POSITIVE CHANGES MADE TO LOCAL ROAD ASSISTANCE

(from Maine Townsman, July 1999)
by Kate Dufour, Legislative Advocate, State & Federal Relations, MMA

Maine's highway system consists of a network of 22,636 miles of federal, state and local roads. Although the existing road network has adequately served the citizens of Maine, the many miles of the road system have been put to an ever-increasing use over the last decade, which has caused the road infrastructure to deteriorate. According to the Department of Transportation, 4,200 miles of federal, state and state aid roads are in current need of repair. The cost to repair these roads is estimated at $1.5 billion, a cost the state has not and will not in the foreseeable future be able to absorb on its own.

Although municipalities are maintaining 13,808 miles of local roads (61% of the entire road system), they also assist the state by plowing and sanding 5,941 miles of state aid major and minor collector roads. It is estimated that statewide in 1997 municipalities spent $138 million on the roads. To offset this expenditure, since 1989 municipalities have received $19.5 million annually under the Local Road Assistance Program. The increasing costs of maintenance, repair and reconstruction of the local and state aid highway system have significantly reduced the impact of the state aid program.

Original LRAP

The original Local Road Assistance Program (LRAP), in its simplest form, reimbursed municipalities $600 per lane mile for their local roads, $300 per lane mile for seasonal local roads and $300 per lane mile for sanding and plowing the state aid (minor and major collector) roads. Under LRAP, additional responsibilities in the urban compact areas were shifted from the Department of Transportation to communities as the municipal population reached two targeted thresholds. The urban compact area of a municipality is the portion along a state highway, usually located in the downtown area, where the town is most densely populated or built up with residences and businesses.

Therefore, in addition to maintaining and improving local roads and state aid roads, municipalities with populations greater than 3,500 were also responsible for sanding and plowing (winter maintenance) the state highways located in the urban compact area. Municipalities with populations greater than 5,999 were also responsible for the summer maintenance (paving, ditching, etc.) on state highways located in the urban compact area. According to the Department of Transportation the winter maintenance on state highways costs an average of $5,500 per centerline mile and the summer maintenance on these state highways costs $7,000 per centerline mile. Despite these acknowledged costs, the reimbursement rate to municipalities was merely $600 per lane mile under LRAP.

Restructured LRAP

In order to address the municipalities’ growing involvement in Maine’s road infrastructure and the fact the state can no longer afford to maintain the state’s portion of the highway infrastructure on its own, the Department of Transportation, MMA’s Transportation Advisory Committee (consisting of 20 municipal officials), representatives from the Governor’s Office, the Joint Standing Committee on Transportation and the Legislature developed a legislative initiative that restructures LRAP. This legislation was fully enacted by the Legislature. The enhanced Local Road Assistance Program addresses the identified issues by creating an indexed funding formula, dividing the original LRAP into a rural program and an urban compact program, and creating a voluntary partnership opportunity for the state and municipalities to repair minor collector roads.

Indexed Funding

The new LRAP funding formula is indexed rather than a flat amount, and is therefore now more similar to the municipal revenue sharing formula, which guarantees that 5.1% of all income and sales revenues be reserved for municipalities. The new road funding formula is based on a percentage of the Department of Transportation’s (DOT) total transportation related budget. That is, LRAP is guaranteed to be no less than 10.4% of DOT’s highway purpose General Fund and Highway Fund allocation. This change will enable the total LRAP funds to increase as the Department’s budget increases. Although decreases in the Department’s budget will decrease the LRAP fund, a floor of $19.5 million has been enacted to protect the program.

This indexed formula further guarantees that the Local Road Assistance Program will be funded each year, a security that did not exist during the Highway Budget deliberations and negotiations in FY 1998-99 and FY 2000-01. Municipal officials will remember that in 1997 and 1998 50% of the LRAP was funded through bonds, thereby leaving the fate of this municipal aid program to the voters of Maine. Never before had this financial partnership between the state and local road programs been put out on the limb of a bond issue rather than appropriated straight forwardly out of the Highway Fund. Again in 1999, due to a $51 million gap in the Highway Fund, the funding for the municipal program was less than certain. With the package of changes approved by the Legislature, however, the LRAP formula now requires that 10.4% of the DOT’s highway related revenue be automatically dedicated to the municipal program.

Two Tiered Program

In order to more appropriately fund the work being performed on state highways in the compact areas of a municipality, the new LRAP separates funding into two programs, one of which addresses the urban compact area roads and another which addresses the rural roads.

Urban Compact Program

As explained above, once a municipality reached a population of 3,500 under the original LRAP it was responsible for plowing and sanding state highways, and when the population reached 6,000 the municipality became responsible for the summer maintenance on the state highways within the compact areas of the municipality. Under the new program, municipal participation in the maintenance of state highways that are located in the compact areas is mandatory for municipalities with populations greater than 7,499 (up from 6,000) and voluntary for those municipalities with populations between 2,500 and 7,499 that meet three qualifying criteria. In order for a municipality to qualify for the urban compact program funds it must have a population that is greater than 2,499, have state aid highways that meet the existing compact or density requirements (a structure every 200 feet for at least a mile), and be a net importer of workers. A municipality that is a net importer of workers has an employment base that hires more people than there are employees residing in the community.

