Cross Roads

Meanwhile, U.S. Secretary of Transportation Mary Peters is urging states toward the edge of the federal nest, touting toll roads and promoting private investment in infrastructure projects. Having passed pilot toll legislation last year and with public-private partnership (PPP) legislation in the works, Tennessee—historically among the most conservative states regarding transportation funding—seems ready to take the plunge into alternative financing.

TDOT Commissioner Gerald Nicely says the state faces a long-term problem that will demand "fundamental change" in the way infrastructure is funded—a forecast echoed by industry insiders and lawmakers in Tennessee and across the United States.

James Weaver, general counsel to the Tennessee Road Builders Association (TRBA) and the Tennessee Chamber of Commerce and Industry, says the problem is multi-faceted, involving policy at every level of government, and it is indiscriminate, impacting quality of life or economic opportunity in every part of the state. "It can't be a partisan issue," Weaver says. "I have Republican friends who are just as interested in economic issues in the rural areas of the state as my Demo- cratic friends are. I have Republican friends who represent and work in urban areas, and they don't like sitting in traffic jams any more than my Democratic friends do. At the end of the day, they will be able to address the issue because it won't be partisan, we'll all be Tennesseans, and it's just about what's best for Tennessee."

Easier said than done when the problem is complex, the solutions are largely political, and the conversation must begin with a gut-check for lawmakers and taxpayers alike.

Those numbers have forced tough choices at the department. "TDOT's doing the best it can, but if you look at the way we're maintaining our roads today versus the way we maintained them seven, eight, 10 years ago, we're painting our roads rather than doing some really good maintenance on them," says Kent Starwalt, executive vice president of the TRBA.

But convincing Tennesseans that TDOT needs more of their money may be a hard sell. In 2003, Gov. Phil Bredesen took office having campaigned on the disparity between the quality of Tennessee's roads and its schools. Tennessee's infrastructure is still well-maintained relative to most other states; its highways get good marks from the trucking industry, which in 2006 and 2007 called I-40 in Tennessee the best road in the nation.

The problem, says Pete DeLay, chairman of the Tennessee Infrastructure Alliance, is that gradual degradation is not dramatic; the time between a funding cut and its effect dulls any sense of public urgency. The result can be both dangerous and expensive, he says. "Our road system is not much different from your house. If you let your house reach a certain point of disrepair, you almost don't have enough money to fix it."

Pete Rahn, director of the Missouri Department of Transportation and new president of the American Association of State Highway and Transportation Officials, agrees. "You have to get into a crisis circumstance for the public to recognize it," he says. "We've already gone off the curve, where things that could have been fixed for $1 now cost us $5."

Darek Bell, co-owner of Bell and Associates Construction Co., notes that in 2006 Nissan chose to locate its headquarters in Franklin, a Nashville suburb, rather than to Atlanta—a city whose gridlock has cost billions of dollars in potential new business, he says. Now Franklin is gridlocked, too. According to TDOT, Middle Tennessee is home to 21 of the state's most congested stretches of urban interstate; the ASCE calculates Nashville commuters spend $730 annually in excess fuel and lost time. But all of metro Tennessee is feeling the crunch. While Memphis is less congested than Nashville, according to the Urban Mobility Report, its rate of congestion from 1982 to 2003 was 1,000%—nearly triple Atlanta's.

It's a scene "repeated from Mountain City to Memphis," Weaver adds. "There's no construction out there. It's just too many cars and too few lanes." Indeed, there has been no new road construction in Tennessee in Bredesen's five-year tenure. In 2006, budget concerns prompted TDOT to defer temporarily 12 projects already on the board and include no new projects in its three-year plan. Maintenance has been TDOT's funding priority, Nicely says. "I think the real hit is going to be expanding capacity and widening and building new transportation facilities."

A Crisis, Deconstructed

At $284.6 billion, SAFETEA-LU, the federal surface transportation authorization for 2005-09, is the biggest to date, a 30% increase over the previous five-year authorization. So what's the crisis?

Federal funds are drying up. The federal government passed SAFETEA-LU without allowing for new revenue streams. Funding comes from the federal gas tax, which at 18.4 cents a gallon hasn't been raised in 14 years. At current spending levels, the Federal Highway Trust Fund will run dry by 2009.
Earmarks are out of hand. In 1987, earmarks—money unavailable unless used for a designated project—represented 1% of federal transportation funding. SAFETEA-LU is 10% earmarked, with Congressional projects circumventing the state approval process, often not on a state DOT's project plan, and sometimes only peripherally related to transportation. "We've got $500 million of earmarks on the budget right now," says Gov. Phil Bredesen. "Half of it's highway money for stuff off the highway." Typical of such projects: streetscapes and greenways. Among the suspect: a parking garage on the campus of private Lipscomb University in Nashville.
Promised funding hasn't materialized. Federal funding rescissions aren't unheard of, but lately they've been whoppers, with money redirected to Iraq and the Gulf Coast. TDOT, which is 49% federally funded, has had $171.4 million in SAFETEA-LU funds rescinded since 2005. Earmarks, coincidentally, aren't subject to rescission.
Tennessee's a "donor state." Through a complicated formula created to match funds to needs, Tennessee gets back only 92% of what it pays into the federal highway trust. (The biggest "donee" state, Alaska, receives several times over what it pays in.)
Tennessee's gas tax is flat. Like Congress, the Tennessee General Assembly has avoided raising the gas tax, which has been stagnant since the 1980s. Meanwhile, cars have become more fuel-efficient. Unlike states that index their tax (like North Carolina), use a gas sales tax (like Michigan), or periodically adjust their gas sales tax (like Georgia), Tennessee, with its per-gallon tax, has watched its buying power dwindle.
There's little money for state projects. In order to receive available federal transportation funding, Tennessee must match that funding at an 80/20 federal-to-state ratio. Limited state revenues go almost entirely toward capturing matching federal funds. Little is left for state-funded projects, which include most short-term and a few long-term projects, including Nashville's 840S.
Construction costs are climbing. War and political instability have sent oil prices skyward, while infrastructure booms in China and India have driven double-digit price hikes for materials like concrete and steel. "The last three years, materials prices have gone up 42%," says Kent Starwalt of the Tennessee Road Builders Association.
Gas tax revenues don't always build roads. For several years money was diverted from TDOT to the general fund—a total of $217 million. (See "Sacred or Cash?", page 50.) Even when fully funded, TDOT's budget regularly covers costs overlapping other departments' jurisdictions, says House Transportation chairman Phillip Pinion (D-Union City): "I know of at least seven different departments that money's paid out of TDOT funds. Some of them are very, very legitimate . . . but with others, I want to say, 'Well why can't that money come out of the general fund now?'" Pinion says he's in the process of quantifying those costs.

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