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Projections: Highway revenue-raising proposals would still fall short

01:00 AM EDT on Saturday, August 23, 2008

By Bruce Landis

Journal Staff Writer

PROVIDENCE — Early estimates suggest that even with extraordinary measures — highway tolls, a sharp increase in the state gasoline tax and millions of dollars in other new or higher fees — the state still can’t cover its highway and bridge repair needs.

The assumptions being tried out in a preliminary economic model — a 10-cent-per-gallon increase in the state gasoline tax and $2 tolls for cars crossing the Connecticut border on Route 95, among others — would be, in ordinary times, politically unthinkable.

These aren’t ordinary times, if the state Department of Transportation really needs as much money as it says to repair the state’s highways and bridges during the next 10 years.

University of Rhode Island Prof. Henry Schwarzbach said that even using relatively high revenue targets, like that hypothetical gas tax hike and tolls, plus other new or higher taxes and fees, the total would not come close to covering the extra $300 million per year that the DOT says it needs.

The numbers suggest a different, much more expensive, environment for Rhode Island motor vehicle owners and drivers.

One set of figures Schwarzbach used would generate an estimated $139 million per year, a large amount of money, but “not near enough to cover the gap.” That combination included tolls at both the Connecticut border and at the intersection of Route 95 with Route 295 south of Providence.

Schwarzbach and other faculty members from URI’s Transportation Center are advising the state Blue Ribbon Panel on Transportation Funding. The panel, made up mostly of government officials and appointed by Governor Carcieri in March, is trying to figure out how to pay to repair the state’s failing highways and bridges.

To help, the URI experts are building a model to let the panel members and other state officials look at the effect of different mixes of money-raising tactics.

For example, raising the vehicle registration fee by $5 per year would generate about $5.7 million, Schwarzbach estimates. (The current rate is $61.50 to register vehicles weighing less than 4,000 pounds for two years.)

Raising the motor fuel tax from 30 cents to 40 cents per gallon would raise about $45 million. A $2 toll on Route 95 at the Connecticut border would yield about $9.6 million.

The trouble is that when Schwarzbach used what he considered relatively high tax and fee levels and added up the results, the total wasn’t nearly enough money.

“These aren’t big numbers when you consider the gap we’ve got,” he said.

The model is preliminary, he said, and will need to deal with a number of complicated factors that haven’t been analyzed yet but are needed to produce good revenue estimates. Some of those factors would suggest less revenue.

For example, with a toll booth at the Connecticut border, some drivers would leave Route 95 to avoid paying a fee, reducing revenue. The model needs to estimate how many drivers would dodge the tolls. That would depend on where the toll station is and what local roads are available for getting around it.

Similarly, he said, the state would probably want to give discounts on tolls. Many Rhode Islanders commute across the Connecticut line to Foxwoods, Electric Boat and other employers. “It’s not fair to charge them $2,” he said, when they drive to work every day. That needs estimating, too.

The DOT says it needs about $640 million per year over a decade for bridge and highway work, and that it expects only about $340 million per year from its existing revenue sources. Those are federal highway aid, borrowed money and receipts from the fuel tax. That leaves $300 million that the DOT says it needs to spend each year that the panel would need to find, somewhere.

The DOT’s figures include a long list of annual costs: from $26.5 million to resurface 120 lane-miles of roadway, to $78 million to repair 16 structurally deficient bridges per year, and $108.7 million for debt service.

Rhode Island’s traditional approach to paying for highways and bridges — more borrowing — isn’t an attractive answer now because the state has already borrowed so much money.

“You can still finance it,” Schwarzbach said,” but you’re at a point where it’s not prudent to borrow a lot more.” The state is already borrowing against its federal highway aid in future years to pay for projects being built now.

The existing financial system, meanwhile, makes some strategies more attractive than others. Raising the gasoline tax, the URI advisers note, is attractive because it’s cheap and easy to do: the collection system already exists.

By contrast, instituting highway tolls means a large up-front cost, millions of dollars to build toll stations and buy the computer systems that would run them, plus operating costs that would consume part of the receipts every year.

blandis@projo.com

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