Rough Road Ahead

January 17, 2016

Written By Adam Buckallew

Rural Infrastructure Repairs Needed

Farmers in the United States are faced with losing one of their most valuable competitive advantages over foreign competitors if drastic improvements are not made to the nation’s deteriorating network of roads and bridges.

A growing list of reports have detailed the worsening condition of America’s rural transportation system and emphasized the need for long-overdue repairs and upgrades to the backroads and bridges in the Heartland.

According to TRIP, a non-profit national transportation research group, 15 percent of rural roads in America were rated as poor as of 2013 and another 39 percent were reported to be in mediocre to fair condition. In 2014, 11 percent of rural bridges in the United States were rated as structurally deficient and 10 percent were functionally obsolete.

In its 2013 report card, the most recent, the American Society of Civil Engineers (ASCE) gave U.S. roadways a D on an A to F scale and the nation’s bridges a C+.

These facts make it clear that America’s highways and bridges are aging, underfunded and inadequate to meet the demands placed upon them today, much less in the future.

Essential Infrastructure

The rural transportation system provides the first and last link in the supply chain from farm to market. When it weakens, the farm economy suffers.

“America’s rural transportation network plays a key role in the success and quality of life for U.S. farmers and ranchers,” said Bob Stallman, former president of the American Farm Bureau Federation. “Adequate roads and bridges are necessary to deliver our agricultural bounty…but deteriorated and deficient rural roads and bridges are hindering our nation’s agricultural goods from reaching markets at home and abroad and slowing the pace of economic growth in rural America.”

If any state knows the challenges of moving large volumes of agricultural commodities over aging roads and bridges, it is Iowa. The state is one of the world’s leading agricultural centers—producing more corn than all but three countries. Unfortunately, the state’s surface transportation system is also one of the worst in the country. Iowa has the largest inventory of structurally deficient bridges in the nation with 5,022, or one out of every five bridges in the state. Additionally, 58 percent of the rural roads in Iowa are rated to be in poor to mediocre condition.

Bridges are considered to be structurally deficient when they exhibit signs of significant deterioration of the bridge deck, supports or other major components. Structurally deficient bridges are often posted for lower weight or closed to traffic, restricting or redirecting large vehicles, including farm equipment, commercial trucks and emergency services vehicles.

The problems with Iowa’s roads and bridges are sadly common throughout the country, including many of the states where MFA Oil does business. Poor pavement conditions on rural roads are prevalent in Kansas (30 percent), Oklahoma (27 percent), Missouri (21 percent) and Arkansas (19 percent). Both Oklahoma and Missouri join Iowa in the top 10 states with the highest percentage of structurally deficient bridges at 19 percent and 15 percent, respectively.

These conditions negatively affect the connectivity and capacity of the Midwest’s rural transportation network, making it more difficult for farmers and companies that supply farmers and rural residents, like MFA Oil, to efficiently transport goods.

A Lack of Investment

Missouri’s decrepit bridges are a prime example of what happens when infrastructure is not properly cared for and replaced in due time.

Roads and bridges are designed with a defined span of time in mind for which they are meant to be used. In Missouri, the average age of the state’s bridges is 46 years, and most of them were designed to last 50 years. Currently, 60 percent of Missouri’s bridges are beyond their original intended life.

The Missouri Department of Transportation (MoDOT) website paints a bleak outlook for bridges within Missouri, stating, “We currently have 866 bridges that have been rated ‘poor’ by the Federal Highway Administration. Each year about 100 bridges fall into the ‘poor’ category, and we fix or replace about 100. The number of poor bridges in Missouri, though, is rising steadily as we struggle to hold our own. We can only stretch our dollars so far, and must prioritize our work. The stark reality for bridges in our current funding situation is that more of them will be weight restricted, some will need to be closed, and the economic vitality of our state and mobility of our citizens will be compromised.”

In recent years, MoDOT has been forced to slash its workforce by 20 percent, shutter numerous facilities and sell off equipment because it has only about half the money it used to have to take care of the state’s transportation needs.

“Missouri has the seventh-largest highway system in the nation, but ranks 47th in revenue spent per mile,” said Roberta Broeker, chief financial officer for MoDOT. “That kind of underinvestment has consequences, including an impact to safety and economic growth. While we are committed to do the best we can with limited resources, we know the condition of our system will deteriorate without additional investment.”

Allowing roads and bridges to slip into disrepair ultimately costs states and local governments billions more than the cost of regular, timely repair. Over a 25-year period, deferring maintenance of bridges and highways can cost three times as much as preventative repairs. The backlog also increases safety risks, hinders economic prosperity and significantly burdens taxpayers.

According to a 2015 report from the American Association of State Highway and Transportation Officials, the current backlog of improvements needed to fix the country’s roads, highways and bridges would cost an estimated $740 billion.

Local Issues

The burden of maintenance for 45 percent of U.S. roadways falls on the 3,143 counties and county-equivalents in the United States.

This has created problems for rural counties dealing with declining populations and a shrinking tax base, said Bob Fox, a county commissioner from Renville County, Minn.

