Friday, November 6, 2015

Statewide Contracting Plan Spotlight: South Carolina

[This post is written as an example of the Statewide Contracting Plan]

South Carolina at present is not exactly coming up with bright new ideas to fix their crumbling and underfunded road system.  While they seem to have continuously moderated their stance on sweeping devolution, perhaps if devolution was handled in the correct way it might work.  If SCDOT scales back their road system to 35-40%, who is to say they won't come back five years later and end up getting rid of the remaining secondary roads?  Regardless of the outcome, maintenance of secondary state roads should not directly transfer to the local governments.  This spotlight explains how.


South Carolina's secondary state highway system has been chronically underfunded for years and is in danger of transfer to the 46 counties, but those 46 counties do not have to simply accept this transfer.  This spotlight provides two possible scenarios that the counties could pursue under the Statewide Contracting Plan

Either way that the state goes, at least 2/3 of the counties and the majority of cities across the state aren't prepared to take on more responsibility.  While the other 1/3 of the counties enjoy high enough populations, a growing population and a solid tax base, the fact is that none of these counties have had experience maintaining major roads.  As seen from our previous spotlight on a county in Northern Alabama, counties can't exactly be trusted to do a good job whether the money is there or not.  Counties in Alabama receive around 20% of the state's gas tax, many have local option sales taxes and all have county engineers yet the roads are still undeniably substandard.  Likewise, this will also be the case when these 18,000 miles of state secondary roads transfer to local control in South Carolina.  The price for smoother pavement should not be shoddy construction and lower engineering standards.

HOW A COMBINATION OF TWO STRATEGIES CAN FIX SOUTH CAROLINA'S ROAD SYSTEM

South Carolina's secondary roads are structured as a very large farm-to-market highway system.  While South Carolina's road system could be reorganized according to the rules in the Farm-To-Market Cooperative Plan, the problem with this is that it would still result in a huge mileage dump on counties and cities because the parameters under that plan are much lower.  Ratios of statewide authority under that plan range from 25-40%.  South Carolina, however, is in a unique position having 63% of its roads under state control, so it makes more sense to consolidate those remaining roads in rural counties under a single statewide authority.

In order to rescue the state secondary system as is, planning and financing of capital projects (construction responsibility) needs to fall solely on the counties for these roads while routine maintenance responsibility remains with the state.  This means that the state's financial and direct maintenance responsibility for secondaries is limited to only maintenance while presently that is maintenance and construction.  However, if the day comes that SCDOT and the legislature still forces the responsibility for the entire secondary state highway system on the state's 46 counties, then two more unique options remain available.  The first of those is to create a separate state agency to handle secondary roads to eliminate the conflict of interest present in SCDOT control.  It involves:

  • Splitting off the secondary state road system into its own separate statewide system that is not under SCDOT control
  • Absorbing remaining county roads and city streets into this new road system in the rural counties to eliminate duplication of services

Divorcing the State Secondary Highway System from SCDOT

Splitting off the secondary roads division from SCDOT does not mean that secondary roads go directly to the counties for maintenance.  In other words, the first avenue that should be pursued is to attempt to have the legislature create a separate state agency that oversees routine maintenance per the example above of county roads and city streets with state-aid funding set aside to fund operations and routine maintenance.  If the separate state agency option still fails, another option is still available that has not been pursued before: a statewide cooperative.  That plan will be discussed next, but first we will describe the statewide agency administered by a separate branch of state government.

In this new separate division, the operations funding would fund the transfer of equipment and employees from SCDOT to the new agency and co-locate each office with the existing county road departments.  This new agency would then take over routine maintenance of the secondary state highway system but not capital projects.  Thus, the remaining secondary state highway system would still operate as a single statewide unit but not under control of SCDOT.  Most likely it would be known as the South Carolina Department of Secondary Highways or South Carolina Division of Secondary Highways operating officially but separately under the umbrella of SCDOT.  The resulting arrangement is that the repurposed system would be divided as follows:

  • State Highways (currently state primary)
    • SCDOT owned, maintained and constructed roadways with SC route numbers
  • Secondary State Roads
    • Roads would be owned by a separate state agency or statewide interlocal cooperative independent of SCDOT
    • The new agency would only be permitted to perform oversight and routine maintenance of secondary state roads and would only be budgeted for such
    • Construction funds for capital improvements would transfer to the counties and cities
    • Secondary state system mileage would remain as-is but set on a ratio cap instead of a mileage cap
  • Local Roads
    • Roads would be owned by the counties and cities as they are today
    • The statewide agency may eventually be able to contract routine road maintenance on remaining roads and streets in many counties, cities and towns under a separate plan

