Farm-To-Market Cooperative Plan Spotlight: Georgia

[This post is written as an example of the Farm-To-Market Cooperative Maintenance Plan]

Georgia's policies in regards to local government funding are a complicated issue when it comes to how they are funded.  Not only does GDOT not distribute any funding directly to counties or cities (via guaranteed annual payouts), but the ratio of state-aid to counties is still quite low.  Most local governments, in fact, are expected to raise the majority of local funding through property taxes or penny sales tax referendums, and this issue has recently become contentious since many counties are raiding funding to pay for everything but roads and/or have become completely dependent on sales taxes for both construction and maintenance.  In addition, not all counties are able to raise ample revenues through this method.  When such referendums fail, county roads fall further into disrepair since GDOT funding to local agencies does not keep pace with local funding or needs.  GDOT has also heavily cut staff and privatized many operations over the years as a means of continuing to adequately finance the state's 18,000 mile state highway system.  So where do the counties and cities turn when they want the state to turn more county roads into state highways, but GDOT refuses to do so?

GEORGIA HAS TOO MANY COUNTIES MAINTAINING TOO MANY ROADS

First, GDOT is in a complicated position.  Unlike Alabama, Georgia has far too many counties to adequately and effectively fund high-cost local government functions like roads.  Even if funding were at ideal levels, it would never be enough nor would it be cost efficient to develop a state DOT type organization with engineers and a full highway operation in every county.  Can you imagine the costs involved in paying for 159 counties to do this?  The state has also largely devolved most responsibility to counties and cities for decades with nearly 86% of the roads in the state under local control meaning higher costs for far less maintenance.

 This is why the state has so far continued to operate a grossly inefficient state highway system.  The state has neither created a plan to transfer more roadways (and funding) to local governments nor have they been willing to discuss transferring more roadways to state control.  However, the state unfortunately continues to maintain a "devolution by evolution" policy (mileage cap) since 1963 that has reduced the ratio of state control by over 5% since its inception.  States like Alabama, in contrast, have fewer, larger counties meaning that the state can afford to finance county engineers and transfer a larger ratio of responsibility to counties.  While it is not a perfect system, what Alabama has achieved would simply not be effective or efficient anywhere in Georgia thus why the regional roads plan was the first proposed alternative for Georgia.  While still a good idea, most state and local leaders are frightened by this untested idea.  They really shouldn't be.  The farm-to-market cooperative plan is a compromise for those cold-feeted politicians who bristle at the mention of consolidation of services.

Local governments are already falling short in maintenance of former state routes periodically turned to local control by the inflexible mileage cap.  This means that roads that have never been under state control are far worse in terms of maintenance funding and standards.  Much of these issues can be fixed through the Farm-To-Market Cooperative Plan.

Local governments in Georgia also have a very murky history when it comes to being grouped together for anything.  Shared service agreements are rare and have a high failure rate.  Furthermore, regional cooperation in large metropolitan areas like Atlanta is virtually non-existent.  The state has also shown no interest in relieving rural counties of maintenance as a means to improve the situation with local governments who lack sufficient resources to meet or exceed state-level road maintenance services.  However, GDOT is also well aware of the deficiencies on local roads steering federal-aid safety funding to help counties upgrade safety problems.  The state has also centralized state funding for local maintenance projects since 1978.  While these programs have helped preserve pavement quality and have done much to upgrade substandard traffic operations, they are far from enough to assure that these roads will ever meet and exceed state and federal standards.  Too many safety problems exist on local roads, and much of that has to do with the way responsibility is distributed among so many counties and municipalities for local connecting roads.

Due to mileage caps, major roads such as this one in Cobb County and even a few freeways remain under local control.  These roads often have substandard maintenance and need a more centralized approach to manage maintenance and better distribute traffic patterns.

LOCAL FUNDING DISTRIBUTION SPREAD TOO THIN

Another problem with the current system having so many small local governments is that funding distribution will always be spread too thin even with existing programs involving redistributing of state funds onto a local level.  The economies of scale are not there, the trained personnel are not there and the tremendous overhead costs for running so many local agencies is taking money away from the roads themselves.  Local governments are also in charge of 53% of higher functional classification roads (including 36% of federal-aid eligible roads) meaning that more than half of the most costly to construct and maintain roads are completely under local responsibility.  Local governments have repeatedly indicated that they lack the resources to maintain these roads and continuously rely on state grants instead of local funds to repair and maintain these roads.  These are also barriers to the creation of the proposed Traffic Control Cooperative Plan in that the operations fees required to cooperate will still be higher than what each local government agency is willing to pay.  The Farm-To-Market Cooperative Plan, however, distributes maintenance costs among the counties and cities for these remaining highways that GDOT will not accept into their own system to keep construction funding and costs local while providing the economies of scale needed to bring the remaining highways to standards comparable to GDOT.

