Inadequate Transportation Funding and the Debt it Causes

Every day we experience and read about the increasing traffic congestion and dangers on Lee County roadways. We hear the Commissioners blame others (including municipalities) for causing the congestion, telling us all the great things they’re doing to address the problem and their grandiose future plans (e.g. flyovers), creating the impression that relief is on the way.

Unfortunately, help is NOT on the way.

Each year, this County Commission tells the taxpayers of Lee County that its Transportation Plan is “fully funded.” This misleading narrative has been used by the County Commission to justify its agenda of promoting development (and even subsidizing development by slashing the collection of impact fees) without regard to whether the County’s infrastructure can handle this fast pace of growth.

This “growth without adequate infrastructure” strategy has not only created gridlock on our roadways and eroded the quality of life for all residents, it has created an ever-growing long-term transportation obligation for the County’s taxpayers, which will have to be paid through debt financing and/or additional taxes in the not-too-distant future.

Here’s the reality: Florida is one of the fastest growing states in the country and Lee County is one of the fastest growing counties in the State.

The continuing rapid growth in Lee County’s population has been projected for the past 20 years, so the County has had plenty of time to prepare for this increased population and to plan for growth and development in ways that are sustainable and most cost-effectively meet the County’s transportation infrastructure needs.

Instead, our County Commissioners moved in the opposite direction.

They took action to reduce the collection of revenues designed to meet the demands of new growth by slashing road impact fees. Historically, impact fees have represented 36% of all the funds used to build the County’s roadway network (the remainder coming from gas tax, surplus tolls, and general funds).

In 2014, the full MPO Board (made up of all members of the County Commission and representatives from each of the six municipalities) adopted the Lee MPO 2040 Long Range Transition Plan (LRTP). This countywide, long-range transportation plan made the transportation funding crisis crystal clear.

While revenues for transportation projects (federal, state, and local) were projected to decline by 26% between 2010 and 2040, our population was projected to grow by 68% over this same time period.

Lee County's Transportation Future

Declining revenues from the federal and state levels is a national problem facing all communities. Many States and counties have proactively been adopting increased gas and sales taxes to meet local transportation needs…

But not the state of Florida or Lee County.

The 2014 MPO Plan put the 20-year funding shortfall for BoCC/County approved projects at $1.2 billion (conservative estimate), which the County Commission has no plan to address except to borrow; pushing the costs onto future taxpayers while ensuring those costs will run higher than necessary (had projects been planned and paid for earlier).

How has the County managed to continue to fool the public about the transportation plan being “fully funded” over the past 6 years?

The County’s annual Capital Improvement Plan (CIP) is supposed to ensure that funding is in place when a project is first included in the CIP and that forecast revenues will be sufficient to pay for the completion of each of the projects in the Plan. However, the County’s annual capital budget process only considers the initial 5 years of project costs (often planning, design, and ROW purchase costs), not the cost of fully constructing the project.

­­­­­­­­­­­­­­All the outyear project costs are hidden from public view.

As the funding shortfall grows (due to insufficient revenues and ever-increasing project costs), more and more of the costs of the “planned projects” are pushed into the outyears (beyond the “budget window”), creating a massive balloon payment to complete the projects now underway or in the County’s approved three-tier priority plan.

Based on a preliminary analysis, the County’s proposed transportation plan for next year  illustrates the problem. Buried in the County’s April 16 transportation budget workshop PowerPoint slides is information on how the 25 priority projects on the County’s approved 3-tier priorities list will be funded (cost and timing).

In total, these 25 projects add up to a cost of over $800 million to complete. Only $234 million (less than 30%) of that price tag is budgeted to be paid during the next five years. This leaves $577 million as “balloon payment” debt outside of the 5-year budget window (i.e. hidden from public view).

(*Note: The proposed debt-financed amount – $66 million – in the 5-year capital budget has been deducted from the $300.5 million in CIP table.)

The Real Costs of Transportation Projects

Most of the 25 roadway projects are needed immediately to address existing transportation problems. But, due to insufficient revenues, only 11 of these projects will be underway in the next 5 years – and many of these projects won’t be completed until 6-10 years later (FY 2028/29). The remaining 14 projects won’t even start until 10 years from now (2029) and 6 of those projects aren’t even planned to start until at least FY 2040!

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The delays in starting the projects due to insufficient revenues mean that actual project costs will increase substantially.

Over the past 5 years, the total project cost estimates by the County for 7 major projects already completed or underway have increased an average of 38%. Assuming that rate of increase continues, by the time the projects get underway, an estimated additional $240 million will be needed. By the time all 33 planned projects are completed, they will have cost almost $1 billion – more than 3 times the projected expenditures during the next 5 years.

So, no, this year’s transportation plan is not “paid for” as the County would have you believe.

They have mortgaged our future. And this doesn’t even address the costs of new projects that will need to be added in the coming years to meet the needs of the additional 304,000 new residents projected to be here by 2040. Can you imagine the congestion on our roadways in 2040 when the County’s roadway network has been built to meet the needs of 713,900 residents (in 2018) and not the 1 million residents projected for that year?

As a result of the County’s poor transportation planning and misguided revenue policies, we are faced with three possible outcomes:

  1. Projects won’t get built and traffic will be terrible;
  2. More debt will be incurred; or
  3. New taxes will be imposed on the residents of Lee County.

So what’s the BoCC’s plan to address the immediate transportation funding shortfall? Borrow money!

Although the County is ignoring the long-term funding crisis, it is faced with an immediate problem: not enough revenues to meet even their short-term (5-year CIP window) needs. At the Board’s April 16 Budget Workshop, staff alerted the Commissioners to the need for an additional $80 to $180 million (above the $234 million available). Instead of suggesting that the County return to collecting 100% of road impact fees, they proposed to finance three top priority road projects with debt, committing future gas taxes for paying back the loans/bonds.

There are no excess gas tax revenues, so borrowing from future gas taxes means reducing the revenues needed to finance the most immediate transportation needs of that period, often the result of our continued growth.

The County is simply trying to “kick the can down the road” again.

The same way they did with “internal loans” where they borrowed from general revenues to initiate needed road projects (committing to pay back the loans with future road impact fees). In the end, the County simply wrote off these debts as uncollectable.

As Commissioner Mann likes to say, “There is no free lunch.” With transportation funding shortfalls and road impact fees constrained by county edict, that leaves the taxpayers on the hook for either money (taxes) or misery (gridlocked roads).


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