Where There’s a Will – There’s a Way: Improving Ohio’s Roads, Bridges, and Public Transit Infrastructure

By Raymond Jurkowski, Laketran General Manager | Tuesday, March 24, 2015 

Fact: the nation’s infrastructure is crumbling before our very eyes without any meaningful solutions coming from Washington or Columbus. There have been so many studies over the years describing our nation’s infrastructure as being in a “state of crisis” that the characterization has lost all shock value.  In the distant past, that description would have compelled our elected officials to work together and put the country back on the road to recovery. Even the loss of lives¹, as a result of deteriorated or obsolete infrastructure, has failed to provoke an action plan capable of overcoming partisan politics.

Periodically, American Society of Civil Engineers issues a “report card” grading the nation’s infrastructure. Once again, the latest report card grade given is D+.² Sixty-five percent of America’s major roads are rated less than in good condition. Twenty-five percent of our bridges require significant repair or can’t handle today’s traffic and forty-five percent of Americans lack access to public transit. ³ To see the latest developments in transportation technology and infrastructure investment, one has to travel to foreign countries. In 2005, the economic competitiveness of U.S. transportation infrastructure was ranked number one in the world. By 2014, that ranking had fallen to 12^th according to the World Economic Forum’s latest report on global competiveness. ⁴

The primary source of federal funding for surface transportation projects is an 18.4 cent gasoline tax. Revenues from this tax are set aside in the Highway Trust Fund to invest in road, bridge and public transit improvements. The last increase in the federal gasoline tax was 1993 – more than two decades ago. ⁵ Consequently, the Highway Trust Fund is constantly “bankrupt” and requires Congress to appropriate general tax revenues into the fund to keep it solvent. Instead of passing a long term, well-funded transportation bill that addresses the infrastructure crisis, Congress continually keeps delaying, year after year, by passing temporary “underfunded” appropriations. The last time Congress passed a comprehensive, six year transportation bill was 1997.

In Ohio, the state constitution prohibits the spending of state gasoline tax revenue on other than highway related projects⁶ – an archaic concept in the twenty first century. For state aid, public transit primarily depends on the Ohio General Assembly’s appropriation of General Revenue Funds (GRF). Since 2000, the state’s commitment of GRF has dropped from $43.6 million to $7.3 million in 2015 – a dramatic 83% reduction for the state’s 61 public transit systems. In comparison, Ohio ranks 38^th among all the states in its investment in public transit, right behind South Dakota and just ahead of Mississippi. When compared to states of similar population, Ohio’s per capita investment in public transit is just $0.68 compared to Michigan’s $24.33, Illinois’s $63.26 and Pennsylvania’s investment of $85.55 per capita. The Ohio Department of Transportation’s most recent report makes three startling findings. One, in 2015 – an investment of $192.4 million is required in capital funds to purchase the vehicles and infrastructure needed to expand transit service. Two, an additional $96.7 million is needed in operating assistance to meet the current unmet demand of 37.5 million additional transit trips. Three, by 2025 an additional $562.1 million investment in annual capital funds and operating assistance will be needed to meet future demand for all Ohio urban and rural transit systems. ⁷

The time has come for some creative, innovative and out-of-the box thinking. So here is a proposal that should have broad based appeal. Not all internet (e-commerce) sales are subject to state and local sales taxes. Out-of-state businesses, such as catalogue companies and internet retailers that don’t have a warehouse or physical presence in locales do not have to collect state and local sales taxes on orders shipped to in-state residents. According to a study done by the University of Tennessee, states lose over $23 billion dollars a year by not collecting these taxes. The estimated loss for Ohio is over $600,000,000 a year. ⁸ While many state governments wait and wait for Congress to fix this loophole, twelve states have passed legislation collecting internet sales taxes and are reaping the benefits of hundreds of millions of dollars in new revenue every year. If Ohio can follow the legislative templates set by these other states, here’s what can be done.

• The bond market provides government the funds needed to get development and long-term infrastructure projects off the ground. Ohio’s bond rating and a favorable bond market (low interest payments) should positon the state to issue a comprehensive multi-billion infrastructure bond or series of bonds for highway, bridge and public transit improvements with a “new, annually recurring” revenue source to pay off the bonds over a period of years.
• Besides improving our infrastructure, just think of the number of jobs that would be created and statewide industries that would benefit from such a significant investment.
• County governments that benefit from sales tax revenue would also realize a “windfall” increase in sales tax revenue. That increase could be spent on unfunded county needs and quite possibly shared with cities, townships and villages for badly needed road repairs.
• Public transit systems that also depend on dedicated sales tax revenues for operating assistance would experience a “boost” in funding as well.
• Closing the internet sales tax loophole will certainly benefit local “Mainstreet” small businesses that have to unfairly compete with online companies that don’t collect sales taxes. Requiring online companies to collect the sales tax would “level the playing field” for local businesses by eliminating the 7% price advantage that internet companies have over local stores that must charge sales tax. Local “brick and mortar” businesses employ local people and pay local property taxes to support our community. Why should certain internet companies be the beneficiaries of indirect tax subsidies over local businesses?

The benefits from such a simple proposal are very significant and the proposal should engender enough bipartisan government and private sector support to make it happen.

Where there is a will – there is a way!

Notes

¹ New American Foundation: Costs of the Infrastructure Deficit

²American Society of Civil Engineers: 2013 Report Card for America’s Infrastructure

³ White House Report by Council of Economic Advisers and National Economic Council: An Economic Analysis of Transportation Infrastructure Investment

⁴World Economic Forum: The Global Competitiveness Report 2014-2015

⁵ US Dept. Federal Highway Administration: Financing Federal-Aid Highways

⁶ Ohio Dept. of Taxation: Motor Fuel Vehicle Tax

⁷ Ohio Dept. of Transportation: Ohio Statewide Transit Needs Study

⁸ National Conferences of State Legislators: Estimated Uncollected Use Tax From All Remote Sales In 2012