KDOT funding and effect on T-WORKS projects

[J N Winkler]

From contact-tlink@ksdot.org, which KDOT has been using for blast emails to transportation stakeholders in Kansas:

Loss of the sales tax revenue will reduce the agency's anticipated revenues by nearly $382 million over the next two years. This is in addition to proposed transfers from the State Highway Fund of nearly $300 million. So, clearly, the loss of sales tax revenue will have serious consequences for the T-WORKS program as early as this summer. Highway projects will be cut or delayed. At this time, we haven't analyzed which projects may be affected, but we will consider all categories of projects - preservation, modernization and expansion that are scheduled to be let in fiscal year 2014 and after.

King is talking about an 0.4c sales tax increment (part of a 1c sales tax increase advertised as a short-term measure to deal with Great Recession-related budgetary difficulties when it was introduced several years ago) whose revenues currently go to T-WORKS projects.  The $300 million worth of transfers to the general fund are a separate, but related, story, and last December King was reported as saying that the KDOT budget could accept some cuts since the agency was "ahead of the game on the cost side" and had enough to cover the next two years of planned lettings.  (I think this was a strategic error on his part, since there was nothing to prevent legislators from construing his comment as an admission that KDOT is overfunded and using that to take far more out of the KDOT budget than he was prepared to offer.)

My suspicion is that failure to protect the sales tax increment and its dedication to KDOT will set up the agency for a train wreck with the South Lawrence Trafficway.  The SLT, which is currently packaged as a single contract (10-23 K-8392-04) and has a $150 million construction budget, is currently penciled in for a September 2013 letting, which makes it a FY 2014 project.  It cannot be let at a later date without re-opening the permitting process because the contract has to be awarded and notice to proceed has to be issued before permits expire at the end of this year.

The SLT is ranked as KDOT's highest-priority project (most benefits per dollar spent), but is locally controversial and does not appear to have a broad statewide basis of support, so I wonder about the possibility of a coalition developing in the Legislature to ensure projects scheduled for letting in FY 2014 onward are protected as long as the SLT is not one of them.

[route56]

The SLT is ranked as KDOT's highest-priority project (most benefits per dollar spent), but is locally controversial and does not appear to have a broad statewide basis of support, so I wonder about the possibility of a coalition developing in the Legislature to ensure projects scheduled for letting in FY 2014 onward are protected as long as the SLT is not one of them.

Of course, the SLT's opponents have been working on developing such a coalition to get the SLT de-funded.

On the other hand, since K-10 has implications on Johnson County, the legislators over there will likely want to get the SLT completed.

The bill that triggered the blast is a House Substitute for SB 84 (basically, the house gutted SB 84 and inserted this bill in place). I don't know how substitute bills work, but I would assume that, should it pass the house, it would go back to the senate for concurrence, then to conference if necessary.

[route56]

H. Sub SB 84 cleared the "Committee of the Whole" 82-37.

The provisions modifying the distribution of Sales Tax revenue to the General fund have now been stricken in its entirety. The bill now solely deals with proposed income tax cuts.

The vault at the "Bank of KDOT" has, for now, been closed.

[ShawnP]

Does Kansas need a lock down on it's transportation funds like Missouri had to get in 2004 with Amendment 3.

[J N Winkler]

Does Kansas need a lockdown on its transportation funds like Missouri had to get in 2004 with Amendment 3?

This is a hard question to answer.  Historically, Kansas has had a constitutional provision stipulating that the proceeds of taxes on motor fuel shall be spent only on maintenance and improvement of the highways.  In fact (per Labatut's 1947 edited volume), Kansas was apparently the first state to pass a constitutional amendment of this type.

However, the Kansas constitution was completely rewritten in the 1970's, and the current provisions dealing with taxation of motor vehicles and motor fuel are in Article 11, Section 10:

Special taxes for highway purposes.  The state shall have power to levy special taxes, for road and highway purposes, on motor vehicles and on motor fuels.

Read in isolation, this provision seems to suggest that it is ultra vires for the Legislature to direct that any part of the proceeds of such special taxation be spent on anything other than road and highway purposes.  However, a prohibition on such diversion of revenue is not anywhere made explicit in the constitution; indeed, the only other appearance of the word "highway" in the constitution is in another section in the same article which limits the state's ability to financially participate in internal improvements and is descended from a similar provision in the 1861 constitution.  (The original purpose of this limitation was to prevent the state from bankrupting itself issuing bonds for canal improvements and the like, which had previously happened in Michigan and other states.)

In practice, I think the Legislature gets around the problem of diversion being ultra vires by coupling each diversion with a promise of future repayment, which I doubt is enforceable.  In any case, each diversion represents a net loss to the state highway fund even if it is repaid in full, since it is effectively a loan at zero interest.