The State of New Hampshire wants to pay itself $120 million with interest. This odd financial ploy from Gov. John Lynch's budget started as an attempt to get around legal restrictions on certain revenue and to avoid raising the gas tax. Instead, the New Hampshire House voted last week for the strange gimmick and to almost double the gas tax.
Gov. Lynch has traditionally opposed raising the gas tax and hasn't announced whether he would veto the House's hike. Instead, in his budget he came up with a clever way to get around legal restrictions on the use of transportation money by having the state sell a piece of road back to itself.
It's well known that the state constitution requires gas taxes, vehicle registration revenue and some other fees to be spent only on highways or traffic supervision. The money can support things like state police doing highway enforcement, but otherwise it has to go toward building and maintaining roads.
Tolls collected on the turnpikes are even more limited. Tolls are a user fee and can be spent only on the toll roads themselves. They are kept in a separate turnpike fund for use on what are legally defined as the turnpikes. After the toll increase two years ago, the turnpike fund is flush with money that can't be spent on any other roads.
Here's where clever accounting comes in. The eastern turnpike includes Interstate 95 up to the Spaulding Turnpike and the Spaulding Turnpike through Rochester. The state wants to take the remaining mile of I-95 not currently part of the turnpike system and transfer it to the turnpike system. The turnpike in exchange would pay the highway fund $120 million plus interest.
At first it sounds goofy, like a man negotiating with himself in the mirror. But actually it is a clever way of dodging state law and using toll increases to fund not the turnpike but the rest of the roads in the state. The governor's budget included millions of dollars of toll increases. Raising a toll is not as unpopular as raising the gas tax, but toll money is more limited. This gimmick allows the state to use the money raised from new tolls to fund a $120 million purchase from itself, which frees millions of dollars from pesky legal restrictions.
The "sale" is expected to give the highway fund an additional $30 million in this budget and $15 million for the next six budgets after that plus interest.
For lawmakers looking to spend more money on roads, the other way to do it is to simply raise the gas tax. A group in the House has been working to do just that and got passed a bill to almost double the tax over the next three years. More surprising is that the House didn't do this instead of the governor's gimmick. It did both.
If you thought the recession would cause lawmakers to be cautious about raising tolls on people or raising the gas taxes they pay, you'd be wrong.
Listening to the rhetoric, you'd think New Hampshire's roads and bridges were falling apart and the highway fund was on the verge of insolvency. Frost heave season notwithstanding, it isn't true.
The state maintains a "red list" of the state and municipal bridges most in need of repair or replacement. Two years ago, the Department of Transportation reported that in the prior decade an average of 43 bridges came off the list each year and 30 bridges were added. In the most recent year of the study, 23 bridges were removed and nine added. So each year we remove more than we add.
The state adopts a 10-year highway plan as a list of the transportation projects we want to fund over the next decade. The plan adopted last year contained $2.3 billion worth of projects and anticipated only $2.1 billion of funding. If this were a budget, there would a $200 million deficit. But the plan isn't authorized spending. It is merely a priority list for how we spend the money we anticipate taking in.
The federal stimulus money will probably fund most of the $200 million by itself. The gas tax hike alone would fund three times that amount, and the weird selling of the road to ourselves would also cover most of it. If there isn't a crisis, we should think carefully about whether a strange accounting gimmick to bypass state law is a good idea.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.
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