Charlie Arlinghaus- The great turnpike robbery of 2009

By CHARLES M. ARLINGHAUS

The transportation plan endorsed by the Senate budget writers and Gov. John Lynch is a radical scheme that ends the requirement to spend toll revenue maintaining toll roads. That requirement would be ended so tens of millions of dollars each year can be transferred out of the turnpike fund. It is the most cynical of public policies and the worst of the three options currently before policy makers.

For decades, New Hampshire's transportation revenue has been among the most safeguarded in the nation. One of the most important elements in that protection is the state's turnpike system and the turnpike fund.

The public is naturally quite cynical about tolls. Travel across the country and people will point at bridges and say "they told us that bridge would only have a toll until it was paid off, but of course we still have it."

New Hampshire built toll roads and faced the same cynicism, but we tackled it in a common-sense way. Tolls are not meant to be a clever way to tax you to fund general operations. We created a separate fund for the toll roads called the turnpike fund. Revenue from tolls can be spent only on the state's 93 miles of toll roads and their 159 bridges.

Because of our safeguards and transparency, the average citizen is less hostile to toll increases than to hikes in other taxes, especially the gas tax. Whatever they raise has to be spent on the road that has the toll booths. I know exactly where that money is going.

That acceptance of tolls is exactly what has put us at risk. Clever policy makers have realized that tolls can be used to raise more money for other purposes if they can find a way to pull the money out of the turnpike fund.

The primary tool to take tens of millions of dollars each year out of the turnpike system is something called "aggregation," and it's a bad idea. Today, your toll is restricted to use on the toll road. The governor and the Senate have proposed adding all the interstate highways and Route 101 into the turnpike system, but not putting toll booths on them. They plan to take the money collected on the 93 miles of toll roads and spread it over 314 miles of roads.

In the past, the people of Merrimack used to be able to take some solace in the idea that their dreaded toll booths were at least paying for the F. E. Everett Turnpike on which they drove every day. If the new scheme is adopted, they'll know that a portion of their tolls will be sent all over the state. The plan would raise all tolls and spend the extra money on non-toll roads.

In addition to this ridiculous toll divorce, we're buying a mile and a half of highway from ourselves so the turnpike fund can transfer $15 million a year of toll money in the general highway fund to spend anywhere in the state.

These two schemes have only one purpose: to get around the restriction on tolls and use toll dollars all over the state. The turnpike fund will exist only as a sad joke and a reminder of what fiscal integrity used to look like.

It's no wonder that Candace Bouchard, Democratic chairwoman of the House Public Works Committee, wrote that putting aggregation into the budget without a full discussion of the policy consequences would be "simply wrong." She was joined by all 18 members of the committee from both parties.

I don't want to minimize the long-term needs of the system. New Hampshire fixes more red-list bridges each year than it adds, but the current 10-year plan only deals with 87 of the 137 bridges currently on the red list. Both the current plan and the governor's plan have us on a 16-year repaving schedule, which may be too long.

A House-proposed plan would address all of the long-term issues and offer safeguards to taxpayers, but would raise the gas tax significantly. Whether that may become necessary in the future or not, it won't happen this year. In a surprisingly forceful statement for him, the governor has said he'll veto the budget if any gas tax increase is in it. He rightly thinks that adding to people's tax burden in the currently economy is a mistake.

If he believes a nickel gas tax increase is a bad idea in this economy, wouldn't the same be true for a 50-cent toll increase? (And what about the other half dozen tax increases he has not opposed?)

I think it would be sensible to follow the suggestion of Rep. Bouchard and the entire House Public Works Committee and spend the next two years discussing the state's real transportation needs and the policy implications of various proposals. However, we should be able to agree that the governor's plan to pillage the turnpike system can be the first thing killed in the budget conference.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

UL- "Lynch's toll scheme: Remember the Big Dig?"

The Union Leader editorial page takes a whack at Govenor John Lynch's plan to divert money from the Turnpike System into the Highway Fund, and raise tolls on the Turnpikes to make up the difference:

Massachusetts funded the Big Dig in part by taking money from the Massachusetts Turnpike Authority, even though the Big Dig tunnels were not toll roads. More than 1,600 turnpike users have joined a class action lawsuit asking the state to rebate the portion of their tolls that went to fund the Big Dig instead of the turnpikes.

