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Industry fears repeat of last year's fund transfer

Budget cuts worry MDOT, MRBA

Last Monday – April 26th – with the clock ticking before the regular legislative session ends, representatives from the Mississippi Department of Transportation (MDOT) and the Mississippi Road Builders Association (MRBA) met at Dennery`s Restaurant in Jackson for a strategy session to protect MDOT`s working cash balance and to support its $890-million appropriation request for fiscal year 2005.

Last year, $50 million was taken from MDOT, with no repayment method, to cover general fund obligations during a lean budget year.

“It`s hard to believe how hard we fought just to keep the damage to $50 million,” said Don Richardson, then director of the 140-member firm MRBA. “We were at the Capitol for 14 straight days and two Saturdays and Sundays trying to maintain that. There were other proposals to take up to $150 million. It`s the first time I ever felt good about getting beaten up so bad.”

House Bill 1279 includes a blueprint for the state budget that does not require siphoning money from MDOT.

“We are extremely hopeful that we will not try to balance the ’05 budget by raping MDOT`s funds,” said Rep. Bill Miles (D-Fulton), chairman of the House Transportation Committee and subcommittee chairman of the House Appropriations Committee. “We believe House Bill 1279 will take care of the state needs and leave MDOT whole. We hope the Senate will be as sensitive to the transportation needs as we think the House has been.”

Mississippi Transportation Commission chair Wayne Brown said he hopes MDOT`s working cash balance remains untouched by legislators.

“I wouldn`t say it could happen like last year, but taking money from MDOT has certainly been discussed,” said Brown. “We know this much: they have some serious shortfalls, they need money, and we’re a very tempting target. They’re going to look at all entities, and MDOT is well managed with money in the bank. However, we have $1.3 million pledged against ongoing projects. We necessarily have to keep money in our checking account to meet our obligations. We don`t have short-term borrowing authority.”

Approximately 15%, or roughly $135 million, of the $890 million requested, is earmarked for maintenance expenses, with the balance covering new construction, special programs and administrative costs, said Brown.

“If they give us our appropriations request and allow MDOT to maintain the income streams we currently have, we`ll continue building highways,” he said. “We won`t catch up, but we won`t fall further behind.”

The 1987 Highway Program, which called for major four-lane highways to be built within 30 miles or 30 minutes of every Mississippi home, did not include a provision for maintenance funds. A four-lane highway with crossovers costs the state two-and-a-half times more money to maintain than a two-lane highway, said Brown.

“The program was great, and allowed us far better roads than Alabama, Louisiana and neighboring states, but it doesn`t take long to fall behind,” said state transportation commissioner Dick Hall, who was a state lawmaker when the bill was passed. “Some roads are now 20 years old and have to be maintained. The dumbest thing you can do is build a brand new system and not take care of it. If the Legislature cuts maintenance, that would be worse than cutting down new construction. It would devastate us.”

Last year, MDOT`s budget topped $1 billion, and the agency had approximately a $300-million working cash balance.

“We haven`t requested as much money this year for several reasons,” said Hall. “For one, we’re still not clear what the federal government is going to do. Congress still hasn`t passed a successor to T-21 and we’re waiting to see what happens.”

The agency`s working cash balance is now less than $200 million, said Hall.

“If we get down to $150 million or so, we won`t have the money to match federal funds,” he said. “We have to have a working cash balance for that kind of cash flow so we can pay the contractor for his work. Then we turn around and give the prorated share of the bill to the federal government and they reimburse us.”

Mississippi`s congressional delegation has “done an exceptional job bringing home the bacon in transportation dollars,” said Hall.

“Wouldn`t it be a heck of a note to pick up the phone and call Sen. Lott or Sen. Cochran or one of our congressmen and tell them, ‘we sure appreciate you sending the money, but we can`t take it because we don`t have money to put up our match.’ For the first time ever, that`s a threat.”

MRBA director David Barton pointed out that MDOT funds are generated by a motorist-paid gas tax.

“Motorists pay for and expect roads to be built,” he said. “Some projects take three or four years to build and the funds have to be in place to build up those projects. I’d hate to see MDOT lose the ability to match federal funds.”

At press time, Sen. Jack Gordon (D-Okolona), chairman of the Senate Appropriations Committee, had not returned phone calls to the Mississippi Business Journal.

“From what I can tell, from both sides of the Legislature, they’re working on keeping the integrity of the funds,” said Barton. “I hope they succeed.”

Hall: We’re building an economy

When he campaigned for U.S. Senator, Trent Lott had a slogan: education, transportation, jobs.

“Trent almost had it right,” said Mississippi Transportation Committee chair Wayne Brown. “As an engineer, I would rewrite it as an equation: education plus transportation equals jobs. That`s what this is all about. A transportation system is absolutely essential to our economy and to our schools.”

State transportation commissioner Dick Hall said the Mississippi Department of Transportation (MDOT) “is not building a transportation system, we’re building an economy.”

“You absolutely have to be plugged into that worldwide intermodal system of transportation if you want to be part of that worldwide economy,” he said. “You can`t survive without it. Now that`s going to take a major investment. At the minimum, we have to keep up the highway program. If the Legislature takes our resources, we`ll fall behind. That`s not just highways. We’ve also got to build infrastructure at our ports, where you can take a rail car right into the port to load directly on and off ships. We have got to have a place to transfer from highway to rail. It all counts.”

Nissan decided to locate a $1.4-billion automotive assembly plant in North Madison County next to an interstate highway, a mainline railroad and within a short distance of an international airport, said Hall.

“If we didn`t have all three, Nissan wouldn`t have located there,” he said. “And we have to have those kinds of sites available for other places in Mississippi.”

Rep. Bill Miles (D-Fulton), chairman of the House Transportation Committee and subcommittee chairman of the House Appropriations Committee, said the House “took a very sound position in House Bill 1279, looking at transportation needs across the state.”

“We took measures to fund the local bridge replacement program that covers our 82 counties by taking excess funds from the 2% gaming money that comes in to pay off the gaming roads bond sinking fund,” he said, pointing out that $36 million is earmarked to pay off the $375 million of gaming roads funds that were issued several years ago. “In fiscal year 2005, we anticipate $53 million, so the difference between $36 million and $53 million gives us almost $18 million to fund the local bridge replacement program, based on a 1% estimated growth in the gaming industry that our analysts think is reasonable.”

The innovative program would replace a less effective existing program and would fund improvements on roads that are not state-aided, said Miles.

“These off-systems roads are important for our citizens to move about to home and work and school,” said Miles. “We believe that our 410 county supervisors were pleased with the new program, because the local bridge replacement money started out being funded from general funds that we bonded. Then we took some back, and it ended up where counties would like to assert that there was a deficit of
a
bout $15 million. However, under our program, we would start with a clean slate. The Mississippi Supervisors Association was willing to start over because this program would be a reliable funding source out of the gaming funds. I understand that the gaming industry was very pleased to support this program because the money will now be going into all 82 counties for transportation needs. We were very proud of that feature.”

Contact MBJ contributing writer Lynne W. Jeter at mbj@thewritingdesk.com.

About Lynne W. Jeter

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