DOTs Find Creative Solutions to Make Up Funding Shortfalls

Though state officials are already looking ahead to a post-pandemic era when revenues and construction projects stabilize, recent news reports show how badly some state departments of transportation (DOTs) are hurting.

It all shines a light on the importance of providing a menu of funding supports, including tolling and other forms of user financing, to keep the system moving through even the toughest of unforeseen challenges.

In the early days of the pandemic, tolling agencies moved swiftly to shut down non-essential facilities and functions, postpone capital projects where they could and, most important of all, protect the safety of staff and customers. That activity was sustained by strong balance sheets, backed by the confidence, and respect the agencies had earned through decades-long relationships with investors and rating agencies.

But as the initial phase of emergency response morphs into a prolonged period of uncertainty, state budgets are being crushed, and DOTs are bearing their share of the burden.

Facing down the crunch

State DOTs experiences vary from state to state with some key similarities. Each of the 50 states has its own mix of infrastructure, financial capacity, and customer needs and expectations. While the overall storyline is consistent—there just isn’t enough money to go around—the details are as unique as the jurisdictions themselves.

• The Wyoming DOT is confronting the reality that it faces $350 million in unmet highway maintenance needs, far above the $135 million it previously estimated. “Current funding levels are unsustainable for WYDOT to continue delivering the level of service citizens expect,” consultants from the Seattle-based Dye Management Group warned in a recent report to a legislative committee.
• In the Chicago metropolitan area, DuPage County is planning to double a previous 4¢-per-gallon gas tax increase to offset pandemic losses. All told, the tax will “raise $16 million more a year for an aging system of roads and bridges,” the Daily Herald reports, after declining traffic volume drove revenues down 25% since April. "The COVID impact is going to be felt long-term, in addition to increased fuel efficiencies and electrification and all the other things that continue to erode our motor fuel taxes," said county transportation director Christopher Snyder.
• The Virginia DOT is offsetting $750 million in losses and keeping short-term highway work in motion, after the state General Assembly agreed to shift some projects into the future if they weren’t ready to use up their funding this year. The state is treating the reallocation as a loan from future budgets, Dogwood reports, but the net outcome is that “no project will be delayed as a result of these actions,” said Deputy Secretary of Transportation John Lawson.
• And the Pennsylvania DOT had to consider the prospect that hundreds of projects worth $600 million would be suspended due to the extended pandemic crisis, the Pittsburgh Post-Gazette reported in late November. Within a week, the state government stepped in, authorizing the department to borrow the funds until the legislature can tackle the funding crisis in the new year.

Looking ahead to a brighter future

The story so far is par for the course for a year of determined, courageous response, but mostly awful circumstances. There are a few glimmers of recovery, with at least one DOT and one tolling agency laying plans for the projects they’ll be undertaking once the pandemic loosens its grip.

In Massachusetts, state officials are preparing for traffic volumes to return to their “ignominious pre-pandemic levels,” the Boston Globe reports. They’re looking closely at a managed lane plan Gov. Charlie Baker put forward for further study in 2019, before anyone had the slightest inkling of what 2020 would bring. “That work is still far from over,” the Globe says. But last month, planners identified specific corridor segments where it should be “technically feasible to put in a priced lane—one way or another.”

And in Florida, the Tampa-Hillsborough Expressway Authority is looking to recover from millions of dollars in lost revenues without missing a beat. “Right now, we plan on the economy recovering in the next one to two years,” said CEO Joe Waggoner. “If that happens, not a single thing we’re doing is going to slip.”

All of which is to say that, in a time of such deep uncertainty, there are still a few constants to count on: Citizens will still need highway transportation, states will still need to fund it, budgets will always be constrained, and a mix of funding and financing options will be essential to keep the system running. Tolling agencies have yet again shown their creativity and resilience and the industry stands ready for the challenges ahead.