By SHELLEY DAVIS

Illinois roads — between a rock and a pothole

Illinois has prided itself on the quality and quantity of its roads. But more than 70 percent of them were built before World War II and funds are needed now for repair and renewal. Federal funds and the motor fuel tax are fading fast, and the state is faced with the dilemma of finding money to fix a crumbling road system.

WHILE THE Chicago-area transit crisis was capturing all the headlines during spring legislative session, the Illinois Department of Transportation (IDOT) was flashing hazard lights for the Road Fund. It was sending a signal to the General Assembly to provide additional funding not only to keep the Regional Transit Authority (RTA) running, but also to shore up the state's road program. In terms of real buying power, it is the smallest in 25 years.

But the signal went unanswered. The end of the session cooled legislative tempers and legislative interest concerning transportation. The only hot summer issue remained reapportionment. The RTA was left in limbo. Chicago decided to run its own transit system, saying it would be able to raise sufficient revenues. And IDOT received a $586 million road program — $322 million expected from the federal government, approximately $153 million from user fees and the sales tax transfer and $111 million in Series A Transportation bonds.

Illinois has always prided itself on the quality and quantity of its $50 billion road investment. The state has the third largest chunk of interstate system in the country with 2,000 miles of freeways. Nearly 60 percent of all goods manufactured in the state are transported over its 134,000 miles of roads. And roads comprise over 90 percent of Illinois' total passenger miles from all transportation modes. Yet, nearly 70 percent of the road system was built before World War II, meaning that more and more repair is needed on the aging system. In the last decade, inflation has made traditional user taxes that support the road program wholly unable to keep up with wear and tear.

Destinations for dollars

Illinois road money has two main destinations — state roads and local roads. Funds for state roads include: about 35 percent of the Motor Fuel Tax (MFT) collected; revenue from motor vehicle registration fees ($18 for small cars, $30 for larger cars and between $20 and $1,600 for trucks depending on weight); part of the total state sales tax collected; federal funding; and bonding. (At the end of fiscal 1982, about $90 million worth of bonds will remain that have not been obligated from the $1.1 billion in Series A Transportation Bonds authorized in fiscal 1972.)

Local roads, which include county, township, rural road district and municipal roads, receive 65 percent of MFT receipts, accounting for 40 percent of local road revenues. Additionally, these local units receive 20 percent of their road funds from federal sources funneled through state channels and 40 percent from local property taxes.

The user taxes, the 7.5 cents per gallon MFT and the registration fees were enacted in 1969. Until 1973, these taxes kept pace with increasing construction and maintenance costs. Since that time, spiraling construction costs have outrun revenues. From 1970 to 1979, the Construction Price Index has increased 152 percent. In 1979 and 1980 alone, costs for this petroleum-based industry soared about 45 percent.

At the same time that construction costs were rapidly escalating, MFT revenues were increasing an average of only 2 percent annually. The MFT, which in 1969 translated into a 25 percent tax on the price of a gallon of gasoline, represents only a 7 percent-per-gallon tax today. In calendar year 1980, fuel consumption decreased 10 percent, producing a loss of $45 million in MFT revenues. These revenues are expected to decrease a total of $170 million over the next three fiscal years. According to IDOT, both the gas tax and registration fee revenues will decline a total of 60 percent over the next five years if inflation is taken into account. In sum, the trend towards purchasing smaller, more fuel-efficient cars is eroding the tax base used for roads. And the state government has not shored up this base by enacting either a new tax or increasing existing ones.

Road funding in Illinois is also pinched by budget cuts at the federal level. The federal government is faced with much the same problem as Illinois — its 4-cent-per-gallon tax on gasoline is based on consumption, not price. While the price of gasoline has risen 148.2 percent since 1970, the tax on gas has remained the same.

Since fiscal 1980 Illinois has lost about $400 million in federal revenues, and is expecting only $322 million from the federal government in fiscal 1982 compared to $500 million in 1979. The Reagan administration is not promising a brighter picture in the near future. With the federal highway budget already cut by 18 percent in fiscal 1982, the administration expects to maintain that level for fiscal 1983 and then allow a slight growth in the federal Highway Trust Fund (similar to the Illinois Road Fund) of about 5 percent.

The outlook for receiving funds from federal discretionary road programs is not good either. Over the last four years, Illinois was able to increase its federal road fund revenues by over 150 percent because of its active and competitive pursuit of these funds. (At one time the state was receiving about 40 percent of all federal discretionary road funds given out nationwide.) Consolidation of discretionary programs into block grants would cut into this edge, however, and Illinois is expected to receive less as the federal grant monies are distributed more

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evenly among all the states. The ability of Illinois to get federal grants is also hindered by the tightening state economy. Many federal grants require matching funds, and state dollars are simply not available.