The chart above shows that Georgia's state road responsibility falls short of federal-aid responsibility by nearly 10,000 miles.  The combined ratio of federal-aid road responsibility in Georgia comes to 21.8%.  When the mileage cap for state maintenance was set in 1963, the state ratio was around 20% leaving an unfunded mandate gap of 5% today for local governments to deal with.  While the state system could also be expanded to cover the gap, a cooperative plan could also be brokered statewide to cover these roads possibly dropping the state's responsibility so that the state responsibility is more evenly divided.

LOCAL FUNDING ISSUES AND WHY THE COOPERATIVE APPROACH IS BETTER

The chart above demonstrates the gap between the entire network of federal-aid eligible roads and the state's responsibility.  In the early 1960's, the gray area was very small, but it has continued to expand placing counties in charge of close to 10,000 miles of farm-to-market roads.  This gap needs to be filled with something other than the 159 different counties and cities within performing this job alone.

Nonetheless, simply taking over these roads as state roads is not so simple.  Georgia's local funding issues are complicated.  Funding for a full state secondary system is inadequate under current levels.  Most likely it would require either a huge sales or gas tax increase, road taxes dedicated only to roads by law and/or a substantial reduction in spending per mile on a state level on roadways of lower classification.  Of course, all of this fails for a simple and unfortunate reason: GDOT does not want to maintain hardly any roads anymore and the ratio of state responsibility will continue to drop 1%-2% every 10 years as the state continues to grow while the state road system doesn't.  While Georgia raised their gas tax significantly with a local option gas tax available to local governments, this does not take into account the issues that are present with over 600 different local agencies in charge with widely varying populations and standards.  Is enough funding available to transfer these roads to the state?  If so, would the counties and cities suffer financially for their other roads?

At most 10,000 miles could be added to the existing state highway system if the existing ratio of funding set aside for local programs was instead used to a finance a larger state highway system.  A transfer like this would leave local agencies entirely dependent on local or state-aid funding with state control ratios increased only 7.5%, but an increase in this ratio would effectively erase local access to federal-aid funding.  This would still be an unacceptable situation for the local governments across the state, however, because it would keep too much of the local system inefficiently structured as well as robbing local governments of federal-aid to maintain their remaining road system.  Unless local option gas/sales taxes became permanent and state-aid to counties and cities was expanded further to remaining local roads, this would simply not work.  This increase would also be insufficient to correct deficient local road standards on other local connecting roads.

An Alternative that Shares Responsibility for Farm-To-Market Roads

The farm-to-market cooperative approach creates a two-tiered system.  It establishes primary state routes that should always remain state-owned due to the high costs associated with maintaining them and then it establishes a farm-to-market system in which limited statewide maintenance is handled by the state DOT, another state agency or an interagency cooperative.  Preferably the arrangement is that an interagency cooperative handles road maintenance then contracts with GDOT to provide routine maintenance of state roads as a means of reverse contracting.

A farm-to-market approach should, however, include more than just federal-aid eligible roads.  In fact, this is the drawback to expanding the state highway system to cover those roads.  Local agencies in Georgia realistically need at least 35%-40% of their road system maintained by either the state or some other collective road agency allowing the road system to be distributed to the agency best capable of doing a good job maintaining them.

This chart shows the full functional classifications for roads in Georgia.  When non-federal-aid minor collectors are added in, the ratio of roads not considered functionally local climbs to 30.9%.  When considering that up to 5% of the other roads that are functionally local are built to highway standards, this means that overall that roadways important enough to be managed by an agency other than the individual counties and cities jumps to around 36%.

The main proposal describes the cooperative approach where a statewide contract is drafted and ratified by the majority of county and municipal agencies to allow resources to be combined for a farm-to-market road system.  Without state-aid, it would likely be more beneficial if entire rural road systems transferred to the cooperative, but it may also be possible to establish a financial arrangement where a group of multiple counties and cities (based on federal planning region boundaries) are relieved of direct maintenance through a multi-agency contract that does not require legislative approval.  However, this change depends very strongly on contract laws in Georgia.  If counties and cities are forbidden to make such arrangements, such arrangement will require legislative approval thus making the creation of a new state agency handling farm-to-market road maintenance more beneficial.