This change enables a municipality with a population between 2,500 and 7,499, to determine for itself (rather than being subject to population-based mandates) whether or not the municipality, in light of the enhanced reimbursement ratio,can adequately provide and fund the summer and winter maintenance services on state highways in its "urban compact areas." Furthermore those municipalities with populations between 2,500 and 7,499 can choose whether to provide both the summer and winter maintenance, just the winter maintenance, or none of the maintenance. A municipality that chooses not to participate will continue with its current responsibilities.

The new reimbursement rate for summer maintenance on state highways is $2,500 per lane mile up to two lanes and $1,250 for each lane beyond two. The winter maintenance reimbursement rate is $1,700 per lane mile, regardless of the number of lanes. This change provides nearly $3 million in additional revenue each year to those municipalities that either choose or are mandated to undertake more road infrastructure maintenance.

It is important to note that a municipality’s decision to participate in the summer maintenance component of the urban compact program will impact the existing turnback statute. Under 23 MRSA, section 754, any municipality with a population under 6,000 as of January, 1997 is protected from being the recipient of roads from the state that are not in good repair. Under the new program, if a municipality with a population between 2,500 and 7,499 chooses to participate in the summer maintenance program, the turnback provision under MRSA 23, section 754 will no longer apply. That is, the DOT will be able to "turn back" sections of roads in compact areas, regardless of condition, to a municipality that voluntarily chooses to undertake the summer maintenance responsibilities.

Rural Road Program

Nearly every municipality will receive funds under the rural road program. This program reimburses municipalities $600 per lane mile for all local roads located outside of the urban compact areas and $300 per lane mile for all seasonal town ways. Municipalities will be reimbursed $600, an increase from $300, for plowing and sanding the state’s minor collector roads. Local road assistance revenue under the restructured rural road program may no longer be used for mere maintenance purposes. One hundred percent (100%) of the funds allocated to municipalities under the rural road program must be invested in capital improvements only.

State/Municipal Partnering on Minor Collector Roads

The Minor Collector Roads Program is a voluntary program that enables municipalities to use rural road program funds to match additional state revenue in order to make improvements to minor collector roads. Somewhat similar to the Collector Road Development Award (CRDA) program, this program creates a 33% municipal / 67% state funding partnership to repair minor collector roads in the municipality and also provides municipalities with an opportunity to administer the program if they so choose. DOT will be responsible for estimating the cost of proposed project. If any savings are retained after the project is completed, the savings will either be invested in another minor collector road project in the municipality or shared by the municipality and the state on the 33%/67% ratio. All municipal savings must be used on capital improvements, while the state savings must be reinvested in the Minor Collector Road Program. Any cost overruns will be shared on the 33%/67% ratio.

The process for accessing the Minor Collector Road Program is as follows. Interested municipalities will be required to submit a 6-year plan for repairing and financing the targeted minor collector roads within the municipality. The plan must include substantive details, which will enable the Department of Transportation to determine the state match. The plan must also indicate whether the municipality intends to administer the project. This report must be submitted to the Department before May 1st of an even numbered year.

Funding the Enhanced LRAP

Over the FY 2000-01 biennium the state aid allocation for local roads will increase by $6 million, thereby increasing the biennial LRAP allocation from $39 million to $45 million. As shown in the accompanying table, these changes financially benefit every region of this state.

In order to fund this $45 million biennial state aid transportation program the Legislature enacted a 3-cent fuel tax increase and a $2 motor vehicle registration fee increase. The fuel tax increase will take effect as of August 1, 1999. The two-dollar increase to the registration fee will go into effect on October 1, 1999. The fuel tax and registration fee increases are estimated to cost Maine drivers an average of $27 per year. Throughout the legislative debate it was the municipal position that funding improvements to Maine’s road infrastructure through the use of a fuel tax increase appropriately holds the users of the road financially accountable for the maintenance and improvements made to the system. The fuel tax is truly a user fee system.

Summary

In summary the restructured Local Road Assistance Program accomplishes the following:

• Increases the total state aid allocation to municipalities from $19.5 million to $23 million and requires in subsequent years that the program formula be indexed to 10.4% of the total highway-related General Fund and Highway Fund revenues allocated to DOT;

• Guarantees a program allocation to every municipality that is equal or greater than the FY 99 allocation;

• Increases the population threshold classifying municipalities as urban compact areas from 6,000 to 7,500;

• Creates an opportunity for municipalities with populations greater than 2,499 and less than 7,500 to voluntarily choose to take responsibility for winter, or summer and winter maintenance on state roads in compact areas;

• Reimburses municipalities $2,500 per lane mile (up to two lanes and $1,250 per lane mile beyond two lanes) for summer maintenance and $1,700 per lane mile for winter maintenance on state roads in compact areas;

• Reimburses municipalities $600 per lane mile for local and minor collector road miles located outside of the urban compact area and $300 for seasonal road miles located outside of the urban compact area;

• Requires that funds allocated for rural road miles be expended for capital purposes only;

• Creates a voluntary municipal/state funding partnership for capital improvements on minor collector roads; and

• Increases fuel tax rates by 3-cents per gallon and the motor vehicle registration fee by $2.

If you have any questions about the restructured Local Road Assistance Program or would like to see how the new program will impact your state aid allocation for roads, contact SFR’s Kate Dufour at 1-800-452-8786.