Gov. John Lynch has proposed the same scheme here in New Hamsphire. He wants to raise tolls by $44 million a year and spend that money on non-toll highways. To make that legal, he would change the law to state that I-89, I-93 and Route 101 are part of the state turnpike system, even though they don't have toll booths. Would that be enough to hold off a lawsuit? Maybe, maybe not.

Weekend Roundup- Budget Edition

We take a look at the weekend political columns.

In the Union Leader's "Under the State House Dome", Tom Fahey lays out three competing versions of the state budget:

The competing budgets lay out very different solutions. Gas tax versus toll hikes, gambling versus estate and capital-gains taxes; whether to loosen liquor controls, cut business tax credits and/or tap LCHIP money; and how to fund school building aid -- plenty of flash points.

Gambling runs the risk of outright House rejection. The Senate hates the capital-gains tax. Lawmakers and the governor's office have been holding brainstorming sessions on replacement taxes that haven't yet seen the light of day. They include a tax on refinanced debt and closing the limited liability corporation loophole on dividend taxes.

Of course, there's always the Republican plan -- throw all tax hikes in the trash and start cutting the budget. Unfortunately, they admit they don't know where to cut. They said they'd leave it to department heads, the folks they usually dismiss as "bureaucrats." In the GOP's eyes, they are now highly paid policy experts who know the budget best.

Fahey also has items on the business taxes increases in the budget, the dispute over whether the state can confiscate $110 million from a medical malpractice fund, and the debate over toll increases.

Lauren Dorgan's budget coverage makes it off the Viewpoints page with a full scene-setter in the Concord Monitor, but her column does address the chances of getting toll increases through the Executive Council:

After Lynch came out for vetoing the gas tax last month, lawmakers scrambled to figure out how to pay for road repairs. Hence the new Lynch/Senate "aggregation" plan, which hinges on the idea of raising tolls, including increases from $1 to $1.50 at Bedford and Hooksett.

But the Executive Council, which sets tolls, has given a frosty reception to the concept.

After all, councilors just raised tolls in 2007 from 75 cents to $1 - to raise them 50 cents now would mean doubling tolls in just a few years. And, the toll plan is matched with "aggregation," a.k.a. tapping toll booths to pay for repairs on nontolled highways for the first time ever, a plan that has few fans on the council.

"I would say, from what I've been hearing from my associate councilors, that it doesn't even have a half a vote," said Republican Councilor Ray Burton, an enthusiastic backer of the gas tax.

Pignatelli, who has never voted for a toll increase, said she might listen if a toll plan was paired with some relief for toll-ringed Merrimack. But aggregation is a nonstarter for her.

"I do not favor the aggregation of the highway system and the turnpike system," she said.

"It would not be an easy thing to explain why we're paying tolls in the southern part of the state to pay for roads in the North Country."

And in the Nashua Telegraph, Kevin Landrigan also covers tolls, but has word that Governor John Lynch is working with hard to invent new taxes to pay for the state's increased spending:

Gov. John Lynch continued to privately sound out lawmakers and other House players on revenue-raising proposals.

Until April, the three-term governor had been hoping that the federal stimulus cash, restrained spending, higher tobacco taxes, a new gambling tax and a slew of fees would be enough to balance the budget.

The spending and revenue trends of the late spring changed all that, and at this late hour, Lynch is left to scramble in search of ways to raise enough new money to put the state back in the black.

The always-cautious governor isn't tipping his hand about which revenue proposals he'd been willing to accept.

Lynch and associates sketched out the newest – and some believe most promising – revenue concept, which is to go after the untaxable income held by limited-liability companies.

UL- "Turnpike mules: Load 'em up"

The Union Leader editorializes against balancing the New Hampshire budget on the backs on drivers with higher tolls:

The governor and the state Senate want to pay for general highway repairs, maintenance and construction with turnpike revenue. Specifically, they want toll road users to pay $44 million more for using the state's turnpikes, then they want to take that money and spend it not on the turnpikes, but on Route 101 and Interstates 93 and 89.

If that sounds unfair to you, that's because it is.