Fox, who is also vice-chair of the agriculture and rural affairs steering committee for the National Association of Counties, spoke about the challenges county governments face at the Rural Infrastructure Summit hosted at Iowa State University in August.

“Counties rely on local revenue sources such as property taxes and local option sales taxes to make infrastructure work,” Fox said. “A few years ago, we bonded for $12 million (to pay for transportation projects) because our board could not wait any longer for state or federal help. It’s a tough decision for a board to bond for $12 million when you have a population of 15,000 people, but the job needed to be done.”

Rising construction costs that are increasing at a rate greater than general inflation compound the issues counties deal with as they attempt to finance upgrades to their roads and bridges.

“A few years ago, we could rebuild a mile of roadway for $300,000,” Fox said. “Last year, we finished four miles of rebuilt road at just shy of $1 million per mile. Some rural counties just can’t afford these expenses.”

Fox attributes part of the problem to “federal and state partners pushing the can down the road,” which leads to funding shortfalls and projects becoming more expensive.

Trump’s Plan

When President-elect Donald Trump delivered his victory speech in the early morning hours of Wednesday, Nov. 9, he highlighted a number of issues he hopes to address while in office. The first priority he cited was the sorry state of the country’s infrastructure.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump said. “We’re going to rebuild our infrastructure, which will become, by the way, second to none.”

Trump frequently panned the state of U.S. infrastructure during his presidential campaign and vowed to spend nearly $1 trillion on transportation projects to address the issues.

“We have roads that are collapsing, we have highways and bridges and tunnels that are in a horrible state of repair,” Trump told his supporters at a campaign event in September.

While many of the details of Trump’s plan to upgrade the nation’s transportation systems have yet to be released, it is expected his infrastructure plan will have a prime place on his agenda for his first 100 days in office.

The biggest question surrounding any infrastructure spending bill is, of course, how it would be financed.

Congress routinely decries the pitiful state of U.S. roadways and bridges, but has yet to put together a long-term plan to fund improvements.

Last year, Congress passed its latest federal funding authorization for surface transportation—Fixing America’s Surface Transportation (FAST) Act—which allows an average of $56.2 billion per year of federal funds for highway and transit programs through 2020. Though this represented a 7 percent increase over the prior federal program for highway and transit programs, it barely keeps up with inflation and essentially keeps the federal transportation funding level close to flat.

In its 2016 “Failure to Act” report, ASCE noted federal gasoline and diesel fuel tax rates, which fund the national Highway Trust Fund (HTF), haven’t been increased since 1993.

“Economists say the revenue now buys less than 60 percent of the surface transportation infrastructure it bought in the early 1990s,” the report stated. “Worse, even after the passage of the FAST Act last year, total user fees and taxes going into the HTF are expected to provide only $38 billion a year while spending from the fund will run about $54 billion a year.”

Don Young (R-Alaska), former chairman of the U.S. House of Representatives Transportation and Infrastructure Committee, told Politico he would hike the gas tax to pay for transportation projects, and he faulted both his own party and President Obama for blocking it in past years.

“There’s no pie in the sky, no magic wand,” Young said. “We have to pay for it.”

Fixing Infrastructure Funding

Whether through a tax on fuel or other means, it is clear something must be done to address the lack of funding for infrastructure in the United States.

Patrick McKenna, director of MoDOT, has suggested raising Missouri’s vehicle licensing fees or the 17-cents-per-gallon gasoline tax, which have not changed since 1984 and 1996, respectively, to increase his department’s budget.

Missouri has one of the lowest fuel taxes in the country, and the purchasing power of the state’s gas tax has eroded over time with inflation.

In January 2016, McKenna told the Jefferson City News-Tribune, “The view that I have is that moving toward a sustainable solution—even if that means taking steps to get there—we should be supportive of those.

“It’s really important to take the first step… There are very substantial needs when you have 34,000 miles of roads to take care of and 10,400 (state-owned) bridges….”

The state of Iowa has made recent strides toward addressing its crumbling roads and bridges. In March 2015, Iowa increased its fuel tax by 10 cents per gallon, which is expected to add more than $200 million in additional revenue for critical road and bridge projects in the state.

“It took 13 years of hard work to make the case for increased investment,” said Stuart Anderson, director of planning and programming for the Iowa Department of Transportation, during a panel at the Rural Infrastructure Conference. “This additional revenue is being put into the system as we speak, and local governments get a large portion of that funding to improve rural roads and bridges. This year (2016) will be a record year for construction in the state.”

Exactly how crucial infrastructure improvements in Missouri and other states will be paid for in the future remains a mystery, but the proverbial can may be kicked only so far down the road.

MFA Oil supports lawmakers at the state and federal level who are working to find a practical solution to the nation’s infrastructure issues.

“We support common-sense tax increases with designated funding for road and bridge improvements,” said James Greer, MFA Oil vice president of supply and government relations. “We need reliable routes to effectively deliver fuel and propane to our farmer-owners.”