Category Archives: Publications

A New ODOT Budget Bill is in the Works

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The proposed ODOT 2014-2015 transportation budget was submitted to the Ohio House of Representatives in early February.  The following post is abridged from Mr. Runyan’s commentary in the January/February issue of Ohio Contractor magazine.

In what seems like no time at all, we have arrived at the point in time where the Kasich Administration will be submitting a proposed transportation budget for ODOT. In addition to the overall funding direction for the next two state fiscal years, there are a number of policy items that the Ohio Contractors Association already anticipates will be included in the bill that will be of interest to the heavy/highway community.

OCA has worked with ODOT for the inclusion of modifications in defining the amounts of performance and payment bonds. Presently, the amounts of these bonds are based on the state’s estimate amount. We have secured the concurrence of ODOT in supporting a change to set the bond amount equal to the contract price amount.

In an earlier edition of OC magazine, I wrote on the evolving contractual concept of Construction Manager/General Contractor (CM/GC). ODOT intends to include language in the budget bill to allow one pilot project to be administered, designed and constructed using this new project management and construction philosophy. This pilot project will be monitored closely to determine if there are, in fact, financial and operational benefits over the traditional design/bid/build methods.

Recommendations on the Ohio Turnpike operations study were recently announced. To the surprise of many, it was decided by the Kasich Administration to retain the current Turnpike Commission structure and permit turnpike toll revenue to secure bonding for projects that are not located on the turnpike. In their pre-announcement briefing, ODOT stated as much as $1.7 billion worth of projects can be directly financed with the use of these bonds. OCA will be supporting the administration’s effort to change current law so that turnpike-generated revenue may be expended for highway and bridge purposes off the current turnpike alignment.

OCA and ODOT have arrived at an agreement to fundamentally change how force account limits are measured on many projects that are performed by the ODOT workforce. In lieu of dollar limits, size limits will determine if the work can be performed by ODOT forces or must be contracted out for: bridge replacement, widening or deck replacement, culvert replacement or asphalt paving.

Recently, the Ohio Supreme Court ruled that revenues generated via the Commercial Activity Tax (CAT) on motor fuel must be spent for highway and bridge construction and maintenance purposes along with several other uses as stated in the Ohio Constitution. This ruling will require a change to the sections of Ohio law that define how CAT-generated revenue must be spent. Our hope – and efforts – will be to urge the legislature to direct those funds to road and bridge construction as prescribed by the constitution and affirmed by the Supreme Court.

These represent five major issues we plan on addressing in the upcoming legislation. No doubt other topics, offered by other sources, will arise. We will be evaluating each of these closely for their impact to the heavy/highway construction industry and responding accordingly.

Read the full text of Mr. Runyan’s article here

‘Right-foot’ Voters & the 2012 Presidential Election

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Infrastructure Insight - A Look at the Democratic & Republican Parties’ Transportation Platforms

The presidential debates have concluded; the polls for the 2012 Election are nearing their end – thankfully; and after an early Tuesday in November, Americans will return to their daily lives hoping they made the correct decision.

While the turnout for the 2012 Election is expected to surpass the more than 132 million Americans who voted in the 2008 Election, the voter turnout will no doubt pale in comparison to the 211 million licensed drivers in theU.S.– of which nearly 207 million are of voting age.

But will the “right-foot” voters – the ones who press the accelerators of their vehicles to get to and from work, make it to appointments and travel for errands 1.1 billion times a day – according to Bureau of Transportation Statistics – be heard on November 6?

A better question yet might be: What are the Democratic and Republican parties’ platforms when it comes to transportation infrastructure?

Democratic DonkeyDemocratic Platform 

“(Long-term infrastructure) investments are critical for putting Americans back to work and strengthening America’s transportation system to grow our economy.”

The Democratic Platform calls for immediate transportation investment and creation of an infrastructure bank. The federal infrastructure bank, which was proposed to be funded with $10 billion but was voted down by the Senate during President Obama’s first term, would be used for projects thought to have the greatest return on investment.

The party’s platform continues its support of “livability” programs, stating, “We will continue to partner with local communities to support their sustainable developments, such as passenger rail, bicycle and pedestrian paths, and other projects to support livable cities.”

The Democratic Party suggests the financing of transportation infrastructure would be through the savings that will be accrued through the ending of wars inIraqandAfghanistan. In his 2012 State of the Union Address, President Obama said, “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.”

The word game: The number of times the Democratic Party’s platform used the following words in the context of the nation’s transportation infrastructure:
“infrastructure” 22 times; “transportation” 4; “highways” 1; “roads” 6; “bridges” 4

Republican ElephantRepublican Platform

“America’s infrastructure networks are critical for economic growth, international competitiveness and national security.”

The GOP Platform calls for a renewed federal-state partnership in improving the nation’s interstate infrastructure through the use of public-private partnerships. These partnerships “are urgently needed to maintain and modernize our country’s travel lifelines to facilitate economic growth and job creation.”

While the Republican Party doesn’t provide ways to address the pending Highway Trust Fund shortfalls, it opposes any funding mechanisms – such as vehicle-miles-traveled systems – that would involve governmental monitoring of every car and truck.

The Republican platform favors opening private competition to operate Amtrak’s Northeast Corridor, reforming National Environmental Policy Act, and ending highway fund diversions at the state level.