State Transportation Commissioner George Campbell said it is justified because the turnpikes and the other highways are "interrelated." People who use turnpikes also use the other highways. And without the other highways, the turnpikes would be overloaded.

Spending the Stimulus- Transportation

Grant Bosse reports on how New Hampshire is spending the transportation portion of the federal stimulus package, and efforts to increase highway spending in the future:

Arlinghaus responds to Campbell column

Charles Arlinghaus, President of the Josiah Bartlett Center for Public Policy, has posted a response to Commissioner George Campbell's column in this morning's Union Leader:

I have found the commissioner to be a very pleasant and sincere man. I applaud him for wanting us to be less ill-informed. I'm pretty sure though that he didn't challange any of the data I used. Perhaps he can refer us to other public documents. A few points.

(1) he doesn't dispute my assertion that the DOT does a terrific job and we annually take more bridges off the red list than are added to it. The study I refereneced is older but more recent documents include similar and updated data here: http://www.nh.gov/dot/org/projectdevelopment/planning/documents/03-04_Bridge.pdf
This from the commisioner's website announces that we annually remove about 45 bridges while only 32 are added. Good job.

(2) I think I used the term 10 year highway plan although we have officialy changed the name to 10 year Transportation Plan. But I use that document specifically because I had thought the commissioner told me that it was what the department's priority. Find it here: http://www.nh.gov/dot/org/projectdevelopment/planning/documents/09-18_TenYrPlan.pdf page 2 of the introduction (after the bill and all that stuff) says specifically that the plan has 2.3 billion of projects and 2.1 billion of revenue. I don't think that document is either ill-informed or misleading.

(3) The central assertion of my piece is not that $120 million is a bad evaluation. Obviously it's a good one and that's why they selected that piece of road for the transfer. My assertion is that the transfer itself allows money to be transfered from the turnpike fund to the highway fund and get around the prohibition on the use of toll money for anything but the turnpikes. You'll note from his text that he doesn't dispute that. One would hope not. After all it was the governor who said as much in his budget speech to the legislature. The speech is here: http://www.governor.nh.gov/speeches/documents/021209budget.htm

The line is "This plan includes having our turnpike system purchase a part of Interstate 95 that is now part of the Highway system. That sale, funded by a 50-cent increase at the Hampton toll, will provide $15 million a year for the Highway Fund."

I'll check with the commissioner to see what other public documents he wants us to look at and report back later. For now I'm just happy to note that my piece was based on his own documents and that he doesn't dispute any of them. Despite the tone of a sentence here or there, I appreciate the compliment.

Charlie Arlinghaus, Canterbury

Campbell calls for more highway money

Transportation Commissioner George Campbell makes the case for more money for his department in this morning's Union Leader, and takes a shot at Bartlett Center President Charles Arlinghaus's column from earlier this week:

Taking care of New Hampshire's highways and bridges is a serious matter. The safety of the traveling public and the utility of the system for travelers and businesses are at the foundation of New Hampshire's economy.

So when an ill-informed and misleading opinion by Union Leader columnist Charles Arlinghaus is published, it's my responsibility as commissioner of the New Hampshire Department of Transportation (DOT) to respond with the facts.

The most troubling assertion Arlinghaus made in Wednesday's column ("The governor's strange proposal to raise highway money") is that New Hampshire is not facing a transportation funding crisis. DOT's funding needs have been well documented and cannot be easily dismissed. I can assure you from dealing with it firsthand on a daily basis that we are confronting imminent and critical financial challenges of meeting both the operational needs of maintaining the system and the capital needs of improving it.

The governor's strange proposal to raise highway money

By CHARLES M. ARLINGHAUS

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.

UL Blasts Rail Project

The Union Leader editorializes against using the latest federal stimulus package as a way for rail enthusiasts to pay for their pet project:

It is typical of the most passionate rail enthusiasts to be blind to the arguments against massive taxpayer support for their pet project. Here are a few excellent reasons why dumping that kind of money into commuter rail isn't a great idea.

One, the project's estimated cost is $300 million. That means it will almost certainly cost $450 million or more and take years to complete. How will a project of that size and scope get done in time to "stimulate" the economy?

