Something's got to give: Indiana, nation face problems with infrastructure

It’s a fantasy, as it stands right now, but a passenger train system connecting Kokomo to Indianapolis — through the center of U.S. 31 — shouldn’t seem so far-fetched.

“It’s not the best option in all urbanized areas, but we need to look at things like that to move people around, get the congestion off the streets and create less wear and tear and the need to build and widen roads,” Goodnight said. “That doesn’t mean everyone will ride a train into Indianapolis. But in the bottlenecks, they have to look at those things. And yes, there is the upfront initial cost. But the long term costs each year goes down. Once you put the infrastructure such as a rail in, the savings catches up pretty quickly.”

It could be the wave of the future, because something has to give.

Government officials at all levels are concerned about the state of our infrastructure — roads, bridges and the like — and how repairs will be paid for moving forward as the conventional methods become increasingly outdated.

But to understand how the entire system works — and more importantly, why it’s broken — it’s imperative to examine the situation from the federal level on down.

Little funding for repairs

The federal government in 1956 established the Highway Trust Fund to help finance the nation’s interstate and highway construction and maintenance. It’s funded largely by a gasoline tax, which currently stands at 18.4 cents per gallon.

But increased emphasis on fuel efficiency in vehicles in recent years has hit the government hard in the pocketbook.

A study released by the University of Michigan in March revealed that gasoline consumption by U.S. drivers is at its lowest point in 30 years.

Gasoline usage is down 17 percent since 2004, and the annual distance driven by the average motorist is at its lowest point in at least 20 years.

Higher gas prices have not led to more tax dollars because the taxes have remained at the same rate through the dip in travel. That, combined with fuel economy unparalleled in the history of motor vehicles, has led to a shrinking pool from which to pull in funds.

The government has been left in a conundrum. There isn’t enough money to go around to repair the current roads and bridges.

“By now, there’s pretty good consensus of the dire conditions of our roads, highways, bridges, railways and ports,” Sen. Ron Wyden, D-Oregon, said during a Senate infrastructure hearing in late June. “We simply can’t have a big-league economy with little-league infrastructure. Yet our transportation networks are crumbling. The price tag of maintenance down the road is growing, and America’s infrastructure is falling far behind our competitors.”

That particular Senate hearing focused on alternative ways to fund the much-needed infrastructure projects facing our nation. Wyden said the U.S. needs more than $1 trillion in new investment just to get infrastructure up to a good level of repair.

Sen. Orrin Hatch, R-Utah, gave an anecdotal example of the type of public-private partnership that was touted at the meeting as a strong alternative to increased taxes.

In 2008, the Utah Department of Transportation, known by residents as UDOT, was in the process of designing and constructing the “Southern Corridor” near St. George, a brand new highway that provides regional transportation and access to U.S. 15, as well as improved access to an airport in St. George to accommodate the growing communities in the region.

During construction, a private developer expressed a desire for an interchange to access his property. This interchange was not in the original plans, but the developer was willing to pay for the additional work himself using a state infrastructure bank.

UDOT partnered with the city of St. George and the private developer in order to finance the interchange.

Under requirement by the state infrastructure bank, UDOT entered into a loan agreement with St. George for the amount of $3.7 million to construct a bridge for the interchange after the developer repaid the cost of the loan, and chipped in an additional $2 million of his own capital for the ramps and street network required for the interchange.

“I’m not recounting these transactions because they represent high political drama or intrigue, but because they demonstrate how innovative financial arrangements with the private sector can be useful in improving our infrastructure by making new opportunities possible and relieving the burden on taxpayers,” Hatch said. “The question is how we can ensure the taxpayers are not just the bearers of the risk. It’s clear, when done right, these types of financing can help us cut through red tape.”

The state of Indiana was heralded as an innovator in this area during the meeting, with remarks heard from both Sen. Dan Coats and Purdue University president Mitch Daniels, the state's former governor.

In 2004, Daniels asked his cabinet to find a way to fund the hundreds of road and bridge projects that had been promised to Hoosiers for years but not yet accomplished. Daniels wanted the members to find a solution that did not involve raising taxes or bringing on more debt.

The cabinet began exploring the possibility of leasing the Indiana Toll Road to a private entity. After a bidding process and 11 proposals, a 75-year lease concession was awarded to a private consortium for a single, lump sum payment of $3.8 billion, nearly four times the amount of money received by the state annually from the federal government for infrastructure programs.

Coats said the lease funded 65 roadway projects and paid for the rehabilitation of 720 bridges by 2012. Indiana will never pay for the maintenance of the toll road during the lease.

“It was a great joy of public service to watch literally the dreams of decades become real,” Daniels said. “Project after project that people said will never become real are now [existing] in Indiana. This was only possible because of the lease, which we were able to secure. We essentially converted a toll road losing money to a tightly regulated public utility. The tolls on that road are the same amount they were in 1985, and will rise through regulated rates throughout the duration of the lease. … It was a way to liberate trapped value from an underperforming asset, then reinvest it in these new projects we thought were in the best long-term interests of our state.”

Daniels conceded that this type of approach is not a complete answer to what he views as a very real problem. But, he said, no answer will be complete without it.

“Without the involvement of private financing, it’s so ironic that this nation, which prides itself on being the world’s innovation leader, is such a laggard in this area,” Daniels added. “This is a practice familiar in the rest of the world. Australia is probably the best example. Even a cursory look around the world will show you we are trapped in old practices, while the rest of the world has left us behind.”

