The Journal Gazette
Sunday, June 05, 2016 7:51 am

Paving the road to long-term savings

Dr. John Crawford

All Indiana cities are having problems maintaining their streets. Costs are rising while funds available are declining as a result of decreased gasoline tax revenue and decreased property tax revenue because of tax caps.

The state legislature responded by providing cities a new possible tool to use. Indiana Code 6-3.5-10 and 6-3.5-11 allow cities to pass a municipal wheel tax and municipal motor vehicle license excise surtax to raise money specifically for road funding.

A Fiscal Policy Group has been analyzing the city’s finances. There is a major problem with street maintenance. This was analyzed three years ago then adjusted so revenue to maintain streets was on a pay-as-you-go basis so the backlog of needed repairs could be completed.

We have caught up somewhat with overall road condition. Over the past three years $25 million a year has been dedicated to streets primarily in neighborhoods. Improving entire neighborhoods at once with streets, sidewalks, curbs and Americans with Disabilities Act improvements have resulted in dramatic changes, rather than patching an isolated street here and there.

But from 2013 to 2016, the cost per mile to replace asphalt streets rose 21 percent, and concrete cost per mile rose over 50 percent. So revenue available has not kept pace with needed repairs.

Property tax revenue has several variables, such as assessed value growth. The exact shortfall also depends on where we decide to set the street repair cycle. Asphalt life cycles can be set at 15, 20 or 25 years (15 is recommended). Concrete life cycles can be set at 25, 35 or 50 years (25 is recommended).

If one chooses the middle option of 20 years for asphalt and 35 for concrete, then that will maintain streets at present level and slightly catch up on backlog each year. This option requires about $21 million a year. Assuming assessed value growth around 1 percent to 2 percent a year, the projected budget shortfall will be between $5.3 million and $10.1 million a year over the next five years.

The excise tax would be $25 for passenger vehicles. The wheel tax would be $40 for buses, semi-trailers, trucks, tractors, trailers and recreational vehicles. The total annual estimated revenue is $6.7 million.

These municipal excise and wheel taxes are designed specifically to help Indiana cities address their revenue shortfalls for road repair. They are user fees. Those of us driving our vehicles on Fort Wayne streets will be asked to pay more to maintain our streets. Money raised from these taxes can only be used for streets and cannot be diverted to other projects or purposes.

Money used for street repairs increases home property values, while crumbling streets do the opposite. Maintaining infrastructure in good repair fosters economic development by making the city more attractive for new investment. Jobs are created to do the repairs that increase economic activity.

There are also benefits for your car with well-maintained roads. TRIP, a national transportation research group, studied maintenance and operation cost for vehicles in each state. Cracks and potholes add wear and tear, causing tires to wear away more quickly, decreased gas mileage, wheels thrown out of alignment, and increased yearly car maintenance costs. This costs the average U.S. driver $515 a year. Indiana is better than average at $366; the worst-maintained roads in the country in Washington, D.C., (somehow fitting) cost drivers $1,042 per year. So, bad roads actually carry a hidden crack and pothole tax that the owner pays in upkeep. If we can continue to improve Fort Wayne’s streets, some of the tax will hopefully be offset by lower costs to operate and maintain your car.

No one on City Council ever wants to increase taxes of any kind. It’s always best to keep citizens’ money in the private sector, where it is most productive. But if a tax is to be considered, it is far preferable for it to be one like this which is a user fee and targeted specifically to a known serious problem.

Without good streets, sewers, parks and other infrastructure, you don’t have a good city.

Governing is about choices. Without additional funding, our streets will not be maintained and each year road conditions will worsen. Most citizens would not want that.

So I strongly favor adopting the municipal wheel and excise taxes. This is needed and is a good way to diversify road funding sources. Council will debate this in June and make a decision to pass it or not.

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