The Georgia roads budget (as of 2014) provides $122,470,000 for the Local Maintenance and Improvement Grant (LMIG) program or 12% of the state budget.  If the Farm-To-Market Cooperative Plan was adopted, this might affect this funding.  This is because this plan, if adopted with existing state funds, would have to come from one of three sources:

• a portion of this same LMIG funding
• a portion of the state maintenance budget
• or a small gas tax increase 

However, Georgia is actually one of the best financed road systems in the country where if overall efficiency was streamlined and road funds were not diverted to other non-road uses, the state could more than easily afford to either provide funding to a regional cooperative for operations or assume routine maintenance of a very large number of roads maintained by cities and counties.  Likewise, counties and cities have been provided adequate revenues by the state that they could afford to transfer certain roads to a statewide agency for limited routine maintenance.  The best of both worlds is a state and local funding match to make this possible.  The state funding match comes from the state providing funding for maintenance of the farm-to-market system while the local agencies remain completely in charge of capital projects.  As is evidenced by most local roads in Georgia today, those of higher functional classification are in good enough condition to become part of a farm-to-market highway network.  It is not so much that there is not enough pie.  It is that the slice is too thin to satisfy the needs of local governments.  

OUTLINE OF THE FARM-TO-MARKET PLAN IN GEORGIA

Since Georgia has, in fact, increased the gas tax it will simplify this situation.  It is time now to set aside a wider chunk of the budget to help local governments not just for road projects but also for routine maintenance.  The beauty of this plan is that it allows the system to be properly tiered so that it works more effectively for each level of government.  Its arrangement is as follows:

1. State Highways (GDOT-owned, maintained and constructed)
• These roads should be adjusted to cover only 12.5% of the highway system (ratio cap) with a proposed mileage around 15,600 miles
• This reduces state mileage by 2,500 miles effectively eliminating the majority of the state's farm-to-market responsibility so that it can be distributed to the farm-to-market system instead
2. Farm-To-Market Roads (locally-owned, routine maintenance by either GDOT or statewide/regional cooperative agency, roads constructed with local funds)
• Routine maintenance is provided by GDOT, a state farm-to-market roads agency or a regional cooperative established based on the state's 12 planning districts created as a joint effort between the planning commissions and affected local agencies
• These roads should cover all remaining federal-aid eligible roads (9.3% of the highway system)
• This system should also cover a proportion of roads not eligible for federal-aid with the combination of farm-to-market miles set at a ratio cap of 22.5% of the highway system
• This total farm-to-market mileage comes up to around 28,000 miles
• Funded with a combination of federal-aid, limited state-aid and local funding
• Sum of state highways and farm-to-market roads comes to 35% of the overall road system
• The statewide or regional cooperative may be contracted for at least some routine maintenance activities along state highways reducing GDOT maintenance responsibility 
3. Local Roads (locally-owned, locally maintained, constructed by local agency)
• These are roadways of a local functional classification not included on the farm-to-market highway system
• They are not eligible for federal-aid and are generally not constructed to acceptable standards to function as a highway
• 65% of the highway system would be classified as a local road
• Local road maintenance may be contracted to a statewide or regional cooperative, but this would be done at their own expense
• Local roads cannot be included as farm-to-market mileage even if the roads are contracted to a statewide or regional cooperative

Through this farm-to-market plan, high maintenance standards can be expanded to over 20,000 miles of roads with little to no increase in local-aid spending by the state or local agencies for maintenance in lieu of a large increase via a complete state takeover of thousands of miles of new highways.  While the transfer of around 2,400 miles from the state system to the farm-to-market system is not necessary to make this plan work, doing so will help better funnel costs to the farm-to-market system by transferring state highways of low importance to a level where they will fall under a primarily local construction responsibility.  This way GDOT will be focused only on roads they are best suited for: arterial and truck routes while other highways will not be forgotten.

Highways of low importance such as SR 255 in Habersham County would likely transfer from the state system to the farm-to-market system.  These roads have few needs beyond resurfacing and routine maintenance, which falls more in line with the plan to have the state or a statewide agency provide limited maintenance while construction responsibility is transferred to a local level.