In an effort to rein in government spending and over-regulations, the party supports a three-step test for federal investment decisions: Is it within federal government’s constitutional role? Is it effective/absolutely necessary? Does it justify borrowing (especially foreign borrowing) to fund it?

The word game: The number of times the Republican Party’s platform used the following words in the context of the nation’s transportation infrastructure:
“infrastructure” 12 times; “transportation” 5; “highways” 0; “roads” 6; “bridges” 2

Unfortunately for the American motorists who combine to travel 4 trillion miles annually and the nation’s economy that is so dependent on the transportation system, neither political party has announced a long-term funding solution. The Congressional Budget Office estimates that the Highway Trust Fund’s Highway and Mass Transit accounts – which fund and support the nation’s transportation programs – will be insolvent in FY 2015.

“Both parties have indicated that there should be a federal role in infrastructure investment,” said Joshua Schank, president of the nonprofitEnoCenterfor Transportation inWashington,D.C.“Neither of them have proposed a way to pay for it that’s realistic. A real strategy is either (to) raise the gas tax or cut spending, and neither party is divulging that.

To find out more about the major parties’ platforms, visit www.democrats.org/democratic-national-platform and www.gop.com/2012-republican-platform_home/

 

Restructuring the Gas Tax Makes Good Sense

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Ohio Gas Tax explainedThe Moving Ahead for Progress in the 21st Century Act (MAP-21) officially went into effect on 10/1.  While the program will keep dollars flowing to surface transportation projects for two more years, it does not solve the problem of funding America’s infrastructure for the long term.  In fact, lawmakers will once again confront the question of sustainable funding for our roads and bridges in 2014.

The government, the transportation industry and the media continue exploring many revenue alternatives.  Ideas range from creating a tax on Vehicle Miles Traveled (VMT) to adding more road and bridge tolls and adjusting the federal and state gas tax.  While each of these ideas has pros and cons, restructuring the tax on motor fuel is of immediate interest.

Many suggest that the gas tax model is broken and needs to be replaced.  But is this really true?  The gas tax has served our country well for decades, funding the construction and maintenance of roads that stretch across America.  It helped Ohio build the nation’s 4th largest interstate system, 7th largest highway network and the 2nd largest inventory of bridges.  Are there flaws in the gas tax model today?  Yes.  Can they be fixed?  Absolutely!  Let’s take a look.

The federal gasoline tax has stood at 18.4 cents/gallon since 1993.  Ohio’s gas tax has remained at 28 cents/gallon since 2005.  Because the rates are “fixed”, the purchasing power of the gas tax has not kept pace with inflation.  The tax collected on each gallon of gas stays the same while funding our transportation infrastructure becomes more expensive.  That’s the downside and the reason for considering alternative revenue sources.

On the other hand, restructuring the gas tax makes sense for a couple of reasons.  The Institute on Taxation and Economic Policy (ITEP) cites the “benefits principle” which is based on the theory that those of us who drive the most should pay the most for the improvement and maintenance of our highway system.  A gas tax handles that efficiently – the more you drive the more gas you buy and the more tax you pay. That sounds fair.  Also, the gas tax is simple and economical to administer.  Taxes are collected at the refinery and passed along to the consumer at the pump.  In contrast, administration of solutions such as the Vehicle Miles Traveled tax promises to be much more complex.

When you look at the whole picture – the necessity of maintaining a strong transportation infrastructure, a fixed tax rate that hasn’t kept up with inflation and the inherent fairness of being taxed in proportion to the amount you drive – the idea of restructuring the gas tax is clearly reasonable.  Viable reform involves two key steps.  First, increase the motor fuel tax rate to a level that generates adequate revenue for our infrastructure needs.  Second, utilize an indexed tax rate to ensure that revenue growth doesn’t fall behind inflation.  This can be achieved by linking the rate to transportation cost growth, the Consumer Price Index or even the price of gasoline.

Restructuring Ohio’s gas tax indeed makes sense.  You can learn more about it in the recent Ohio Contractor magazine article, “While Broken, Motor Fuel Tax Can Be Fixed” or by watching the Gas Tax video produced by the Ohio Construction Information Association.

 

Welcome to the OCIA Blog

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The Ohio Construction Information Association is happy to announce the launch of our new blog. Over the years OCIA has become a valuable resource for contractors, legislators and Ohio residents – virtually anyone concerned about restoring and improving our highways, streets, bridges, and utilities. Keeping you informed has always been our goal and the new OCIA blog will help us do that faster than ever before.

We look forward to bringing you up-to-date information about Ohio’s infrastructure – the opportunities and initiatives that affect our state, your town, and ultimately you personally. Look for articles from Infrastructure Insight, our quarterly newsletter that’s been educating the public, government officials and the media about critical transportation and utility issues for more than 20 years. Fact-filled and straightforward as ever, Infrastructure Insight articles will now be published right here – still “black, white and ‘read’ all over”. You’ll also find digests of important stories drawn from the Ohio news media along with analysis and comment from transportation infrastructure organizations throughout the country.

We pledge to make this blog lively, information-rich and a good read that is worthy of your time. We invite you to join us and hope the OCIA blog becomes a scheduled visit during your busy week. Enjoy!