'D+' for Ind. infrastructure

Using history as a guide, the national gas tax is long overdue to be raised. It’s remained at 18.4 cents per gallon since 1993, when it was raised from 14 cents, where it had stood since 1990.

The gas tax had stood at 9 cents per gallon since 1983, previous to the 1990 raise. Before the 1983 raise, the tax had remained at 4 cents since 1959.

Even with the infusion of private dollars, Indiana’s infrastructure doesn’t grade much higher than the nation’s as a whole.

In 2013, the American Society of Civil Engineers gave the United States a "D" grade for its infrastructure, while Indiana received a slightly better grade, receiving a "D-plus."

What’s even more troubling is that Indiana House Transportation Committee Chairman Ed Soliday, R-Valparaiso, told The Indianapolis Star in May the state faces a $500 million deficit for upkeep on bridges and highways already in existence. That’s not counting future endeavors of the Indiana Department of Transportation.

To help ease that shortfall, INDOT has asked selected communities to delay Local Public Agency projects. To incentivize the deal, INDOT has vowed to pick up the 20 percent financing of such projects, for which the local communities are responsible.

“Some say they can do it because they like the idea of saving that 20 percent, but others say they can’t because the project at hand has so many other things that are contingent upon it,” INDOT spokesman Harry Maginity said. “We look at the ones who are flexible, but whether we move it or not depends on whether we need to move it or not after we find out what projects can move. But we don’t need them all to move.”

INDOT also is currently engaged in discussions with the General Assembly on what different funding levels it needs in terms of infrastructure condition long-term. In 2013, the Legislature passed House Bill 1104, authorizing INDOT to conduct an alternative funding study that looks at potential options. The study is anticipated to be done this year and will be discussed in front of a joint House and Senate study committee.

“That will provide information on which they can then make informed decisions,” INDOT spokesman Will Wingfield said. “At this point, we’re going to continue to manage our assets to the money we receive, and we’re appreciative of what the Legislature has given us to date. The study will provide additional information. There’s been a lot of work leading up to that. As we look forward to future legislative sessions, this will be some good information on which they can form the basis of future actions.”

State Sen. Tim Lanane, D-Anderson, believes the answer to why the $500 million shortfall has occurred is simple: The state has neglected its own roads over the years. Plus, property tax caps have cramped local government units in terms of the amount of projects they can undertake.

Lanane sees the answer as twofold.

For starters, regardless of fuel efficiency, all vehicles that use the state’s roads are putting wear and tear on them.

“All modes of transportation and manner of vehicles out there need to be paying their fair share,” Lanane said. “You have some hybrid cars and all-electric cars that pay very, very little in terms of gasoline taxes. Some states have looked at some sort of tariff or tax for the registration or re-registration of those vehicles so that they’re paying a little more of their fair share towards infrastructure.”

The other alternative? Just biting the bullet and increasing a gasoline tax that hasn’t been raised in more than 20 years.

“That’s, of course, a tough sell in Indiana, where we don’t like to raise taxes — ever,” Lanane added. “But, hey, at some point in time you have to look at how you are going to repair this infrastructure. And it takes dollars.”

How Kokomo cuts costs

The City of Kokomo receives $1.8 million annually in tax distribution from the state’s Motor Vehicle Highway Fund. The funds don’t stretch as far as the number may indicate.

As a result, city officials have looked at their own alternative ways to reduce costs for local roadways.

During Goodnight’s tenure as mayor, the city has removed close to 35 electronic traffic signals. The city estimates each removed traffic signal saves between $16,000 and $18,000 in operating costs annually.

“The long-term strategy is trying to reduce some of our fixed costs for maintaining roads,” Goodnight said, “and there’s a lot of costs associated with the maintenance and electricity of traffic signals.”

It’s not by carelessness or poor management, but several city streets are overbuilt due to outdated traffic patterns. Goodnight gave several examples.

Hoffer Street, between Home Avenue and Indiana 931, is far wider than it needs to be, and with little congestion, doesn’t necessarily need to be four lanes anymore.

Home Avenue on the south end of town was constructed in an era when the road was a main artery for businesses like Accurate Parts, Kokomo Spring, Delco, Central Transport and Brada-Miller. Similar stories are told about Lincoln Road and Boulevard Street, from Indiana 931 to Goyer Road.

“They’re way too wide with too many lanes and not much congestion,” Goodnight said. “It may have been warranted at one time. Nothing indicates that it is now. Everything we’re trying to do, instead of just resurfacing, stripping down the road and putting it back the way it was, is re-evaluating where we need turn lanes and reduce some of the other lanes so we can extend our pavement dollars as far as we can.”

One strategy to reduce the surface area of maintenance-needing pavement has been the installation of medians like the ones seen on Apperson Way. Those are not an immediate savings for the city, but it turns into a savings in the long run because those parts of the street no longer need resurfacing, plowing and salting.

“Part of our long-term plan is trying to stretch dollars the best we can,” Goodnight said. “When we put the long patches in, I equate it to putting carpet in your house. If you have six or seven rooms in your house — I, at least, only replace carpet one room at a time. It’s the same type of management with pavement. If there’s a bad section, whether it’s 30 feet or 300 feet, we need to fix that and not necessarily take up the whole road. That’s why we have 66 projects this year.”