Sunday, September 2, 2007
Cash Crisis Looms For N.M. Roads
By Trip Jennings
Copyright © 2007 Albuquerque Journal; Journal Capitol Bureau
SANTA FE Will New Mexico jack up its gasoline taxes? How about some toll roads?
Those are some of the ideas under consideration by a task force as rising costs, dwindling federal funds and an increasingly expensive Rail Runner threaten New Mexico's road and highway projects with a financial train wreck.
"We're getting hit from all sides," said Rep. Daniel Silva, D-Albuquerque, chairman of the state House Transportation Committee. "If we don't get more funding, we'd have to do less road maintenance, less construction or no construction."
Sen. Timothy Jennings, D-Roswell, co-chairman of the Senate Finance Committee, was even more blunt.
"There's a day of reckoning coming," he said.
One project has already been delayed: an I-25 widening project from Bernalillo to Albuquerque, which had been scheduled to begin next year.
Some state lawmakers estimate New Mexico is already half a billion dollars short of money for dozens of highway construction projects around the state, although Transportation Secretary Rhonda Faught said the exact figure is unknown.
Lawmakers fear the financial squeeze in coming years could spill beyond big-ticket projects such as the I-25 widening in the so-called GRIP (Governor Richardson's Investment Partnership) program.
They say it could also trigger cutbacks in highway maintenance and new road construction statewide unless new sources of revenue are found.
A couple of options: higher gasoline tax or road tolls.
The looming crisis is the result of a perfect storm.
Rail Runner commuter train operating costs could rise to $20 million a year, up from $9.5 million currently.
The state needs to make up $75 million in federal funding that hasn't come through for Rail Runner construction and start-up costs.
Inflation of at least 28 percent in the cost of materials for highway construction, particularly the oil-based products needed to make asphalt.
Fewer federal dollars than expected for New Mexico highway construction.
Crisis in evidence
So serious is the problem that the Legislature has created a 14-member panel to identify possible new revenue sources.
The panel has already heard presentations on raising the state gasoline tax and placing tolls on highways as possible long-term fixes.
Rep. Patricia Lundstrom, D-Gallup, who heads the task force, said the panel hasn't endorsed any ideas but said the mere mention of tax hikes or tolls is evidence of a real budget crisis.
The panel's recommendations are due to Gov. Bill Richardson and several legislative committees in October.
Meanwhile, the Department of Transportation is considering whether to rank its projects.
"My responsibility is to see that the worst roads are treated first," said Faught. "We're trying to make sure they go at the right time."
This summer, the transportation agency postponed two Albuquerque-based road-widening projects because of a lack of federal aid and the rapid rise in the cost of construction, Faught said.
"We're used to seeing 2 percent to 3 percent inflation (a year), not 28 percent inflation over a year and a half," she said.
Priorities an issue
Some lawmakers are pointing to the money poured into the Rail Runner as evidence of previously misplaced priorities.
The commuter train is projected to cost $400 million all of it coming from the state by the time its leg between Bernalillo and Santa Fe is completed in December 2008, Faught said.
"There's a huge bunch of money that's going out of the highway department to pay for mass transit," said Jennings, the state senator who is co-chairman of the Senate Finance Committee, referring to the Rail Runner.
Rep. Luciano "Lucky" Varela, D-Santa Fe, vice chairman of the Legislative Finance Committee, said the state could have spent money earmarked for the Rail Runner on "other things or let it revert to the permanent fund."
But a DOT spokesman defended the commuter rail project as an important mass transit project for the future.
"These individuals are out of touch with reality," said spokesman S.U. Mahesh. "It's time for these legislators to move away from the horse-and-buggy mentality and embrace the ideals of moving New Mexico forward."
Critics of the Rail Runner have warned repeatedly that the Rail Runner will never pay for itself, meaning the state will have to subsidize operations.
Currently, only $1.4 million of the $9.5 million in annual operating costs comes from a combination of proceeds from riders' fares and fees the Burlington Northern Santa Fe Railway Co. pays the state, said Chris Blewett, the Rail Runner project manager for the Mid Region Council of Governments.
A little over $8 million annually in federal air congestion management funding covers most of the costs, but that disappears in 2009.
The end of that funding means the state will have to assume all operating costs unless another revenue source is found, Faught and Blewett agreed.
The state will reapply for federal money from the same program, Faught said, but even if successful, New Mexico likely won't receive the $8 million it gets now.
Making the situation worse, the state has given up on getting anytime soon the $75 million it had counted on in federal funding for the Rail Runner.
The state is filling the gap with a combination of severance tax bond proceeds and investments from GRIP bonds, Mahesh said.
Looking long term
Advocates of the commuter train say mass transit is a good idea, but even sympathetic lawmakers worry about the ultimate cost to New Mexico.
"I keep reminding myself, what if we wait 20 years (to build it), what will it cost then?" said Sen. Diane Snyder, R-Albuquerque, a task force member. "I say to myself, 'This is a great long-term investment.' On the other hand, I say, 'What have we done?' ''
Lawmakers from both political parties are quick to say that the problem facing New Mexico's roads and highways is larger than the Rail Runner.
"No one in their wildest dreams could have predicted oil would go to $72 a barrel," Snyder said of the drastic rise in oil-based products used in making asphalt, a necessary ingredient in highway construction, since GRIP was passed in 2003.
Lundstrom predicted the money crunch will surface as a high-profile topic during next year's legislative session.
She said she doesn't expect state lawmakers to vote on any long-term fixes, such as a tax increase, in the 2008 session: All state lawmakers are up for re-election next year.