Two, it won't stimulate New Hampshire's economy nearly as much as a wider Interstate 93 will. Wider, safer, speedier highways bring more tourists. Who is going to ride the train from Boston to Nashua, then rent a car to go the rest of the way to the lakes or to ski slopes?

Three, who is going to pay to operate the thing, and how? Even if Obama the Benevolent handed us half a billion for the infrastructure, trains don't run themselves for free, and ticket prices cannot go high enough to cover the cost. We'll have a pretty new train sitting in the station unless we raise taxes to pay for it to choo-choo along the track.

Spending the Obama Money

Transportation Commissioner George Campbell didn't get everything he wanted for Christmas, but he making a list for someone with deeper pockets than Santa; the Federal Government:

"It's certainly the best opportunity that's come around in decades, and frankly, it's the best opportunity for infrastructure funding that's come around since the 1950s," said Commissioner George Campbell, who has been compiling a list of projects that could benefit from federal funding as part of Obama's stimulus package. The biggest item by far is more than $300 million to upgrade and double-track rail lines linking Manchester to Lowell, Mass.

Campbell is looking to spend hundreds of millions of dollars that may be coming in a new stimulus package being put together by the incoming Obama Administration. Trains have long been the pet project of "infrastructure" advocates, since most rail lines need far higher per-passenger subsidies than either roads or air travel. Campbell is also looking at ways to pour the anticipated stimulus money into New Hampshire roads:

Campbell's list also includes more than $220 million in "shovel-ready" highway projects that could be set to go within six months, which may be the standard for the stimulus package. On that list, the top priorities are $30 million for the Interstate 93 widening project south of Manchester, $4.5 million to replace a bridge on Route 4 in Lebanon and $12.5 million for the Manchester Boston Regional Airport access road.

The Union Leader article includes nearly $700 million in "Wish Lists" at a time when the state is running historic deficits in its General Fund, Education Fund, Highway Fund, and Pension Plan. Nor does anyone in the article explain how they would like this massive stimulus to be paid for. Presumably, it would just get tacked onto the national debt.

It seems that our state government, facing tight budgets after years of free spending, are having a hard time breaking its big-spending habit. Now, it's looking to Washington for its latest fix.

Telegraph Backs Gas Tax Increase

The Nashua Telegraph this morning comes out in favor of raising New Hampshire's gas tax in order to boost revenues into the Highway Fund:

There's no single answer to the problem, which, if roads must be plowed and salted less often and maintenance delayed, threatens public safety.

But the seriousness of the shortfall means that for the first time since 1992, the governor and Legislature should increase the gas tax.

Is the Gas Tax Outdated?

Mark Sanborn is counselor at the U.S. Department of Transportation, and a New Hampshire native. He writes in this morning's Union Leader that the gas tax is no longer a viable way to pay for highways, and proposes a new approach:

There is another way. We must create a transportation network that applies the concepts of supply and demand, including the use of pricing or tolling. While tolling is not a new concept in the Granite State, pricing is. Dynamic pricing means charging a fee, based on demand, on high-use roads. "Double taxation" can be avoided by making it unnecessary to use gas taxes for maintenance of that road.

Public-private partnerships are another option being embraced by states facing funding shortfalls. This does not involve selling public assets, but rather leasing highways to private companies for a fee and allowing the companies to collect money from highway users. The company is able to operate the highway more efficiently, while the state can leverage the funds to pay for infrastructure improvements elsewhere.

Lawmakers get creative.

Never underestimate the ingenuity of the American spirit, or the creativity of lawmakers looking to separate taxpayers from their money.

In Georgia, one county will start sending out $500 tickets to residents who don't recycle:

While neighboring counties encourage recycling, Gwinnett County’s new solid waste management ordinance puts teeth into it. The ordinance provides for a civil fine of $500 for violations, which includes those who fail to “source separate residential recovered materials.”

Mandatory recycling is not common in metro Atlanta, but Gwinnett County Commission Chairman Charles Bannister said the move is in line with a state policy that local governments develop plans to reduce solid waste by 25 percent.

Who is and isn't recycling sufficiently will be left to the discretion of local bureaucrats:

“We don’t intend for this to be the garbage gestapo, running around, looking in people’s garbage about what’s there and what’s not there,” said Connie Wiggins, executive director of Gwinnett Clean and Beautiful, which is administering Gwinnett’s waste disposal program. “I believe the fine applies to all categories, and certainly, if we saw excessive abuses of materials being thrown in the garbage.”

