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The Truth about Amendment 3's Redirected Vehicle Taxes

People may think that MoDOT's money problems are due to decreased tax revenue from gasoline sales and increased highway costs. That's correct to a point, but the mismanagement of state funds has resulted in much greater losses.

The ballot language for Missouri's 2004 Amendment 3 stated "Shall the Missouri Constitution be amended to require that all revenues from the existing motor vehicle fuel tax (less collection costs) be used only for state and local highways, roads and bridges, and also require that vehicle taxes and fees paid by highway users be used only for constructing and maintaining the state highway system (less collection costs, refunds and highway patrol law enforcement costs), except that up to half of such vehicle taxes and fees, phased in over four years, will go into a state road bond fund to repay state highway bonds?" The Amendment was passed by voters with an overwhelming 78.9% majority, probably because most people wanted vehicle taxes to go toward highways and repaying bonds that MoDOT had sold, not siphoned off by legislators for other purposes. But we were actually voting for more than most of us realized. Would we have had the same result if the ballot additionally said "The highways and transportation commission shall have authority to issue state road bonds"? Those words were in the full text of the Amendment, but unfortunately were not in the ballot language. I'd bet most voters didn't realize they were voting to allow more government debt when they voted in favor of Amendment 3.

After being passed in this questionable manner, the actual Amendment can now be found in the Mo Constitution. The part about bonds says "Moneys deposited in the state road bond fund...shall only be used to fund the repayment of bonds..., except that after January 1, 2009, that portion of the moneys in the state road bond fund which...is not needed to make payments upon said bonds or to maintain an adequate reserve for making future payments upon said bonds may be appropriated to the state road fund. The highways and transportation commission shall have authority to issue state road bonds for the uses set forth in this subdivision (3)."

It's clear that under the full text of Amendment 3 that the highway commission was given authority to sell bonds, but contrary to what is often claimed by MoDOT officials, it's also clear that selling more bonds wasn't required. The commission didn't need to incur new debt, but could have chosen to use the Amendment 3 money to simply pay off the bonds that were already sold before 2004, and then move any remaining money from the road bond fund to the state road fund in 2009 to start spending it on highways. They would then have had an extra revenue stream from the vehicle taxes for on-going spending on new projects. Instead they decided to sell more bonds and use the proceeds on a 5 year construction boom spending about 1.2 billion per year. It was a dream come true for contractors. They not only had plenty of high-dollar projects, but they were paid huge bonuses to finish quickly. Now the bond money is running out, and the construction program will drop to about $600 million per year. MoDOT is now repaying the bonds at a cost of $219 million a year. By the time the bonds are paid off in 2033, MoDOT will have paid over $2.2 billion in interest alone. So much for the voters redirecting the vehicle taxes to highways in Amendment 3 - it's all been blown for the next twenty years!!

If not for the new debt incurred and the premium prices paid to have their accelerated construction boom, would MoDOT's management and the Missouri Highways and Transportation Commission now be cutting 1200 of their 6300 employees, closing 131 buildings, consolidating 10 districts into 7, and selling off 740 pieces of equipment? They say its a "matter of survival". What else but their botched handling of funds could have brought a stable state agency to this point?

If I'm wrong, I'd be relieved to know it.

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