MISSOURI LOANS ILLINOIS $38.6 MILLION FOR BRIDGE

Missouri will loan Illinois $38.6 million to speed up construction of the Bill Emerson Memorial Bridge at Cape Girardeau.

Missouri Department of Transportation officials Wednesday praised the move, but the state auditor's office expressed concern about the arrangement.

The auditor, Margaret Kelly, said a recent audit of the department by her office showed that the department needs to improve its financial planning.

Kelly's comments followed the release of the state audit last week.

"Our concern was that the department with its innovative financing agreements doesn't have a sense of the bigger picture," said Frank Ybarra, director of communications for the auditor's office. "We don't see a long-term plan; we see a lot of piecemeal, short-term projects," Ybarra said.

By loaning money to Illinois, Missouri has less money to spend on other highway projects, he said.

"It is a great deal for Illinois," Ybarra said.

Illinois expects to repay the loan with future federal money that would be earmarked for the bridge project.

The Missouri Transportation Finance Corp. will loan $28 million to the Illinois Department of Transportation under a plan approved last week by the Missouri Highways and Transportation Commission. The other $10.6 million in loan money will come from the Missouri Department of Transportation's regular budget.

Illinois will repay the loan, with interest, over the next eight years. In all, Illinois will pay Missouri $43.9 million.

The state audit found that Missouri transportation officials entered into the loan agreement before figuring out how to finance it.

The Transportation Commission set up the non-profit finance corporation in August 1996 to oversee loans made through the State Infrastructure Bank. The bank is a pilot program created under the National Highway System Designation Act of 1995.

A share of Missouri's federal highway and transit money is set aside for the program, the state auditor's office said. Missouri also puts money into the loan program.

The loans are repaid into a revolving fund, which is used to finance other transportation projects.

In this case Missouri is allowing Illinois to use federal money that would otherwise have been spent on road and bridge projects in the Show Me State, Ybarra said.

But transportation department officials said the loan benefits the bridge project. "It allows the bridge to be completed three or four years earlier than otherwise," said Randy Hitt, department area engineer.

Without such a loan, the project could have been delayed, he said. "We would have just had to wait until the year 2000 to begin letting contracts," he said.

Hitt said the arrangement was unique. "I have never known of one state to loan to another," he said.

Illinois already is paying its share for construction of a bridge over the Mississippi River at Hannibal. The bridge at Hannibal is a higher priority for Illinois than the Cape Girardeau bridge, said Bill Yuskus, chief of program planning for the Illinois Department of Transportation in Springfield.

Illinois, he said, couldn't afford today to contribute to the Bill Emerson Memorial Bridge project without the loan.

Illinois wanted to wait for federal discretionary funds before moving ahead with the replacement of the aging Cape Girardeau bridge, Yuskus said. Even then, there isn't any guarantee that Illinois will receive federal funding for its share of the project within the next three to five years, he said.

Missouri wanted to proceed with construction so the loan was worked out, he said.

"It is a bigger advantage to Missouri than it is to Illinois," Yuskus said of the new Cape Girardeau bridge.

The Missouri Department of Transportation is the lead agency on the bridge project.

Construction of the $85 million span began last year. It is scheduled to be completed by 2001.

The federal government will pay 80 percent of the cost, with Missouri and Illinois contributing the other 20 percent, Hitt said.

By using the State Infrastructure Bank, the loan won't be as big a drain on the Missouri Department of Transportation's regular budget, he said.

If the department had made the entire loan from its regular budget, it would have hurt other projects, Hitt said.

"We would have had to shut down a lot of other projects just for funding on the bridge," he said.

Scott Meyer, district engineer for the state highway office in Sikeston, said the arrangement helps both states. "It helps them with the cash flow now. It allows us to gain some monies through interest out of the Infrastructure Bank," Meyer said.