APPLYING THE COOPERATIVE MAINTENANCE PLAN IN GEORGIA

The commitment to this program on a state level needs to be very high in Georgia.  With better revenues than either South Carolina or Alabama, the state's control ratio of only 14.3% is grossly inadequate for the needs of the state when the only alternative for road maintenance of the state's remaining roads is counties and municipalities.  As a fast-growing state with 10,000,000 people and a budget absent federal funding of more than $1 billion, local roads should not be in the substandard condition they are in.  The mileage that the state needs to take over routine maintenance on farm-to-market roads needs to be in the range of 10,000 miles up to 25,000 miles in addition to the current 18,000 miles.  This means that the amount of roads receiving routine maintenance by the state would grow from the existing 14.3% to between 22% and 35% of the highway system: more than adequate to cover every connecting road in the state while keeping the most local roads and streets directly under maintenance of county and city forces.  Let's look at how this is funded:

• At $2,500 per mile, 10,000 miles of routine maintenance are funded on the farm-to-market system requiring $25,000,000 (2% of the state DOT budget).  The ratio is 22% state/farm-to-market.
• At $2,500 per mile, 26,000 miles of routine maintenance are funded on the farm-to-market system requiring $65,000,000 (6.5% of the state DOT budget).  The ratio is 35% state/farm-to-market.
• While counties and cities will be relieved of all routine maintenance of these roads, they will likely suffer a loss of half to 2/3 of LMIG funding to finance this road system without any adjustments or funding increases made elsewhere
• In general, a new funding source such as an ad valorem tax or local taxes should be paid into the system to balance out costs with the state contributing no more than half
• This can still be funded if the state contributes nothing at all, but will require a greater local commitment and a high level of participation from local partner agencies
• Fortunately, the increase in the state gas tax will balance out these losses in addition to the local option gas taxes.  Preferably a portion of the gas tax increase should simply be set aside for this purpose.
• If some of the existing state road funds used for other purposes were returned to state road purposes, the funding for this program could be made available without any cuts to local governments or to the state-owned highway system budget
• If cuts are required, however, the state could consider a transfer of less important state highways to the farm-to-market system (with total state and state-maintained local mileage unchanged) as a means to change the funding ratio to local governments so that the local funding ratio is increased
• The state highway reduction would include a transfer of 2,500-3,500 miles from the state highway system to the state-aid local highway system to bring state-owned roads more in line with roadways of statewide function.
• Transfer of these roads to the state-aid system includes at most 1-1.5 cents of the gas tax 

Another option would be to consider a mileage-based fee to cover the costs of farm-to-market funding:

• Another funding option would be the creation of a flat fee to cover the program
• The flat ad valorem maintenance fee would be mileage fee assessed on all motorists of no more than $5 per vehicle netting a significant portion needed for state-aid maintenance depending on the agreed ratio cap. 
• All local agencies should be required to match up to 50% of funding for the program based on jurisdictional population ratio to state population ratio

EXECUTION OF THE COOPERATIVE MAINTENANCE PLAN IN GEORGIA

After adjustments to funding are made, the new farm-to-market system would begin the process of assuming control of up to 26,000 additional miles that were previously maintained exclusively by local forces.  However, local governments would still own these roads and would be responsible for funding major capital improvements beyond the routine maintenance activities defined in this program.  With statewide forces only providing limited maintenance on this system, it is still up to the counties and cities to finance everything else.

While the mileage cap could be retained for state primary routes, farm-to-market routes should be set on a ratio cap.  This means that mileage is only allowed to proportionally increase based on growth of the highway system.  This means if total mileage (125,523 as of 2013) increases to 130,000 miles then the secondary system mileage would subsequently increase from the initial 10,000-18,000 miles of farm-to-market roads to between 10,356 and 18,642 miles of farm-to-market roads keeping with the original total system ratio (22%-35%).  In addition, the system could be phased in slowly over a 2-3 year span to make sure that funding is adequate for initial upgrades.  This will also allow for adjustment of tax and funding mechanisms for both the state and local governments.

In all, roads should be added to the system in order of functional classification.  They include:

• Arterial and Major Collector Roads [9,746 miles] (7.8%)
• Non-Federal-Aid Minor Collectors and Urban Collectors [10,969 miles] (8.8%)
• Rural Local Connecting Roads [5,146 miles] (4.1%)

It should be noted in this total that unpaved or unimproved minor collector roads and collector streets in cities may be swapped for better constructed local connecting roads.  In addition, local connecting roads should only be added to the system if they are in a rural area.  Functionally local roads in urban areas should not be on the farm-to-market system.  If they are already on the system, they should be truncated to the urban boundary or removed if the urban boundary absorbs the entire length of the road.

