South Dakota panel to address road funding woes

By JOE KAFKA
The Associated Press

4/30/2008

PIERRE, S.D. — South Dakota can no longer depend on adequate federal funding for roads and must do what it can to ensure that road needs are met without placing too large a burden on taxpayers, legislative leaders say.

Just how to accomplish that, however, is a monumental task.

The issue of road funding is so critical that state lawmakers have decided it should be the only topic studied by a legislative panel this summer. Typically, several interim committees are appointed to study various issues after the winter lawmaking session.

Federal money typically has paid for 75 percent of highway construction in South Dakota, but those funds are uncertain in tight budget times. Officials predict federal gas tax revenues could be $4 billion to $5 billion short by the end of next year, and state officials across the nation worry federal road aid may decline.

South Dakota spent much of its highway reserves in recent years to get work done before inflation drove construction costs higher. The state road reserve fell from about $90 million three years ago to $13 million last year.

Rep. Gordon Pederson, R-Wall, who chairs the House Transportation Committee, said federal funding prospects are grim. He attended a recent session of the National Conference of State Legislatures in Washington that provided little reason for optimism.

South Dakota has been getting back $2 in federal highway funds for every $1 in matching funds it provides, Pederson said.

“We were told we might only get the dollar back in the future, so our federal highway funds could be reduced close to 50 percent,” he said.

Couple the potential of stagnant or reduced federal support with inflationary costs of road work, and things look bleak, Pederson said.

“Steel and asphalt, anything that’s trucked, has gone up,” he said.

Rep. Larry Tidemann, R-Brookings, chairman of the Legislature’s Executive Board, said the board would appoint members of the highway funding study committee on May 12.

Most of the state revenue for roads comes from a tax of 22 cents a gallon on gasoline, diesel and other fuels; a portion also comes from the 3 percent state excise tax on motor vehicle purchases.

The fuel tax provides the state about $140 million a year.

Simply increasing that tax by a few cents a gallon would accomplish little, Pederson said.

“We could raise the gas tax a penny or two, but the problem is so big that it would be a drop in the bucket,” he said.

Tidemann agreed. “That’s a Band-Aid, in my opinion.”

Tidemann said it’s politically sensitive to increase the fuel tax by even a few cents — even though gasoline prices can spike by 10 or 20 cents a gallon over the course of a day or two.

“Any time you have an increase in the tax, irregardless of what the price per gallon is, people will identify that as an increase in taxes,” he said.

South Dakota must develop a long-term strategy to finance its network of roads, Tidemann said.

There are 84,000 miles of state and local highways in South Dakota. The state system includes 7,848 miles of highways. Although it’s just 9 percent of highway miles in South Dakota, the state highway system carries 68 percent of all traffic — including 76 percent of all heavy truck traffic.

Some states have been issuing bonds to pay for road work, but Pederson said that is prohibited in South Dakota by the state constitution. The constitution can only be changed by voters, and that’s not something that can be quickly accomplished, he said.

Increasing the state gas tax as part of the solution may not be popular, but it may not be possible to avoid because delaying road repairs only adds to the eventual cost, Pederson said.

“We have to make people understand that this has to be done because otherwise it’ll cost more in the long run,” he said.