State Legislators Question TDOT Officials About Off-System Bridges

Counties are having a problem with delays in federal funding for bridge programs. TDOT officials confirmed today that the average amount of time for TDOT to get an "off-system" bridge project underway is four years. These projects represent bridges on county highways and city streets that are not part of the state highway system. Both representatives of local government and state legislators expressed concerns that these delays are dramatically inflating the costs of these projects. In some cases, the local government is then committed to paying their share of a project that is much more expensive than anticipated when the project began. TDOT officials stated that they recognize this long-standing problem and that fixing this issue is a high priority for them. They have hopes that either bonding or a new federal infrastructure stimulus package might free up funds to allow the department to make progress in this area.

Nationwide Decline in Miles Driven Indicates that Gax Tax Revenues May Not Rebound

A USA Today article indicates that even though gas prices are down, consumers have not started driving more. This trend reflects the deepening recession and signals a shift in lifestyles and driving habits that could outlast the current turmoil. Drivers logged 10.7 billion fewer miles in September than they did the same month a year earlier — a 4.4% decline, according to data issued Wednesday by the Federal Highway Administration.

For the full text of this article, follow this link:
http://www.usatoday.com/news/nation/2008-11-19-driving_N.htm

Transportation Funding Study Committee

Today a joint transporation funding study committee is meeting to hear proposals on how to shore up infrastructure funding in Tennessee. Earlier in the week, during the Department of Transportation's preliminary budget hearing, there was discussion of issuing GARVEE (Grant Anticipation Revenue Vehicle) bonds. These bonds essentially use the anticipated stream of federal grant dollars to fund a bond outlay which would give the state a large influx of money now. That money could be used to start a new wave of infrastructure projects now. As federal dollars come in over future years, those dollars are pledged to pay the costs of the bonds. As used in other states, in some cases the potential federal dollars are the only security of the bonds. In other cases, the state pledges additional sources of revenues in the event the federal dollars do not materialize. If the revenue bonds are only secured by federal grants, the interest rates are higher as the bonds are riskier.

State Comptroller John Morgan addressed the committee and proposed issuing general obligation debt as a alternative with the plan to budget to use anticipated federal revenue to pay off the bonds. While this may seem like a technical distinction, this structure of the financing results in the lowest interest costs. According to the Comptroller, other states have used GARVEE bonds because general obligation debt must be approved in a referendum, which is not the case in Tennessee. He also pointed that Tennessee has borrowed relatively little in the past, which makes it more possible for the state to borrow funds now.

An important point to keep in mind is that borrowing money for infrastructure needs actually does not increase revenue, it only increases costs (through interest and issuance of debt costs). Cost savings can be realized if starting projects earlier helps the state avoid future inflationary costs. In other words, if anticipated inflationary costs in bridge and highway construction are expected to be higher than costs of borrowing, then in the long run it may be costs efficient to borrow and build sooner.

Another element of this issue is that this effort can of course be considered a part of a state funding economic stimulus package. Starting all these road and bridge construction projects now can help provide employment and economic activity in Tennessee while preserving and protecting important infrastructure.

The proposal would be for borrowing approximately $350 million. Over a 12 year period, estimates indicate that a general obligation bond would cost about $90 million in interest costs. This essentially means that the state would be paying $8 million a year in interest costs instead of spending that money on transporation projects. Whether or not the state would save that much in inflationary costs is yet to be seen. GARVEE bonds would be more expensive. These discussions are all preliminary, but we have yet to see whether these borrowing proposals would include any funds to assist local county highway departments with their infrastructure needs.

K-12 Education Funding - Budget Hearing

Yesterday began a series of budget hearings conducted by the Governor as a preview to next year's budget. First up was the State Department of Education. While it is too early to know specifics, one thing that was clear fom the hearing is that the Governor is committed to protecting K-12 education funding. This would include funding the BEP at its current level plus improvements to cover increases in enrollment and inflationary adjustments. This improvement was estimated at $80 million. Note that this does not include any supplementary funding to continue with the phase-in of the so-called BEP 2.0 improvements. These improvements were passed the year before last with funding provided to pay for approximately 50% of the proposed improvements to ELL instruction, funding for at-risk students and restoring the state funding of instructional salaries to 75%. Last year, additional improvements were proposed, but could not be funded. In the current budgetary environment, it appears that the state will start the budget process hoping to hold K-12 funding where it is plus annual adjustments for growth and inflation. We must realize that this means cuts to other state departments and programs will have to be deeper in order to protect education funding.

Help for Tennessee Families

If you ever get requests from constituents for help and resources through the State, pointing them in the right direction just got easier. A new portion of the State of Tennessee's website entitled "Help for Tennessee Families" debuted recently. The state should be commended for setting up this central collection of links to helpful information for families facing tough times. Tennesseans have often complained about difficulty working their way through a maze of voice mail systems and bureaucracy when looking for assistance from their state government. This page cuts through the clutter and helps direct people to the programs they are looking for.

The site includes a job center, sections on mortgage and financial assistance, energy and transportation, health insurance, health care, food and nutrition, healthier living, financing college, small business assistance and more.

It can be found at: http://www.tennesseeanytime.org/gov/family-resources/

I'm adding this to the links section of this page as well.

Fiscal Review Presentation

The Fiscal Review Committee of the TN General Assembly held hearings on November 12 and 13 to examine the fiscal status of Tennessee's economy. I'm very greatful that Chairman Charles Curtiss invited cities and counties to present on the second day of the hearings regarding how the economy is affecting local governments in Tennessee. Chad Jenkins with the Tennessee Municipal League and myself made presentations to the committee and took questions. You can find a copy of my presentation here:

http://www.tncountycommissioners.org/files/Fiscal_review_presentation.pdf

As more data comes in, I will try to keep this information updated. You may be particularly interested in slides 5 and 6 of the presentation which show how local option sales tax collections performed for counties for the fiscal year ending June 2008 and for the first quarter of the curent fiscal year. Unfortunately the trend is not good.

Report on Social Security Numbers

The Office of Research and Education Accountability within the State Comptroller of the Treasury's Office has released a report on Safeguarding Social Security Numbers in Tennessee Government Records. This 44 page report is available on the Internet at this link for those who are interested:

http://www.comptroller1.state.tn.us/repository/RE/SSN2008.pdf

This issue is important as it relates to identity theft and the security of personal information of our citizens and county government employees. The report makes a number of findings regarding the current status of social security numbers in Tennessee government records and makes administrative and legislative recommendations.

TCSA Annual Conference a Success

It was good to see many of you in Memphis last week for the TCSA annual fall conference. We had a number of good meetings and informative workshops. During the conference, our association selected its new slate of officers for next year. We recognized out-going president Phil King of Greene County for his service this past year as our president and welcomed in Wallace Austin, White County commissioner as our new president for 2008-2009. Jim Westbrook of Weakley County who had been serving as association treasurer was selelcted as president-elect. Houston Naron of Williamson County was named to replace him as treasurer. Most of the board members are continuing to serve, but we have two new members: Scott Gillenwaters of Anderson County and Robert Barnwell of Williamson County. I look forward to working with all these good folks during the upcoming year.