I’ve been severely disappointed in how the Minnesota Department of Transportation has responded to its current fiscal woes. And while it is better than the delusion of TexDOT – which I got a taste of last week, oh my – the Minnesota narrative begins with needing more money, proceeds through the possible types of new revenue and then ends with a call for more money. Nowhere are we confronting the big issues. Nowhere are we telling the truth.
What is the truth? Here is how I would put it:
We have used a variety of programs and funding sources to, through a process where political influence trumps engineering, finance and other practical considerations, build a transportation system that is too expansive to be productively utilized and too expensive to be effectively maintained. We are now faced with accelerating costs, tightening revenues and demand that is slowing, a toxic mix that is forcing an abrupt end to our current approach. At the same time, we are under pressure to adapt to other modes of transportation, something we cannot do given our current financial constraints.
Our federal partner, who has never been interested in funding maintenance, is becoming increasingly unreliable, all too often pressuring us to redirect scarce resources to low priority projects in order to secure funding that we used to be able to spend at our discretion. If we want to salvage what we have, we need to enter triage mode, intensifying our preventative maintenance and using our limited funds on priority corridors between key economic centers. Our current system is going to contract, not expand.
We call on the legislature and the governor, not for more money, but to give us the financial tools to manage demand and to capture the value created by transportation improvements to fund a transition to a viable transportation infrastructure.
Well, while not quite there, the Oregon DOT is making me want to move to the Northwest. More than any other transportation department I have seen, they are treating their residents like adults, speaking frankly and giving them the hard facts. From their own web page:
In 2001 the OTIA program authorized ODOT to use bonding for highway projects for the first time. Bonding is a lot like taking out a mortgage: it allows you to buy a house (or build a bunch of highway projects) a lot sooner than if you had to save up the cash, but it also requires paying off the debt over the course of several decades. And while ODOT is paying off that debt, the state will have a lot less money to spend on new projects.
While 35% of the state’s highway fund revenues now go to debt service – an amount they claim is “reasonable and prudent” – they acknowledge that retiring this debt:
…will constrain the resources available for new projects for the next three decades.
Here’s the chart they provided. This is the kind of straight dealing all DOTs would benefit from.
And how about adding new capacity? They are pretty clear on that too. While they do acknowledge that federal funding could potentially make some expansion happen, with state funds, it is not in the cards.
As a result of declining revenue projections and growing debt service, ODOT’s State Highway Fund resources are essentially fully committed to debt service, highway maintenance work, and agency operations.
So what is ODOT doing to respond to these constraints? They are talking seriously about maintenance and even triage strategies based on return-on-investment.
Faced with these funding challenges, ODOT is focused on its most basic mission of maintaining and preserving the highway system, investing scarce resources to minimize the deterioration of the system. New strategies have been developed to ensure that scarce resources are being invested to get maximum return on investment in bridges and pavement, including prioritization of projects on key routes. And ODOT is also taking steps to cut its costs: Since 2011, ODOT has been reducing its workforce to help bring expenses in line with state revenues, with a goal to achieve a 5 percent reduction by 2015.
Very nice work, Oregon. This is refreshing in so many ways. I wish all other states – including Minnesota – would follow your example.
Honesty. In times like this, it may be your only real friend.