The scope of this system as proposed is shown below with specific rules that make sure that farm-to-market mileage is only used on the roads that need it the most.  Additional criteria for rural local connecting roads is shown in the list below:

This chart shows proposed criteria for establishing road priorities on farm-to-market roads

WHAT ABOUT JUST TAKING OVER THESE ROADS AS FULL STATE-OWNED SECONDARIES?

The main purpose of the Farm-To-Market Cooperative Plan is to relieve counties and cities of direct maintenance duties on all higher functional classification roads by consolidating management and costs for those roads under fewer agencies with a more engineer-driven approach.  While cost savings will certainly be realized, it is the creation of higher standards at little to no cost increase that is the advantage of this approach.  In addition, applying a cooperative approach to this plan means local agencies are not required to follow state standards for construction activities, local funding levels remain high enough to preserve local investment and local control is retained.  While this will help counties, especially rural, save money and have better local road standards it does not completely relieve them of the responsibility for these roads.  A full state-owned secondary road system with only construction responsibility given to local governments is more ideal, but it will take at least one of two things: all transportation funding dedicated to transportation and/or a new revenue source.  While the new revenue source is available with high local taxes, an increase of federal-aid or political will to transfer a greater percentage of funding to state system expansion will be required, and this plan minimizes the required investment for that purpose while maximizing the mileage that can be placed on such a system.  It also creates a means to have an agency on the same functional level as the state provide limited maintenance on roadways not eligible for federal-aid since they will not be responsible for larger costs involved.

If the present funding was used to create a secondary state system, it would require a huge new financial commitment for the state, and the major funding source they would need is currently entrusted to counties: sales taxes.  For 28,000 miles of additional state-owned secondary state roads, between $224,000,000 and $280,000,000 would be needed for a funding of $8,000-$10,000 per mile.  For 40,000 miles, that number would jump to $320,000,000 to $400,000,000.  Based on the current budget, this would increase the state financial responsibility for these currently local roads from the current 12% to between 22 and 40% with nothing left over for local governments.  This would also cut deeply into funding for new road construction considering that this amount will demand a quarter to nearly half of the funding made available through the tax increase.  Either way, this would be a huge new cost for the state although costs could be offset through better cost efficiency, federal-aid payments or higher taxes.

Much lower costs per mile are not the only advantage of the Farm-To-Market Cooperative Plan.  A full-scale secondary state highway system has its challenges.  These problems include:

• A diversion of a much higher percentage of taxes away from road projects to maintenance which will require an even greater financial commitment from the state to fund
• A loss of federal-aid funding to local agencies
• A complete loss of local control to all but roadways of low importance
• Georgia has to taken on many more miles than the state maintains currently
• State responsibility may include roads that are not eligible for federal-aid funding
• Cities will lose control of major roads through historic districts unless gaps in these routes are created or complicated concessions are made with the state

Overall, cooperation between agencies in Georgia has a poor track record.  With urban planners frequently pushing for more control over the design of urban corridors, this means that fewer roads in built up areas like this will be able to be state maintained.  GDOT will also fight this plan due to the added liability of completely owning these roads.  With far more limited responsibility by local governments, local investment on remaining roads will be weak meaning that either local road standards may ultimately become worse and/or local roadways will be overbuilt.  Many counties in Georgia will also need the option to transfer much or all local maintenance to the state due to the excess costs of operating a local street department coupled with greatly reduced revenues to maintain them.  

Most of these issues evaporate when GDOT has limited to no responsibility for otherwise centralized farm-to-market roads.  While GDOT may ultimately be contracted to provide limited routine maintenance to farm-to-market roads, the use of a separate state agency or an interlocal cooperative of all of the counties and cities across the state could make this possible without GDOT playing any direct role.  In fact, very little state-aid may be required at all in comparison to if the state took over those roads.

This strategy presents a balanced approach largely working within existing funding where local agencies are largely relieved of road maintenance duties on a very high number of roads while retaining powers to plan and finance construction.  This is why maintenance functions are limited on this system so that counties and cities can still plan and use the greater portion of available funding on capital projects while sharing costs for routine maintenance as a means of creating higher efficiency and better road standards through a single agency funded jointly.  It is hoped that this strategy will bring the quality and balance that Georgia needs to truly have the best maintained road system.