Deficit Financing for Highways?
Oklahomans may learn that tax-supported highways really are mortgaged as highly as their homes.
Although state law prohibits the state from acquiring debt without approval of the voters, there may be a way to build new highways through a mortgage-type financing, according to Transportation Secretary Neal McCaleb.
As state and federal highway construction budgets continue to get tighter, transportation planning officials must come up with innovative ways to finance new roads and maintenance and rehabilitation of existing roads.
This budget constraint has caused a lot of frustration among state motorists as they face congestion or inadequate highways.
Using deficit financing could be the way to build needed traffic arteries, especially in urban areas, McCaleb said.
Relief from this budget crunch can come from the same agency that a lot of motorists have been criticizing for years, the Oklahoma Turnpike Authority _ the folks who build high-capacity highways and then charge a toll for using them.
"We are looking into the possibility of using the Oklahoma Turnpike Authority to issue revenue bonds to build the roads, and then leasing them to the Oklahoma Department of Transportation," he said. "The annual lease payments could be used to repay the bond buyers."
This idea came from an in-depth study of the Intermodal Surface Transportation Efficiency Act of 1991, something that's been on the books more than three years and has not been used yet.
"Federal Highway Administration people have been telling us for years that we need to find innovative ways to fund highway construction," McCaleb said. "That's what we're trying to do.
"This has never been done before. If we are able to do it in Oklahoma, this would a first for our nation."
McCaleb's plan, which is still in the formative stages, calls for the Oklahoma Department of Transportation to assume maintenance of these new highways in the lease agreement.
"Since they will be new highways, there won't be any maintenance requirements for a few years, which will give us time to build up our maintenance budgets," he said.
Federal Highway Administration officials have been talking with state transportation officials from all states, showing them ways to finance their highway projects. This idea came from those meetings, McCaleb said.
"I believe the reason this has never been done before, even though it's been on the books for four years, is because it's hard for federal bureaucracy to adapt to something new," he said. "As much as we hate to admit it, most of us are afraid of change. We are much more confident doing what we've been doing.
"That's the way it is with the federal government, or in any but the most entrepreneurial private companies. People just don't want to embrace something that's not been tried and proved."
That attitude must change, though, if highway systems are to be maintained to meet motorists' needs, he said.
"As of right now, there are only a few ways to finance highway construction," McCaleb said. "One way, the way that we have chosen, is to pay as you go, utilizing cash flow. That is like someone trying to build a house out of their monthly income, adding rooms here and there as they had the money. That's the way we've gone for years.
"Another way is to issue revenue bonds, like taking out a mortgage on your house, building the facility and using it immediately, paying for it for 30 or 40 years. The state is prohibited from issuing revenue bonds.
"A third way is by general obligation bonds which require a vote of the people statewide. …