Road to streets sales tax proposal marked by budgetary potholes

Todd Dorman
Published: October 12 2013 | 5:05 am - Updated: 28 March 2014 | 9:44 pm in
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So when exactly did the streets go to pot?

This is not an easy question to answer. Everyone has theories. To test them all, I’d probably have to take some time off. Maybe, in the end, I could write a Malcolm Gladwell-style book. “The Pothole Point: How funding, weather, traffic and age combined to change the way we think about Cedar Rapids’ (bleeping) Streets.”

Perhaps I’d find out it all started on some chilly March day in 1978 or 1988.

“Our city streets can be described in one word — disgraceful,” wrote a reader in a letter to The Gazette, in 1998.

“It was always kind of a battle, because we did surveys and always found out that the people thought police and fire and parks and recreation were the most important things. I think that’s turned around considerably,’ said Don Thomas, who served as Cedar Rapids Streets Commissioner from 1994 to 2005. He now chairs the Fix the Streets Committee pushing to extend the current 1-cent local-option sales tax for 10 years to pay for streets work. The measure is on the Nov. 5 ballot.

“Because it’s so obvious that we haven’t been maintaining them enough each year. And then it gets behind. There never was enough money to be used for the maintenance of streets and keeping up with it. That’s why it’s so important now that we’re in this program to have a local-option sales tax that will continue,” Thomas said.

WHY SO FAR BEHIND?

Maintenance has fallen behind, but why?

Another tough question, because streets funding tends to be a moving target. There’s the “capital improvements” budget, fueled by property tax-backed bonds, federal dollars, some state bucks, special assessments, unspent dollars from the last construction season and so on. Capital improvements pays for bigger projects, the sort put out for contractor bids. The city says the capital improvements budget has averaged $14.7 million annually since 1996, but it fluctuates significantly year to year. This year, for example, it’s 23.7 million.

It’s a little easier to look at streets maintenance, which covers patching, plowing and pothole-filling, along with the people and equipment needed to get that done. City officials have vowed to put more money into what they call “pro-active” maintenance if the sales tax expansion passes. They say it’s the kind of maintenance that keeps small issues from becoming big problems.

A big chunk of the city’s maintenance budget comes from the state’s Road Use Tax Fund. Unlike the capital improvements budget, the city’s share of road use taxes is easy to track.

STAGNANT FUEL TAX

But let’s back up. The Road Use Tax Fund is the biggest tank among the jumble of tanks and pipes and spigots that fund transportation infrastructure in Iowa. During the current 2014 fiscal year, the fund will take in $445 million from fuel taxes, $515 million from annual vehicle registration fees, $280 million from a tax on new vehicle purchases and about $80 million from a bunch of miscellaneous sources.

About $1.1 billion of that money is being used for road and highway projects, with 47.5 percent for state projects, 32.5 percent for counties and 20 percent for cities.

There’s also another smaller tank called TIME-21, created several years ago when lawmakers raised registration fees on pickups and other older vehicles. That tank holds $140 million, of which the state gets 60 percent, while counties and cities each get 20.

This year, Cedar Rapids’ share of the Road Use tax Fund is just more than $11.5 million. Last year, the city received just more than $12 million. Five years ago it was $10.7 million. Ten years ago, it was $10.1 million.

One reason that road-use funding hasn’t changed much is that fuel taxes in Iowa have remained unchanged since 1989. Rising vehicle fuel efficiency has also taken a slice.

Last year, the city spent $7.15 million of its road use tax share on roadway maintenance, $3.14 million on snow removal and $1.2 million on administration costs. That split has been pretty consistent in recent years.

Up until 2008, the city was using about $2 million annually for engineering bigger construction projects, according to reports filed with the state. Starting in 2009, that money was plowed into maintenance.

COSTS RISE SHARPLY

One likely reason is the rising cost of materials. Although road-use tax funding has grown only gradually, the materials costs have risen more sharply. According to the city, the Public Works Department was paying in the neighborhood of $636,000 annually for street materials in 2004. By 2011, the cost had jumped to $1.16 million.

“Concrete has gone up about 30 percent in the last 10 years. Asphalt materials have gone up ... 200 or 300 percent in the last decade,” said Dave Elgin, Cedar Rapids public works director.

Rising costs, for material, labor, equipment, etc., has sapped the buying power of the city’s maintenance money. Not surprisingly, that means less maintenance. And neglected maintenance means lousy streets getting lousier.

But if you don’t believe the city, ask the state.

Each quarter, the Iowa DOT puts out a price trend index of highway construction, basically a report tracking the cost of building roads. Inside that report is a chart (above) showing the increase in construction materials. It shows a steady, gradual rise in costs that abruptly spiked sharply upward in 2003 and 2004. With a few annual exceptions, generally, that rise has continued. Asphalt is among the materials driving the rise.

In 2003, using constant 1997 dollars, the Road Use Tax Fund’s buying power was $915 million. By 2009, that figure had plunged to $580 million. That buying power has rebounded some, but still remains 31 percent less than 1997.

So the state’s buying power hit, naturally, trickled down to cities, reducing the buying power of their road funds and slowing the pace of maintenance. Less maintenance means bad streets getting worse, especially when the average age of Cedar Rapids’ streets is in the 50s, according to the city.

OTHER CITIES USE LOST

Cedar Rapids certainly isn’t alone. Many cities faced with similar issues have approved local-option sales taxes to help pay for street projects. Mason City, which uses 40 percent of its sales tax proceeds for streets, has approved the tax in 1992, 1997, 2002 and 2012. Waterloo first approved the tax in 1991 and is expected to renew it Nov. 5. That city spends 100 percent on streets.

“I can’t imagine what we would do without that source of funding for street repair and reconstruction,” Waterloo Mayor Buck Clark told the Waterloo-Cedar Falls Courier. His city collects about $9.7 million annually.

Clark doesn’t have to imagine. He can visit Cedar Rapids.

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