County road costs soar

A hike in the county road tax on property is one proposed way to pay for skyrocketing construction costs.

With revenues dropping and construction costs soaring, Island County Public Works personnel are racking their brains to help the Transportation Improvement Program stay alive.

Public Works Director Bill Oakes presented the situation to the county commissioners at last week’s staff session.

“Money is tight and economic trends tell us it’s going to get tighter in the future,” he said.

Revenue comes in primarily in the form of gas tax distribution funds, Rural Arterial Trust Account funds, and state gas tax refunds.

Federal dollars are increasingly harder to come by as the amounts are set and do not change with inflation and rising costs.

“There’s no cost escalation for a federal appropriation,” Oakes said. “The future of federal assistance looks less than bright.”

The federal funding process is so cumbersome that even applying for the dollars can weigh down a project with additional costs and delays.

“The federal government is backing out of funding transportation, they have other things they need to pay for,” the public works director said. “Recent state increases in the gas tax have contained little money for local roads. Counties received none of the nickel increase and only one-third of one cent of the nine-and-a-half cent increase.”

Historically, costs and revenue have stayed fairly even. The county had managed to dodge bullets each year until the most reason construction season. Countries like China buying up supplies like steel, asphalt, diesel and concrete have prompted double-digit increases in costs. And with transportation and construction tied closely to the high cost of petroleum, the situation becomes even bleaker.

“This is literally going on worldwide,” Oakes said. “I’m not confident I can say our costs are going to stay at 4 percent. There’s no indication the world market is turning around.”

The buy-up of materials has caused the Construction Price Index to rise dramatically. A more realistic cost estimate is 7 percent, an increase that could ultimately sink the Transportation Improvement Program.

“It’s not rocket science when you’re saying your costs are exceeding your revenue,” Oakes said.

In six years, the capital budget will be cut in half if the costs increase by 3 percent more than revenue as Oakes predicts. At that rate, by 2016 there would be no capital program.

“It’s prudent to cost constrain the plan,” he said.

Cost constraints will mean delayed projects already on the books. Projects that will suffer include the Houston Road and Race Road connector, commonly called the “new county road” and the Crawford Road project.

“We’re looking at major cuts,” Oakes said. “Something of the magnitude of Arrowhead Road improvement needs to come out.”

For a six-year plan, he recommended some increase in the property tax levy as a hedge to sustain the program. The one-time infusion of money will only serve as a Band-Aid approach, but it will keep the Transportation Improvement Program.

“It infuses some revenue in the first three years of the program,” Oakes said, adding that $420,000 would be needed.

Commissioner Mike Shelton expressed concern that the 7 percent figure may not be enough. He acknowledged that it is unlikely that we will see a long-term decrease in petroleum costs.

“Next spring when we’re back in another construction season, who knows where they’ll go next year,” he said. “We have reserves to hedge, but those reserves could be eaten up pretty quickly.”

The Legislature approved counties imposing a $20 vehicle licensing fee, but Oakes said they are not advocating for the fee.

The commissioners will continue to review construction on a project-by-project basis and decide if the undertakings are financially viable given the potential fiscal emergencies portended by Oakes.

“The largest asset the county has is the road system with a replacement cost in the billions,” he said. “If we don’t continue to invest in the maintenance of the system, the system will deteriorate and our children will be left with a bill that they won’t be able to pay.”

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