile of I-95 not currently part of the turnpike system and transfer it to the turnpike system. The turnpike in exchange would pay the highway fund $120 million plus interest.
At first it sounds goofy, like a man negotiating with himself in the mirror. But actually it is a clever way of dodging state law and using toll increases to fund not the turnpike but the rest of the roads in the state. The governor's budget included millions of dollars of toll increases. Raising a toll is not as unpopular as raising the gas tax, but toll money is more limited. This gimmick allows the state to use the money raised from new tolls to fund a $120 million purchase from itself, which frees millions of dollars from pesky legal restrictions.
The "sale" is expected to give the highway fund an additional $30 million in this budget and $15 million for the next six budgets after that plus interest.
For lawmakers looking to spend more money on roads, the other way to do it is to simply raise the gas tax. A group in the House has been working to do just that and got passed a bill to almost double the tax over the next three years. More surprising is that the House didn't do this instead of the governor's gimmick. It did both.
If you thought the recession would cause lawmakers to be cautious about raising tolls on people or raising the gas taxes they pay, you'd be wrong.
Listening to the rhetoric, you'd think New Hampshire's roads and bridges were falling apart and the highway fund was on the verge of insolvency. Frost heave season notwithstanding, it isn't true.
The state maintains a "red list" of the state and municipal bridges most in need of repair or replacement. Two years ago, the Department of Transportation reported that in the prior decade an average of 43 bridges came off the list each year and 30 bridges were added. In the most recent year of the study, 23 bridges were removed and nine added. So each year we remove more than we add.
The state adopts a 10-year highway plan as a list of the transportation projects we want to fund over the next decade. The plan adopted last year contained $2.3 billion worth of projects and anticipated only $2.1 billion of funding. If this were a budget, there would a $200 million deficit. But the plan isn't authorized spending. It is merely a priority list for how we spend the money we anticipate taking in.
The federal stimulus money will probably fund most of the $200 million by itself. The gas tax hike alone would fund three times that amount, and the weird selling of the road to ourselves would also cover most of it. If there isn't a crisis, we should think carefully about whether a strange accounting gimmick to bypass state law is a good idea.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.
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YOUR COMMENTS
Might you have another link that shows how much projects cost when they were posted on the 10 year plan? After all the lawsuits, increasing construction prices, etc., it seems to me the DOT planned a fixed cost yet when projects are actually started the cost has tripled. (?) Examples might be the Airport Access Road and the 93 expansion. Should the government start over-charging for projects now knowing these 'obstacles' are here to stay?
I agree there is good news that they are repairing more red listed bridges than adding more. My gripe? How long was that bridge (in another state) on the list before it fell down? Or was it on a list?
- Meg, Bedford
I read the article twice to understand what it is that has raised Mr. Arlinghaus' ire on this issue, and I don't see it. The turnpike is a separate legal entity from the highway system, with its own funding mechanism. The state is selling part of the highway system to the turnpike. Presumably, the turnpike will at some point increase its fee to charge users for using this extra mile, and thus recover its purchase price. If the turnpike were a private business, I doubt Mr. Arlinghaus would have the slighest concern about the transaction.
Thye really strange thing is why the last mile of I-95 is legally a separate entity from the rest. Who made that decision?
- Mike Marsh, Greenland
Meg, there are quite a few bridges that need repair. The numbers from the DOT suggest not that nothing needs fixing or that we don't have frost heaves but that we fix more than new ones are added which suggests we are keeping up. As for the bridges you drive over (on 101 maybe?) you can go to the DOT website and they have a list of the redlist bridges so you can see if the ones of most concern to you are on the list.
as for the statement of solvency being off the mark, we have only the official statements and annual reports released by the state's officials. One has to trust them or assume malfeasance. I think they're more likely reporting the results of audits accurately. But here again the data is available for you to examine yourself. The numbers I refer to come from the "ten year transportation plan" which can be found here:
http://www.nh.gov/dot/org/projectdevelopment/planning/documents.htm
- charlie arlinghaus, canterbury
I'm not sure which road or bridge Mr. Arlinghaus takes to work, but the one's I have to drive over are shaking my axle's loose.
I've driven over bridges with holes you can see all the way to the highway below. I guess that's what all that wood is for under the deck...to catch the falling bridge.
From what I have read, the solvency statement is also off the mark.
- Meg, Bedford
Harry from Wolfeboro, I agree with you and although I am as Republican as you can get, I think all politicians are like small children, spend all you can get and spend more. I think the first part of the solution is strict, short, term limits. You are very correct, "The people are getting angry out here on the streets", and people are really getting serious about "Tea Parties". This has to stop, period.
- Gary Hoffman, Bedford
The selectmen of the towns have been doing such games for years even in towns with budget committees. Put in a line in your budget rfequest for something you know has appel and a small amount for something else, then transfer the monies arround. properly used such transfers can be needesd and valid. However, both of bthese things are not valid in my mind give the economic state we all face.
- albert, northwood
It's actually a pretty cool idea.
- Art, Portsmouth
This shows exactly what I have been saying for awhile. They ask for money for one thing and find away to use it for something else. Makes you wonder why the highway fund is the way it is. Imagine what they can do with increased tolls, increased car registration fees and increased gas taxes? But don't worry they will be back in a few years telling you how the highway fund is broke!!
- Bill B., Pelham
PS--J of Loudon, the "game-playing" you describe sounds like our whole "fractional reserve" system, under which a bank that takes in $1 is allowed to loan it out seven or eight times at once. We assume not everyone will default at the same time, nor will all depositors ask for their money back. The bank can make more profit and the economy can grow faster, under assumptions that are valid ALMOST all the time.
- Spike, Brentwood NH
Please take note, everyone who is advocating casinos or new taxes on the assumption that you can restrain politicians by requiring that the revenue be applied toward desirable goals.
- Spike, Brentwood NH
Sounds like the Eron school of Math. I say lets sell the entire state to ourselves and then give us each a refund. This kind of game playing is what got the economy where it is (banking and wall street games). If there is $120M avialable to do this then free it up and create some jobs today. Gov, How about you hire say 3,000 people for a year at 35K each to make sure no one steals the roads ( traffic supervision). Then they would not have to be paid unemployment, assistance $$ and could pay their mortgage. If I sell my driveway to myself can I get a tax write off on my income tax for the interest I pay myself but then call it non-income? Politicians side stepping the very laws they put into place. Does Gregg get a vote in where the shifted money goes, I want to be in the ground floor with him and his bro.
- J, Loudon
Sound like a duck
and look like a duck.
What a rip off.
Tax payers beware.
- amos, plymouth
It's simple, the Dems will rob, cheat, steal and spend every bit of money they can get their hands on. It is a disgrace, here in New Hampshire, and in Washington. The people are getting angry out here on the streets.
- Harry, Wolfeboro
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