FARM BUREAU DISPUTES ROADS SHORTFALL

Missouri Farm Bureau officials say the numbers don't add up to a $14 billion shortfall in the state's 15-year highway plan.

The estimated shortfall is at the center of assumptions in a state transportation plan that is being finalized by Gov. Mel Carnahan's Total Transportation Commission.

"The $14 billion is not correct," said Charles Kruse, Missouri Farm Bureau president.

Kruse said the state should provide some solid information on Transportation Department finances before it considers asking voters to approve another tax measure.

The commission meets today and could give final approval to consultants' recommendations for a 1-cent sales-tax hike that would fund projects in the 15-year program and allow for expansion of urban transit systems.

But commission member Estil Fretwell said the advisory group has three times refused to call for the completion of all the projects in the 15-year plan. Fretwell, director of public affairs for the Farm Bureau, was the only commissioner to vote against a preliminary draft of the commission report.

For months the commission and its consultants have talked about a $14 billion shortfall in the road-and-bridge improvement program. The program was launched in 1992, when the Legislature approved a 6-cent hike in the gasoline tax. The tax was phased in over several years.

Fretwell said the Office of Administration has estimated the Department of Transportation would receive $25.8 billion in state and federal money over the life of the current improvements program. That is $1.2 billion higher than the original 1992 estimate on which the 15-year plan is based.

The higher projection includes $840 million more in state revenue.

Both the 1992 and 1997 projections cover a period of 19 fiscal years, from 1992 through 2010.

The Office of Administration projection assumes state revenue growth of 2.1 percent and the repeal of the sunset clause on the 6-cent hike in the gasoline tax. The 6-cent hike is set to expire in 2008, but the Transportation Commission wants the sunset clause repealed.

J.T. Yarnell, deputy chief engineer of the Transportation Department, said the department had projected spending for projects past 2008 with the assumption that some projects would still be under construction in subsequent years.

Fretwell said the Total Transportation Commission's consultants included an annual inflation factor of 4.5 percent in their cost estimates when actual inflation has been running at 1.7 percent for the past 15 years.

"Construction costs have remained relatively flat over the last 15 years," said Fretwell.

He said the high inflation factor accounts for much of the projected $14 billion shortfall.

Yarnell said the 4.5 percent figure includes more than inflation; it also includes added design costs and other expenses.

Before the 15-year plan was adopted, the Transportation Department typically used a 5 percent a year inflation factor in coming up with project cost estimates, Yarnell said.

He said the 15-year plan didn't include any inflation factor. He said a 4.5 percent inflation factor seems reasonable.

Administrative costs are projected to total $2.5 billion over the 19-year-period, ending in 2010. That is up $185 million from the original $2.3 billion estimate.

The Transportation Commission's consultants have recommended that administrative costs be reduced in the future and the money put into construction projects.

Jo Frappier, president of the Missouri Chamber of Commerce, also serves on the Transportation Commission. Like the consultants, he wants to see administrative costs reduced.

Frappier said the Transportation Department has its own health and retirement plans. It could be more economical for the department to use the state's health plan and retirement system, he said.

But he said the Missouri Constitution gives a lot of independence to the Transportation Department and its governing body.

Frappier said he doesn't know how much control the Legislature has over the Transportation Department.

Frappier doesn't like the idea of recommending a specific sales tax amount to the Legislature. The lawmakers would have to vote to put the tax before voters.

"I think it is presumptuous and maybe disrespectful on the part of this commission to say to the Missouri General Assembly, `You do a penny sales tax.'"

Frappier said, "It sounds like nothing, but it is a huge amount of money."

A 1-cent sales tax initially would generate $575 million in 1999, and would increase about 5 percent a year over the next 16 years, he said.

On average, it would generate about $878 million a year for transportation projects. By the final year of the program, the sales tax would generate an estimated $1 billion, Frappier said.