Highway construction industry sees a need for more revenue
Fred Kenison, vice president of RS Audley Inc., a construction company with headquarters in Bow, says he usually shies away from making political statements.
“It’s a small state,” he explained, making it easy for someone with an unpopular cause or opinion to stand out. But lately Kenison has been championing what has traditionally been the most unpopular cause of all in a state that prides itself on thrift in government. Kenison is publicly championing a tax increase.
“Let your political representatives know that you value our state’s highways and bridges and are willing to pay a little more to keep it safe,” Kenison wrote in his “President’s Letter” column in the September issue of “New Hampshire Highways,” the magazine of the New Hampshire Good Roads Association.
Kenison, president of the private non-profit organization of contractors, consulting engineers, materials suppliers, equipment dealers and others, was pointing out what he sees as the obvious, if often forgotten, facts. “Many of us have recognized for some time that with flat revenue and rapidly rising costs, something would have to give,” he wrote. “Unfortunately on August 1, something did give as a 40-year-old interstate bridge collapsed in Minneapolis, killing several commuters and putting our nation’s infrastructure on the news.”
But events in the news change quickly, and the nation has a short attention span, Kenison lamented. He is hoping recent attention given to New Hampshire’s own road problems will inspire some action at the State House in Concord.
In mid-September, New Hampshire Transportation Commissioner Charles O’Leary reported a projected deficit, based on the present revenue stream, of $730 million in the Highway Trust Fund over the next 10 years. (A toll increase on the state’s highways – which is expected to generate an additional $16 million year – would be used solely toward repairs on the turnpike system.) Under those circumstances, the commissioner predicted, the department would have be forced to lay off 25 percent of its workforce.
The bridge collapse in Minnesota, Kenison said, underscored the safety costs behind the dollar signs.
“It definitely makes everybody stand up and know it’s not just somebody like Chuck O’Leary talking in newspapers all the time about not having enough money. There actually is a consequence of not taking care of roads.”
Christian Zimmerman, president of Pike Industries Inc. in Belmont, believes a bridge collapse, while spectacular, focuses public attention on only a small part of the problem.
“When a bridge falls down, it’s like an airplane crashing,” he said. “A lot of people die, and it gets a lot of media attention. But people die on the roads one at a time. People die on the roads every day because of poor road conditions.”
Pike, with 400-plus employees, does 50 percent or more of its business on state and federally funded highway projects, Zimmermann said. This past summer, he said, the company saw the “writing on the wall” in the reduced volume of asphalt being sold in the state, so it scaled its paving crews down from six to five.
“In the end, I do truly believe an increase in revenue is needed,” Zimmerman said, if the state is going to balance its highway funding with its construction and maintenance needs. “I’m not going to put my neck out there and say how or what kind of revenue or where we should get the revenue from … I do believe the projects in the 10-year plan need to be looked at thoroughly and decisions made about which are really needed. I think the diversion (of highway funds to other state agencies) needs to be addressed. In order to get the public to say ‘yes’ to spending more money, they need to be convinced money we’re spending now is used appropriately and is used to fix roads.”
Mark Charbonneau of Continental Paving in Hudson is concerned about the long-term effects if the Department of Transportation has to reduce it workforce.
“If DOT has to lay off a bunch of people, it takes years to retrain people and have a qualified staff out there to do the inspections,” he said. That’s important for competitive business as well as safety reasons.
“It keeps a level playing field,” said Charbonneau. “It assures quality and it makes sure people don’t get away with things.”
Continental, with about 300 employees, does about a third of its business with the DOT, Charbonneau said. Aside from safety issues, the motoring public will either have to pay more for highway maintenance or endure more delays and detours, he said.
“The roads are deteriorating dramatically,” he said. “What Commissioner O’Leary is saying is what we’ve all been saying for the last 20 years, but haven’t been heard.”
The economic consequences of neglecting road maintenance go beyond the paving and construction industries, Kenison said.
“We’re a tourist state,” he said. “We depend on people wanting to come here. If we can’t expand our roads and maintain them adequately, we’re going to lose that base of tourism.”
Gary Abbott, executive director of Associated General Contractors of New Hampshire is not endorsing a fuel tax increase, but believes it must be one of many alternatives to be considered by the state’s Legislature.
The state has not raised the gasoline tax since a 2-cent-per-gallon hike went into effect in 1992.
“We’re looking at 15 years where we have not adjusted at all with inflation,” he said. “With that and other factors, there’s no doubt there’ll be a shortfall.”
Construction costs have risen roughly 40 percent in the last three to five years, Abbot said. And there has been an increase in what is often called the “diversion,” or transfer of trust fund money to a variety of agencies within state government.
“That number (of agencies) has continued to grow,” Abbot said.
Along with the Department of Transportation, state agencies receiving money form the Highway Fund include the departments of Safety, Health and Human Services, Superior and District Courts, Administrative Services, Environmental Services, Justice, Cultural Affairs, the Bureau of Tax and Land Appeals, the Office of Emergency Management and the Highway Safety Agency.
Cities and towns also receive money from the fund for maintenance of local roads.
According to DOT figures, the share of Highway Fund money going to other agencies has grown from 33 to 41 percent since 1999. But reducing the amount of transfer from the Highway Fund would not solve the deficit facing the trust fund, Kenison said, since money not going to agencies from the trust fund would be replaced by expenditures from the general fund. “It’s like stealing from Peter to pay Paul.”
Instead, the Legislature this year appropriated $6 million from general funds for the DOT and bonded $13.5 million against general fund revenue to help pay for highway maintenance.
The New Hampshire Motor Transport Association led a legal fight a few years ago against the use of Highway Fund money for a planned rail system in Nashua. The state Supreme Court ruled unanimously in 2004 that the expenditure would violate Part I Article 6-A of the New Hampshire Constitution, governing the use of revenue from the trust fund.
Robert J. Sculley, president of the Motor Transport Association, said any increase in the fuel tax should be accompanied by legislative language strictly devoting the money to highway use only.
“We need good roads and safe bridges to get to our customers,” said Sculley, with about 400 member companies statewide. On the other hand, “We’re not going to be on the bandwagon trying to persuade the governor and Legislature to take more money out of member’s pockets.”
About 90 percent of goods and services coming into the state come primarily by way of highways, Sculley said, making that portion of the transportation network essential to the state’s economy.
But Nancy Kyle, president of the Retail Merchants Association of New Hampshire sees the down side of raising taxes to improve road conditions.
“Obviously we don’t want to see a tax increase,” she said. “Anything that raises taxes takes money out of consumer’s pockets. On the other side, we don’t want to see roads in disrepair or difficult to drive on.”
But Kyle said she sees this as a bad time to increase the price to the consumer at the gas pump.
“I think it would be very difficult for the consumers of New Hampshire to take an increase in the gas tax on top of record highs in gasoline prices right now. I think the average consumer would find that very difficult.”