And in Rhode Island, the Public Transit Authority is looking for more revenue from several sources, more tolls, higher has taxes, and maybe even taxing drivers based on their mileage:

•Both new and higher fuel taxes. The proposals include increasing the gasoline tax, now 30 cents, by up to 15 cents per gallon by 2016, which would raise an estimated $64 million per year. They also include a new “petroleum products gross earning tax,” beginning with the equivalent of 10 cents per gallon of gasoline in 2010 and adding another 5 cents in 2014. That would affect all petroleum products, from gasoline and aviation fuel to those made from petroleum derivatives, such as plastics, paint and fertilizer. It would eventually raise about $66 million per year, the draft report says.

•Car registration fees, now $60 for two years, would rise $40 per year immediately and could more than double, to $140, by 2013, depending on which version was used, raising up to $46 million per year.

•A new mileage fee. The $150-million plan would not include it, but the $300-million plan would impose a half-cent-per-mile fee, raising an estimated $50 million per year. But officials said yesterday that they expect to eliminate the transfer of some sales tax revenue to the transportation system, proposed elsewhere in the report. Raising the mileage fee to 1 cent per mile would make up the difference.

At a half-cent per mile, driving 10,000 miles per year would cost $50 per vehicle. One cent would cost $100.

Also referred to as a VMT fee (for vehicle miles traveled), the mileage fee would be based on odometer readings reported by vehicle owners when they renew their registrations. The mileage could be verified during mandatory auto inspections, the study says. Robert A. Shawver, the DOT’s assistant director, said that although one state, Oregon, is pilot-testing a similar fee, Rhode Island’s would be the first of its kind in the country.

•Tolls. The $150-million plan could include tolls, $3 per car and $6 per truck, only at the Connecticut border, yielding an estimated $39 million per year. The $300-million plan would include similar tolls where all of the state’s interstate highways (Routes 95, 295 and 195) cross the state line, and would raise $60 million per year.

Gas Tax Trial Balloon still floating

Tom Fahey reports in the Union Leader that Governor John Lynch is giving the idea of raising New Hampshire's gas tax a lukewarm reception:

Lawmakers from both parties say the state needs to increase its gasoline tax to keep highways maintained, but Gov. John Lynch is not convinced of that yet.

Lynch said this week he hasn't changed his stance against a gas tax hike, but he left room to be persuaded it is the right move.

He said the state needed to figure out how much highway work needed to be done and how much it would cost before talking about raising revenue. He noted a federal economic stimulus package was expected to send money for highway and bridge construction to all states.

"That may be part of the overall financing package going forward," Lynch said.

Telegraph all over state budget

Kevin Landrigan blankets the state budget this morning, with a pair of pieces.

First, he reports on the growing shortfall in the state Highway Fund, along with the hopes for free money to start flowing from the Obama Administration:

A federal stimulus package from President-elect Barack Obama would help pay for much-delayed projects, but does little to deal with a projected, $153 million deficit facing the Department of Transportation, Commissioner George Campbell said Monday.

"A lot of people think if we get a 100 percent fully funded stimulus package that it's going to solve all our problems, but it's not,'' Campbell told a legislative commission that will soon prepare a final report on the state highway fund.

Then, Landrigan turns his attention to health care, as State Health and Human Services Commissioner Nick Toumpas says that rising health care costs will keep going up:

"A business as usual approach will not be available. We need to fundamentally examine what we do and how we do it," Toumpas said.

Spending to maintain current services from all sources (including federal grants and local property taxes) would go up 16.5 percent over the same period. The total health and human services budget would increase from $3.3 billion in the current two years to $4.4 billion in the next two. For the past several months, Toumpas has engaged in an agency-wide dialogue with stakeholders to figure out how to more efficiently deliver services.

"Our ability to tweak rates and cut on the margins is just not going to fly moving forward," Toumpas said.

Both Campbell and Toumpas are telling legislators that the structural problems in their departments goes far beyond the current economic slowdown. State budget writers have been placing far too much blame on national economic conditions, and not enough on their own choices. They will have to make far different choices this year in order to close that gap.