Government

Financial hit on Iowa's road fund not as bad as feared

State not seeing need to delay bidding out road work projects

The Interstate 80 to Interstate 380 interchange is seen from above in Iowa City on Wednesday, Dec. 11, 2019. (Andy Abeyt
The Interstate 80 to Interstate 380 interchange is seen from above in Iowa City on Wednesday, Dec. 11, 2019. (Andy Abeyta/The Gazette)

DES MOINES — While Iowa’s transportation revenue has been reduced with less driving during the COVID-19 pandemic, state planners say the negative impact has been less than feared and they likely won’t delay highway improvements and other construction projects they expected to complete during fiscal 2021.

Receipts that flowed into the state’s road-use fund from June 20 to Oct. 20 from state taxes on fuel, vehicle registrations and car sales were about $40 million below the $744 million the state Department of Transportation had projected for that period, said Stuart Anderson, director of Iowa DOT’s planning, programming and modal division.

While the state’s share is running about 4 percent down from last fiscal year, the drop is nothing like what department officials feared shortly after the coronavirus pandemic hit Iowa in March and Gov. Kim Reynolds’ emergency shutdown order caused a 40 percent drop in traffic on Iowa roads.

“Back in the spring when all this started, we really had a lump in our throat,” said Scott Newhard, a spokesman for the Associated General Contractors of Iowa. “But as time progressed it wasn’t as bad as we thought it was going to be.”

Since then, Anderson said, overall vehicle traffic on Iowa roadways is about 90 percent of its normal volume, while commercial passenger numbers at Iowa airports are only about 35 to 40 percent of normal, although recent weekly numbers from the Transportation Security Administration have crept closer to 50 percent.

The decline in state aviation fuel tax has reduced the number of state-funded projects, but Anderson said the improving vehicle travel numbers has enabled transportation officials to proceed with plans to let highway construction projects that had been temporarily delayed.

“We did delay putting some projects out for bid just to make sure we had enough funding to get through the construction season without impacting any projects that are underway,” he said. “We feel like now that it is not as negative as we feared originally; that we will be able to go ahead and put those projects out for bid this year.”

Overall, Iowa DOT officials forecast state collections into the road-use tax fund in fiscal 2021 would total about $1.766 billion by June 30, 2021. While fuel tax receipts are lagging slightly, Anderson said, vehicle registration fees have remained steady and a high demand for used vehicles has offset a drop in new car sales.

“While we don’t like to see a reduction in the road-fund receipts, this is not as dramatic as other states have faced,” said Newhard, who praised Iowa officials for not relying solely on fuel tax revenue to finance transportation needs. “We’re dealing with realities of (the COVID-19 pandemic), but we’re not stymied by this so that’s a good thing.”

According to the Iowa DOT website, road-use tax fund money is distributed by formula with 47.5 percent going to the primary road system, 24.5 percent to secondary county roads, 8 percent to farm-to-market county roads, and 20 percent for city streets. That would mean the $40 million reduction is roughly split evenly among state and local governmental entities.

“While we were prepared for a more challenging situation, fortunately, at least on the highway side, the revenue has bounced back although at a lower-than normal level, Anderson said. “But we’re still able to proceed with our program pretty much intact.

“Forty million dollars is significant but it’s not as significant as we had expected or feared early on in the pandemic, so that’s actually significantly better than we had originally feared when we saw traffic drop by over 40 percent in mid-April,” he added.

Iowa DOT officials are monitoring the transportation numbers closely and could have to revisit the five-year plan recently passed by the Iowa Transportation Commission if the trend toward reduced vehicle traffic persists for an extended period, Anderson said. Also, discussions at the federal level over another COVID-19 stimulus package could provide funding to “backfill” lost revenue at the state level, he noted.

That five-year plan includes modernizing Iowa’s highway system and enhancing safety, though more than half the money over the next five years will be spend on rural projects.

A small share of transportation program funding comes from the state’s Rebuild Iowa Infrastructure Fund, which is funded by state gaming receipts also hit hard by the pandemic. The fiscal 2020 funding of $6.9 million has been cut to $3.65 million for things like the state recreational trails program and infrastructure programs for airports, public transportation and rail.

Comments: (515) 243-7220; rod.boshart@thegazette.com

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