Friday, January 16, 2015

The absurdity of "starving the beast": stealth devolution by refusing to raise statewide revenues

USA Today posted this article in April 2014 about the fast-growing devolution trend.  The first question begging to be asked is, "Where is the opposition?"  Surely somebody supports keeping these large state maintained road networks in place or expanding the state's role?  Why is there this newly found trust of local government?  Since when did local governments of small means and population have the means to supervise large scale maintenance and infrastructure projects?

Even the local governments themselves don't want to have to take over thousands of miles of state-owned roads knowing it will swallow up a very large percentage of the county budget.  These counties also know that unless they have a very broad tax base they're not going to be able to do what the state did even at their worst.  Why does nobody see the benefit in consolidating the road responsibility under a larger statewide or regional agency who has the proper staff and resources to make sure that consistent road standards are found in both urban and rural areas and that costs are managed in such a way that work actually gets done?

History has shown that these unfunded mandates also mean a virtual guarantee of lower standards.  This means unsafe roads.  Local agencies are given two choices: higher taxes or lower standards.  The history of local control in the South shows that lower standards win when a small tax base is coupled with a very inefficient system.  The last time that devolution fever swept the country to this level was in the 1970's citing oil shocks and stagflation as an excuse.  This time a similar tactic is being employed, except that this time it is quite simply a refusal by state governments to raise adequate revenues to do what they always did before.

Yes, nobody likes taxes but with roads you will pay one way or another.  It is not cheaper to give the responsibility of one government agency to hundreds!  The problem is that these states would rather drive up costs significantly on the local agencies, pass the buck (literally) and do a one time large payment to repave the road before dumping them on the counties for good.  This was bad policy in the late 70's and it's still bad policy today.  Better ways are available to handle this, but none are being considered by the state legislators.  The local control bandwagon is a runaway train prepared to take the quality of more of the nation's roads off of a cliff.  This bandwagon can be stopped and put on the right track with smarter policy reforms than the proven failure known as devolution to counties and municipalities.

Commentary on article:

The USA Today article describes the effect of devolution on Beaufort, SC.  This article is odd because it is mentioning cities instead of counties who usually are the least interested in state meddling in their domain.  The issue here is more with counties than cities who stand to lose the most when it comes to devolution of secondary roads to counties.  Cities like Beaufort should be offered a different approach with city maintenance agreements where they can use funding from the state or their own resources to have state forces maintain their streets for them without actually owning the roads.  That way the city has leverage to build roads to their own standards but have state forces do the nuts and bolts maintenance for them.  This was one of South Carolina's major mistakes: instead of adopting the North Carolina or Virginia system they just added roads across many jurisdictions randomly into a crazy patchwork of secondary state highways that did not promote adequate efficiency or real need to continue to operate without substantial revenue increases.  Virginia, in contrast, took a more hands-off approach with cities allowing only small population towns to contract with the state taking a reverse approach with cities.  Cities in Virginia are required to maintain both state surface roads and local streets.  While not a perfect system, it is still more efficient than duplication of services.

The article also mentions that North Carolina, Texas, West Virginia and other states have tried devolution tactics.  In other words, they want to dump a bunch of roads on individual cities and/or counties that are neither financially nor structurally prepared.  However, they want to sweeten the pot by giving them a one-time handout so that they'll shut up and never mention secondary roads again.  States have been successful at forcing roads on the counties in the past, but the quality of those roads noticeably declined the second the deed was signed over.  However, some high population counties have ultimately recovered such as in many high population urban counties in Florida.  These exceptional counties with populations of small states, however, should not be used as a case for devolution.  If devolution is to be done, it can be replaced with more sensible solutions such as local agencies hiring back state forces, statewide or regional cooperatives and, if nothing else, creating a separate state agency that splits the responsibility for farm-to-market and local roads from major highways.

Essentially this is an era of white knuckled fiscal conservatism, and a bunch of mostly conservative states have decided that instead of taking a risk by making sure that enough revenues are raised to pay the bills, they will just play the more safe political route by passing the cost onto counties who will ultimately charge a lot more for a lot less work.  Texas, mentioned in the article, has 27% of their roads under state control and is routinely rated one of the best state-maintained road networks, but they'd also rather pass the cost to the counties and cities who clearly are by no means financially prepared for the job.  In Texas's case this is even worse considering that the farm-to-market roads they are looking to turn back are maintenance-only roads that require local governments to fund capital improvements thus a small cost on the state compared to rural roads.  Most county roads in Texas are severely substandard even in some larger metropolitan areas similar to how they are in many other Southern states.  The state-maintained systems all work just fine as intended as long as they aren't starving them for funds the way South Carolina has, but they'd rather not have the responsibility or liability.  

