A Facebook Exchange With MoDOT

Freddie Beechwood on Tuesday, Aug 23, 2011 It's my understanding that the Highway Commission sold bonds to enable a construction boom the last several years. I read that $2.2 billion in interest will now be owed on the bonds over the next 20 years. Why were these taxpayer dollars intentionally wasted to pay interest when the commission could have stayed out of debt and used the $2.2 billion for highways?

Freddie Beechwood on Wednesday, Aug 24, 2011 Please answer. I'm a taxpayer in Missouri just like you, and we deserve to know why $2.2 billion taxed for highways will now never build or maintain anything. Can MoDOT show that it was cost-effective to borrow money to provide us with some fast projects, when the cost of that urgency will be over $100 million per year in interest for twenty years ?

Missouri Department of Transportation on Thursday, Aug 25, 2011 Hello Freddie - Constitutional Amendment 3, approved by voters in November 2004, required the Commission to sell bonds. Amendment 3 redirected the state sales tax on motor vehicles that used to go to the state’s General Revenue fund to a newly created State Road Bond Fund. The law required receipts of the State Road Bond Fund to be used to repay bonds until January 1, 2009. After January 1, 2009, the amount not needed for debt service could be used for pay-as-you go funding.

Using the new revenue for bond repayment allowed us to deliver projects immediately instead of waiting 3 years before using the new revenue. By January 1, 2009, we had collected $228 million of Amendment 3 revenue, less than we spent on the Smooth Roads Initiative alone. Bond proceeds allowed us to not only complete SRI, but make substantial progress on approximately $2 billion of Amendment 3 projects. Bond-financing allowed us to build projects faster and cheaper. We saved project inflation costs and provided much needed infrastructure improvements for the traveling public while increasing economic development.

Freddie Beechwood on Thursday, Aug 25, 2011 Thank you for writing back. I think that I understand. If costs inflated 50% since 2004, which is probably a high guess, MoDOT previously bought about $2 billion of road work that would now cost $3 billion, which is a good deal in saving $1 billion. Still, paying off the debt that made that possible will cost $2.2 billion in interest for a net loss of $1.2 billion. In my opinion, getting the road improvements a few years quicker is not worth that kind of loss of tax money, and the Highway Commission shouldn't base their spending decisions on increasing economic development, which would be very difficult to put an accurate value on.

Freddie Beechwood on Thursday, Aug 25, 2011 Please indulge me a little more. Amendment 3 was passed overwhelmingly by Missouri voters, but the ballot language only referred to redirecting the money "into a state road bond fund to repay state highway bonds", without mentioning that the Highway Commission would be authorized to sell more bonds (by more bonds, I mean bonds in addition to the "Senior Lien" bonds that the Commission had already sold and were paying back at $75 million a year, but they had stopped selling those bonds in 2003 blaming them as the reason MoDOT was dangerously low on funds). I think Amendment 3 passed because most people wanted to redirect the vehicle taxes back to highway purposes, which included repaying any bonds that were already owed, as the language implied. Regardless, the Constitution was amended, but nowhere does it require the Highway Commission to sell bonds. It only states "The highways and transportation commission shall have authority to issue state road bonds for the uses set forth in this subdivision (3)." The Commission clearly had a choice to either sell more bonds and use the redirected taxes to pay off their debts, or to simply pay off the bonds that were sold before 2004 to fulfill the amendment, leaving the extra available after Jan 1, 2009 for pay-as-you-go. I think that it's disappointing that the Commission chose the former, especially after abandoning bonds a year earlier as an experiment gone bad (they had wisely stopped at $907 million of the $2.25 billion Senior Lien bonds that were authorized). But please, tell your personnel and the media that the Commission was only authorized, not required, to sell bonds. For better or worse, the Commission made the decision - it's time to stop blaming Missouri voters for this action.

Freddie Beechwood on Thursday, Aug 25, 2011 I guess this post isn't going to be allowed on your wall since it hasn't shown up there yet. I realize that MoDOT probably doesn't want to bring attention to it's possible mistakes, but an open exchange could help me realize that I'm completely off-base if others could see this and comment. Please reconsider and allow your Facebook Friends to join the conversation. Thanks again for your participation and helpful reply to my questions.

Missouri Department of Transportation on Thursday, Aug 26, 2011 Hi Freddie- thank you for your comments. We have our wall open for posts, and I'm not sure why yours is not appearing. I am trying to find a solution in facebook's help section and will work to get this posted. I apologize for that inconvenience! We want input about funding and would like to continue more conversations about the best way to fund a system that is so vital to Missouri.

Freddie Beechwood on Thursday, Aug 29, 2011 Thank you for trying to put my post on your wall.

Freddie Beechwood on Thursday, Aug 29, 2011 Another thought that occurred to me... MoDOT tends to have a hard time admitting to mistakes. Selling bonds was apparently considered a mistake in 2003 when they stopped before selling half of all they were authorized to sell. Only a year later, Amendment 3 was passed, and with the new money available to them, MoDOT obligated every bit of it to sell new bonds, seemingly to impress Missourians with fast, major projects in the hopes that legislators and taxpayers would send new funding to MoDOT in gratitude. The new funding never materialized, and now MoDOT is paying back the bonds at about $219 million per year, which is more than they receive annually from Amendment 3 funds. So their spending money now is less than before Amendment 3. Now they fear that they are so short on money that they soon won't be able to match federal funds, so they implemented their Bolder Five Year Plan consisting of huge cuts to their workforce, equipment, and buildings. Of course, they will tell everyone that the cuts were needed regardless of their funding levels. Assuming that's true, I think if they still had the money from Amendment 3 available for pay-as-you-go (instead of using it all to pay back their debt) the cuts could have occurred gradually instead of in crisis mode. What a difference it would have made for their employees and for the people they serve. It's too late now, but at least the Highway Commission should level with everyone, and place the blame where it's due.


Use the comment form below to begin a discussion about this content.

Please review our Policies and Procedures before registering or commenting