The Illinois road program also receives 5.5 percent of the total state sales tax collected. But revenue from this source is decreasing. An IDOT report, "Principles of Investment Strategy," released last December, indicates that tax exemptions for food and drugs and farm and business machinery enacted in 1979 and 1980 were expected to reduce sales tax revenue for highway purposes by 10 percent or about $17 million annually for the next several years. It should be noted, however, that the expected decline in revenue will be somewhat less due to the rollback in the business machinery exemption passed this spring.

So, what does this mean for roads and bridges that are desperately in need of repair? According to the same IDOT report, the state-maintained highway system, which contains 17,600 miles of the total 134,000 miles of road

Over $1.5 billion would be needed annually for the next five years to repair all state and local roads

in the state, currently has: 3,100 miles of road that are rough and/or narrow; 1,100 bridges that are rapidly deteriorating; and 400 miles of high-volume routes that are severely congested. The local road system is in even worse shape. Of the 116,400 miles of local roads, 4,500 miles of road are rough and narrow; 1,700 bridges are in need of either replacement or repair; and 950 miles of road are heavily congested.

In addition to this backlog, the IDOT report indicates that state-maintained roads in need of repair will increase by 1,100 miles annually and that locally maintained roads needing repair will increase by 3,900 miles annually. According to the report, in order to retire the current backlog and keep pace with the growing needs at both state and local levels, over $1.5 billion would be needed annually for the next five years.

Obviously, Illinois cannot afford a road program of this size. A more realistic approach to the problem would be to maintain the status quo by upgrading the 3,100 miles of state roads now in need of repair. But more money is needed to do this than is available for fiscal 1982.

At the current funding level, only 800 miles, or about 26 percent, of the 3,100 miles of state roads will be repaired this year. If 1,100 miles of rough road are added to the backlog each year, the number of miles of roads that need repair jumps to 3,400 in fiscal 1983 and continues to grow. More money is needed not only to keep the backlog stable, but also to continue construction on major projects throughout the state.

The desire of IDOT to keep up with deteriorating roads is better understood when the cost of road repairs and constuction are examined. Minimum road repair — smoothing a rough surface road that has a strong base -costs approximately $150,000 a mile. That figure jumps to about $250,000 a mile when a road needs major resurfacing and below-surface repairs. And new construction can range from $3 million a mile for a rural road to $7-9 million a mile for a road in the suburbs. Urban road construction can cost up to $100 million a mile.

The Thompson administration recognizes these costs and during the past five years has pledged its commitment to maintaining a good road system in Illinois. However, the governor has not gotten far. The General Assembly has been reluctant to pass any increases in the user fees, a goal that Gov. James R. Thompson has consistently supported. The first attempt was made in 1977 with a bill sponsored by Sen. Stanley Weaver (R., Urbana) that would have raised the MFT 3 cents a gallon. If passed, the revenue increase would have been $165 million annually or about $1.2 billion over seven years. The revenue estimates were based on a fuel consumption increase of 2 percent a year.

A second effort to increase the MFT was launched in 1979. The request was more modest this time — a 1 1/2 cents per gallon increase. It was to be bolstered by a proposed increase in registration fees ($3 to $15, depending on the size of the vehicle). Although these measures failed, a $4 billion, four-year road program was passed in the summer of 1979. Under the plan, bonding power was increased $400 million and diversions for noncon-struction purposes from the Road Fund were scheduled to be phased out over a three-year period in order to free $120 million in road funds by fiscal 1982. And as part of the plan, the 5.5 percent transfer of sales tax revenue was approved and $1.1 billion in federal funds was realized for state roads from the scrapped Crosstown Expressway project in Chicago.

Thompson's 'move ahead'

Billed as the "move ahead road program," this now infamous Thompson-Byrne compromise started falling behind before it moved ahead very far. Construction costs took an unforeseen leap in 1979 and continued to increase during 1980. By the end of fiscal 1981 — two years into the program — only 40 percent of the 1979 road program goals had been accomplished. Under the $550-million road programs slated for fiscal 1982, the third year of the

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four-year program, only 10 percent more of 1979 expectations will be met, bringing the program to the halfway mark. If the state were operating the $850 million program that IDOT had envisioned for fiscal 1982, almost 65 percent of the 1979 road program would be completed.

The failure of Thompson's program points out the difficulty inherent in attempting to project revenues too far into the future. The Illinois Transportation Study Commission has repeatedly suggested that the administration formulate a long-term plan for roads, preferably on a 20-year basis (as required by law). But both the Walker and Thompson administrations, have resisted setting such long-range goals.