We also tend to suspect a motivation for more local control so that the liability involved in maintaining to proper standards can be bypassed.  Roadway standards are almost never enforced on a local level the way they are on a state level, and there is far less money, equipment or resources for proper safety improvements.  If counties and cities were held to the same standards as states are, you can bet that the majority of counties and cities would be screaming for the state to take over their roads.

Maybe Texas should look into the regional approach presented here, which will be a periodic theme with throughout this site as different maps will be created carving up states into regions.  As such a large state with such a large population, a regional approach would be very effective since most regions would rival many states in size and population.  Placing farm-to-market and ranch-to-market roads under regional responsibility and expanding that responsibility so that more roads are farm-to-market than what TxDOT currently offers would be far better than just burdening local governments with tens of thousands of miles of roads that they can't afford.

The main focus of the article, however, was South Carolina.  While South Carolina's road plan correctly was designed to improve planning statewide, its use for political power purposes was only partially true.  This was a progressive-era plan that was championed by then-governor James F. Byrnes who was a proponent of the Good Roads Movement.  Unfortunately the proponents of this movement are all dead meaning that they are not here anymore to either explain why they did it nor argue against devolution.  He probably liked North Carolina's system, but was afraid of political fallout from having a sweep of all the county road agencies into a single state agency.  Remember that it was 1952 instead of 1932 with the depression long over.  In other words, the risk was less calculated in North Carolina and Virginia since both states at the time had a single-term governor system with a clear mandate to rescue destitute local governments at the height of the depression.  The strategy employed then was also to have the state take over these roads only after they were brought to state standards.  Because of the 20 year difference, Governor Byrnes let the system grow slowly.  Unfortunately, the legislature did not respond by adjusting the tax structure accordingly nor did they ever finish the job of taking over remaining county roads as-is.

SCDOT spokesman Pete Poore was quoted in the article suggesting that the system they have is a relic of 1930's and 1940's politics and does not relate to life in the 21st century.  This is an absurd argument.  It can basically be translated to "Because this system was set up before my time and it's not the way that every other state does it, it is thus archaic and unworkable and thus should be replaced with an even more archaic, inefficient and unworkable system called "local roads" that doesn't save any money but makes it look like the state is keeping your taxes low and takes the liability off of us".  Absolutely no imagination is applied to this argument, and the state is only giving counties and cities a leaky boat.

Beaufort then states that that if they took over secondary roads they simply need more money and that they should do exactly what they want.  Wrong answer, Beaufort.  It's not that you need more or less money.  You just need the system to work as it is intended and make it work better.  You're saying "if you give us more money, we'd be glad to take on the roads".  That's going to cost you, and the roads will not be any better.  It's time to reform your argument.  If you want to take over the roads, incorporate it into a unified statewide strategy to provide something equivalent to what SCDOT provided for years.

The article then goes on to talk about a loss of interest by state governments in keeping up large state road systems stating the often abused 19% nationwide figure.  If everybody else jumps off a bridge, should these five states do the same?  This is a logical fallacy just because most states weren't willing to adopt the North Carolina plan in the 1930's.  The only reason these states did not adopt the plan was because at the time counties were stronger and less willing to give power to the state government.  They even noted at the time that North Carolina's roads greatly improved by adopting that system.  Instead of adopting the archaic and broken county model of road maintenance, why not try something new such as regional roads, statewide cooperatives or separating the secondary system into a separate state agency from SCDOT with a better local funding mechanism?  Why not have the state maintain all county roads in exchange for counties taking back literal ownership?  Nothing like that seems to be on the table.  All or nothing is the only game in town.  The winners?  Short-sighted South Carolina politicians.  The losers?  South Carolina motorists and local governments.  

The article states what is already known in that states took over county roads because they weren't building enough roads or weren't maintaining them well.  The problem is that they still don't maintain them adequately except in less corrupt or higher population counties.  Nothing changed except the view from the top.  The state DOT's don't want the liability for the roads and the state legislature doesn't want the price tag.  This might sound fair enough if they plan to hold the hand of every county and city, but history has shown that is not the case.

