Proposals to stabilize Delaware’s Transportation Trust Fund are popping up in Legislative Hall- including one with a new twist: should such a fund exist at all?
The fund was established to develop a stable source to pay for road and bridge improvements. Over the years state budget difficulties led to the Fund being tapped more and more to cover other transportation-related expenses: the Division of Motor Vehicles, DelDOT salaries and equipment, and more.
Encouraging revenue projections have led House Republican leadership to develop a plan to shift such operations out of the Transportation Trust Fund and back into general operating expenses.
“This is not a new idea. Most good ideas aren’t new, it’s just seizing the opportunity to implement them,” House Minority Leader Greg Lavelle (R-Sharpley) says. “This is a great opportunity to implement an effort that’s been suggested on multiple occasions.”
“Our constituents want good roads. They want good signage. They want roads maintained. And, they see that we’ve played games with the Transportation Trust Fund,” says House Minority Whip Gerald Hocker (R-Ocean View).
The opportunity, according to Lavelle and Hocker, presented itself when the Delaware Economic and Financial Advisory Council (DEFAC) provided encouraging revenue projections in consecutive months based largely on growth in personal and corporate income taxes. In April, $168.5 million in additional revenues were projected for Fiscal Year 2012. DEFAC is also projecting an addition $155 million dollars in revenue for the current fiscal year.
DelDOT’s most recent annual budget amounted to $344 million, entirely paid for through the Transportation Trust Fund. Lavelle and Hocker say $215 million could be moved out of the Fund safely. $129 million was allocated to service debt on transportation bonds.
“We have a chance to keep from raising our constituents’ taxes,” according to Hocker.
Last year, a Transportation Trust Fund Task Force was appointed to examine the financial difficulties facing the effort to maintain stable funding for road and bridge improvements. The Task Force released its findings March 31st, indicating the potential of a $1 billion shortfall within five years and outlining more than 90 possible courses of action. (see previous coverage here)
Following the task force report and new DEFAC revenue estimates, Lavelle and Hocker further developed their idea of moving expenditures out of the Transportation Trust Fund. They say based on a $165-million surplus, $65 million of DelDOT’s operational costs could be moved into the general fund for the fiscal year that begins July 1st. Another $30 million would also be transferred into the budget as a one-time cash infusion. In the following fiscal years, Lavelle and Hocker say $50 million could be shifted annually for three years, then $36-million in the final year.
The state also has a 50-50 policy under which projects are funded 50% with cash and 50% in money borrowed through bonds. The state could sell up to $95-million in bonds in Fiscal Year 2012.
State legislators offer thoughts on how to fix the Transportation Trust Fund
House Minority leader Greg Lavelle (R-Sharpley), discusses a proposal to shift spending obligations out of the Transportation Trust Fund.
House Minority whip Gerald Hocker (R-Ocean View) believes Delawareans are concerned about transportation dollars being spent wisely.
State Senator Karen Peterson (D-Stanton) suggests the state will have to spend carefully on transportation despite encouraging revenue projections:
State Senator Karen Peterson (D- Stanton) says beyond deciding how to fund transportation projects, lawmakers are also likely to discuss whether such a dedicated fund is necessary or appropriate.
“No other department enjoys that kind of advantage,” Peterson says. “Everybody else has to come in and ask for the money. It’s going to be a philosophical discussion as to whether or not that fund should even exist.”
Peterson, who served on the Transportation Trust Fund Task Force, also says Delaware could gain financially by considering a tax on “lightering” in the Delaware Bay. Lightering is the process where the draft of large ocean going vessels is reduced by bulk transfer of cargo from the ocean going vessel to smaller service vessels. This reduction in draft is necessary for the ocean going vessel to be able to proceed upriver. Supertankers that carry oil are off-loaded in Delaware Bay, and smaller vessels carry oil up the Delaware River to be refined. Peterson says a $1 per barrel lightering tax could generate $100-million a year.
“If we were to do just a two-cent, across-the-board gasoline tax increase, that would only generate about $12-million,” Peterson says.
Two other states impose a tax on lightering activities in their waters.
Meanwhile, Lavelle says in dealing with the Transportation Trust Fund lawmakers will continue with their scrutiny of DelDOT, which has been criticized for costly land acquisition deals.
“You still have to work on improving DelDOT operations. You still have to improve DelDOT accountability,” Lavelle says. “We have to come up with solutions that involve oversight, transparency and integrity.”