Part of the reason for the resistance is the fact that accurate estimates of revenue gleaned from any hike in the MFT cannot be assessed. For example, a 40 percent increase in the MFT will not necessarily produce a 40 percent increase in revenues. This is due in part to difficulty in predicting the number of miles people will drive, the amount of fuel they will buy and what kind of vehicle they will use. The 1979 and 1980 increases in construction costs, which were not anticipated by the "move ahead road program" planners, is another example of how long-term planning may fail. These escalating construction costs also have been blamed for the failure of the program to proceed on schedule. Purchasing power is obviously decreasing. An Illinois Municipal League report, "Estimating State Collected Municipal Revenue," stated that although the MFT distribution to municipalities increased from $9.82 per capita in 1970 to $11.83 per capita in 1979, real dollar expenditures coming from the MFT revenues have decreased 40.1 percent. What could be bought in 1979 for $11.83, could have been purchased for only $5.88 in 1970.

But the Transportation Study Commission is also critical of IDOT's ability to keep track of the Road Fund right now. According to the commission's 1981 report, "Illinois Transportation Directions," IDOT is hampered by an "ad-hoc structure of accounting" which makes it difficult to tell where and when state and federal funds are being spent or to determine the assets and liabilities against a particular fund source. One thing is certain. There is no need to travel 20 years down the road to see that the Illinois Road Fund is in deep trouble. Some type of tax increase or new revenue source must be found to give a transfusion to the ailing fund. Like the RTA, the Road Fund will go broke without more money.

The July 1981 report from the comptroller's office stated that the end-of-year balance for fiscal 1981 in the Road Fund was $4 million — the lowest since 1972. While revenues for fiscal 1981 increased 3.5 percent, expenditure increases were not far behind, going up 3.3 percent. And for the first nine months of the fiscal year, receipts from both the registration fees and the MFT decreased slightly — $4 million or 1.4 percent and $3 million or 2.7 percent, respectively.

The report further states that almost half of all money for roads came from the federal government. Without this money (plus the money from the sales tax transfers — nearly $140 million for fiscal years 1980 and 1981), the Road Fund at the end of fiscal 1981 would have been only $100 million higher than it was during the Walker administration and about the same as it was during the early years of the Thompson administration.

Nor is there much chance of finding additional road funding from any source in the near future. The legislature failed to come up with a mass transit funding package during the spring session. And with reapportionment, the cutback and the 1982 elections, it will probably be equally reluctant to approve new taxes for the road program or to increase existing ones. Thompson also is up for reelection in 1982, and he too is vulnerable. Whatever he does — or doesn't do — about roads will undoubtedly be used against him.

The failure of Thompson's most recent plan for increased funding of the road fund is an example of the legislators' reluctance to act. The governor decided to forego another attempt to increase any user tax increases and instead proposed a new tax — a 5 percent gross receipts tax on oil companies. The tax had the double purpose of providing funds for both transit and highways. Basically, the revenues from the tax could have: increased the fiscal 1982 road program to $900 million; provided $3.5 billion in fiscal 1983-86 (for an average annual road program of $875 million); and provided approximately $262 million to local governments over the next five years. But the package, billed as a mass transit funding plan, stalled in the General Assembly. As a result, mass transit in the Chicago area got nothing. But state roads may have been the real losers. Without adequate funding in fiscal 1982 and

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perhaps in fiscal 1983, roads will simply continue to deteriorate.

IDOT's solution to this funding problem has been to shift its priorities to maintenance and repair of existing roads. Next, IDOT hopes to complete major reconstruction and expansion on heavily congested roads. If any money is left over, IDOT will try to complete sections of construction projects where substantial investment has already been made. It is estimated, however, that with an annual funding level of only $500 million, nearly 60 percent of construction on all major projects will conic to a halt. This is quite a change from five years ago when 70 percent of the road program was construction. Today, 80 percent of the funding is going to maintenance and repairs.

All of this also brings up the question of whether the state really needs any new four-lane highways or if existing routes can do the job. The proposed highway linking Chicago to Kansas City via Quincy is an example. Many argue that Illinois is already linked to Kansas City by smaller roads.

Ideas for increasing money

The other options for increasing road funding are the traditional ones. According to the Transportation Study Commission, these include increasing the MFT or changing the per gallon tax to an ad valorem tax that would be price sensitive since it would be based on the value of the gasoline. The commission also suggested: increasing motor vehicle and license fees; establishing an excise tax on the sale of new vehicles; and continuing or increasing transfers from the General Revenue Fund in the form of state sales tax receipts from the sale of gasoline. So, with little in the way of concrete proposals to improve state funding for roads and little hope for additional help from the federal government, Illinois roads are destined to get worse before they get better. They may have to crumble to the point where regional and political disagreements vanish into the pot holes.

Shelley Davis was Illinois Issues' intern during the spring legislative session under the Public Affairs Reporting Program and Sangamon State University. She was graduated from the master's program in May.

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