The article also states how these large state road systems are a drain on state resources.  In this they are correct, but where else is the money coming from?  The only other option counties have independent of statewide legislation is property taxes.  While the states are probably too big to handle it themselves, the states took them over in the first place because the counties were too small and poor to handle it alone.  This is still true today in the majority of South Carolina counties, but unfortunately most states have shown no interest in local government reform.  Unless the states want to redraw county boundaries so that each state has huge, high population counties with deep tax bases then either the state is going to have to stay involved or a regional approach to local control is going to have to be considered.  The article also states that states own portions of local roads that were added long ago because of political reasons.  This is true in pretty much any state that has a state road system.  No system is perfect and a powerful politician usually can wrangle at least a few miles of roads into places state roads are not needed.  This is evidenced by the lopsided Georgia highway system where in a few parts of the state where powerful politicians resided saw far more roads added to the system than others.  About the only solution to that is to have only the most bare bones state highway system consisting of 8% or less of the roads.  The downgrade planned of the system to 34% will not get rid of all political roads, but it will ramp up costs for the counties.  At that ratio counties will still be too underfunded to do a very good job with these new "county" roads that they had no hand in building.  

It is also true that inflation and better vehicle fuel efficiency are stripping states of a solid revenue stream.  However, the real problem is that a fiscally conservative, anti-tax approach is part of why revenues are drying up.  Any state road system is only going to work as long as revenues are sufficient. Starving the beast is going to kill it not make it lean.  Even states like Michigan and Minnesota, both which have very small state highway systems, are having real trouble raising adequate revenues.  State control is not the issue.  Money is. 

The article quotes a representative from the National League of Cities stating that local governments are being stuck with roads they neither chose to build nor given the money for them.  If that's the case, shouldn't these roads be maintained by the state or a regional entity with enough resources pooled together to be able to manage them efficiently and effectively?  A county with 12,000 people should not be on the hook to maintain a road built to state highway specifications complete with expensive to maintain roadway features.  If they are given enough money to do it, it will cost more in taxes than if it's handled by another higher population county or regional government with at least 100,000 people.

States are also turning into salesman trying to "pitch" local control to city and county governments such as the TxDOT turnback program mentioned in the article.  If instead counties and city road agencies could be grouped into regional or statewide cooperative highway commissions, turning these lower maintenance roads down from the state system might make sense.  Texas has the highest number of counties in the country along with the largest land area.  Having 50-70 regions instead of 254 counties handling at least the farm-to-market roads would be more beneficial than dumping them on counties that in many cases have populations under 10,000 residents.  Likewise having 1-2 agencies handling 46 counties in South Carolina makes much more sense than assuming that every county is the same with the same capabilities.  Since regions are not an actual government jurisdiction they can also have authority to maintain these city streets now under TxDOT responsibility.  Until then Texas should just stick to their commitment to maintain 1/4 of the state's roads.

The article mentions that West Virginia was proposing local funding mechanisms that did not require devolution.  At least West Virginia gets it that regional cooperation for funding makes more sense than a big dump on counties and cities.  West Virginia's entire state population is very low meaning that the counties can hardly afford to take on what the state does for them.  WVDOT is struggling to maintain what it has, but with a lower population and more consistently rural population they are able to do it more effectively than fast-growing North Carolina and Virginia.  

Fortunately, the article makes mention of the other problem being too much local control.  That's what devolution creates with roads: too much local control.  The article cited New Jersey counties and townships struggling to fund roads after the rough winter of 2013-2014.  Indeed, New Jersey also has a major issue with townships, and this fragmentation of local responsibility has resulted in very high local property taxes and very inconsistent standards.  As another inefficient means of maintaining roads, road responsibility should revert to either regions or counties with townships primarily taken out of the road business.  Costs could be far lower when authority is centralized into high population counties.  New Jersey is one of the most populous states in the country and their 21 counties typically have populations that well exceed 100,000.  By just using county government alone, the regional concept would work very effectively with the few counties who are under 100,000 residents partnering with the higher population counties.  This is why most county roads in New Jersey are often better maintained than in other states because they do have such high populations and responsibility, but those benefits do not expand to townships or to the lower population counties.

In all, this article helped to highlight the real issues that local governments face and why states are giving them a raw deal.  It is time that we re-evaluate our approach to how we handle roads instead of simply thinking that starving the beast and forcing counties and municipalities large and small to shoulder the burden is some sort of forward way of thinking.  Are they honestly suggesting that the whole Good Roads Movement was a mistake?  Authority for roads other than counties did not exist before 1920, and states took that role in varying degrees because local government was not a reliable source for efficiency, construction standards or long-distance travel.  While this article in no way is suggesting the complete removal of state authority, it is assuming that a "county" road is a pretty little tree-lined one lane country road.  The fact is that on average 24% of every state's road network is eligible for federal aid with a further 5% designated collector and often built to highway standards.  Most small local agencies really don't have the revenues to keep up roads like that.  We need to either re-think our approach to local government or resist devolution as a "solution" to funding problems on a state level.  

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