Missouri, Welcome to the Era of the Broke State DOT

Word went out in a press release early last month: The Missouri Department of Transportation would be eliminating 1,200 jobs, closing 135 facilities and selling 740 pieces of equipment.

“This is about survival,” said MoDOT spokesman Jorma Duran. “This is about making sure our roads and bridges continue to be maintained and operable.”

Drastic times call for drastic measures. And outdated gas tax rates, state operating shortfalls and a lack of foresight are combining to create a crisis for state DOTs in Missouri and beyond. In the last two years, Virginia DOT let go of 1,000 employees and New York DOT eliminated 100 positions.

The Virginia Department of Transportation made 1,000 layoffs in 2009, the biggest reduction in the history of the agency. Photo: Richmond Times-Dispatch

“We just ran out of money,” Reta Busher, VDOT’s chief financial officer, told the Richmond Times Dispatch.

State transportation agencies are adjusting to a “new reality,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials. And there will be widely felt impacts.

“It’s terrible,” he said. “Because of these economic crises, you’ll see projects put off. States will not do as much as they recognize is absolutely essential.”

Horsley said the most vulnerable employees are rural maintenance crews. “If you go to rural Missouri and just about any rural place, the state maintenance facility is one of the most important employers,” Horsley said. “That’s a real blow to rural economies all over Missouri. Those paychecks were very important to those regions.”

How did states get into this mess? Well, stagnant gas taxes are a big part of it. States depend on gas taxes — federal and their own — for an average of 24 percent of their budgets, according to Smart Growth America. But since the federal gas tax was last raised in 1993, inflation and greater fuel efficiency have greatly diminished its purchasing power. In addition, many states have not had the political gumption to take on gas tax hikes themselves (Georgia and Connecticut being a few notable exceptions).

Rising fuel prices have also forced gas tax receipts downward, as consumers curb nonessential driving. Where in headier times, states might have subsidized their transportation agencies out of the general fund, few states are in the financial position to do so at the current time.

To make matters worse, many states have been pouring their increasingly scarce transportation resources into projects of dubious merit. According to a report by the Brookings Institution, states do a poor job ensuring their transportation investments are strategically targeted to aid economic growth. Transportation investments are not properly coordinated with land use considerations. States were also found to be underinvesting in maintenance, a recipe for long-term financial disaster. The problem in a nutshell: Building sprawl is expensive.

“States face challenges because they spend their (now-declining) transportation dollars poorly,” the report noted. “By failing to join up transportation up with other policy areas—such as housing, land use, energy—states are diminishing the power of their interventions and reducing the return on their investments.”

Missouri has been spending about $1.2 billion annually on highway construction. In the new economic reality, MoDOT’s budget will be reduced to about $600 million annually. The cuts will leave the agency with just enough money to maintain its current system and meet its required federal match — 20 percent of the project costs, said Duran.

Part of the reason for the sudden flurry of job cuts in Missouri was the expiration of a bond-backed surge in transportation funding beginning in 2004. In a report called “Falling Off a Cliff” [PDF], MoDOT noted that declining state revenues and increased construction costs were part of the problem, as well.

These same problems are plaguing DOTs across the country. It’s difficult to know where the next shoe will drop. Ohio Department of Transportation Director Jerry Wray told members of the House Transportation and Infrastructure Committee in February that without an increase in revenues “We will not be able to match federal funds; we will have a difficult time maintaining our existing system.” According to some reports, New Jersey seems to be headed in the same direction.

If environmental and social justifications for pursuing smart growth strategies haven’t been enough to encourage states to change course, maybe a fiscal mandate will. At least in Missouri, the funding crisis means that new construction is off the table, Duran said.

But highway expansions won’t be the only projects targeted for cuts. Pedestrians and cyclists will be among the biggest losers as the state reverts from construction to maintenance mode, said Brent Hugh, of the Missouri Bicycle and Pedestrian Federation.

“The last thing we need is a lot of new roads and big freeways in Missouri,” Hugh said. “But we need to maintain what we have. We need to add bike lanes and sidewalks.”