A Cooperative Interlocal Approach

The plan above splits up SCDOT into two separate state agencies giving the secondary roads maintenance to one state agency and primary state highways to another thus eliminating the commingling of funds and responsibility for two classes of roads while keeping the road responsibility centralized.  However, if the legislature still refuses to form a separate state agency to handle secondary state roads then the next step would be for all the counties across the state in conjunction with the cities to form their own secondary state highway system.  This would be a new agency brokered by the South Carolina Association of Counties and the Municipal Association of South Carolina .  This new agency would be a cooperative effort of all county governments and city governments where they would pool a portion of their cut of state-aid funding ("C" funds) along with their own funds if necessary to create a statewide operation that mimics and replaces the state-controlled secondary highway system.  

The resulting cooperative is this: one agency would be in charge of routine maintenance of all secondary state roads across the state, but it would be under the ownership of all the counties and cities throughout the state as joint owners.  If operated as a collective of all counties and cities across the state, they would then have flexibility in terms of by-laws, policies and the ratio of roads that fall under authority of the cooperative unit.  It would be established with an elected statewide commissioner and a board made up of at least one existing elected representative from each county and largest city within that county that would set policies regarding the cooperative agency.  

Overall, counties and cities should be enthusiastic about the prospect of gaining greater control while not being stuck with the costly responsibility of managing each county agency on their own.  Under this arrangement, technical matters, purchasing, expensive equipment and facilities are shared across the whole state while counties and cities have far more control over funding, planning and road improvements.  Counties and cities would not have to hire their own employees or traffic engineers.  Instead, they would defer that responsibility to a single statewide agency with all the resources it needs to do as good of a job as SCDOT once provided.

Absorbing Remaining County Roads and City Streets Into This New System in the Rural Counties

What was always a major flaw of South Carolina's Secondary State Highway System is that is was set up as a farm-to-market system that left limited control to counties.  Most farm-to-market networks are designed to have no more than 1/3 of the roads under state control, but at some point South Carolina let things grow out of control resulting in 2/3 of the state's roads falling under state control.  In general, rural counties ultimately were left with the responsibility of only a few roads thus duplicating services needlessly when SCDOT could have just expanded their operations to include the few remaining roads.  While urbanized counties typically chose to retain a larger county road system (especially in the Upstate) these other counties typically transferred more than 50 percent of their road network to the state, but because a small county system remains they are still stuck with a needless inefficiency that could have been eliminated.


The counties labeled in green are the counties with populations over 100,000 who would be better suited to continue maintaining a separate county road system from a statewide secondary highway system.  The remaining counties have an average population of 39,000 residents, which is not enough to justify keeping a separate county highway agency.

South Carolina's secondary road structure was designed as a highway system instead of state-maintained county road system.  Thus, all secondary roads had to be constructed to state standards and were treated as highways.  However, a point was reached long ago that the system grew too large to function in this manner making it a costly mistake to continue further with that option.  Mileage was then capped with logic subsequently cast aside.  In fact, too many roads across the state were basically overbuilt resulting in higher maintenance costs than surrounding states.  The hidden issue with the state's farm-to-market system is the fact that most states did not reconstruct local roads into highway-quality roads.  This lead to very high maintenance costs years later as these roads aged.  Remaining county roads should have been taken over as-is rather than expecting rural counties to continue maintaining a very small road system simply because it was substandard.

If the local agencies themselves collectively owned the secondary system, they would no longer need to try to convince state government to expand SCDOT operations onto remaining county roads.  In fact, operating as their own cooperative it would be more costly for the counties not to transfer remaining county roads to the cooperative system.  According to the 2010 census, 1/3 of the state's population lives in a rural area.  This means approximately 1.56 million people reside in or adjoining a county with a very low population.  By this definition, 33 of the 46 counties or 72% of the counties in the state would be considered primarily rural meaning that their population and resources are inadequate to justify maintaining a separate county road system if much of that road system is already maintained by a statewide cooperative agency (SCDOT).  Thus, it would make more sense in these counties for them to just dissolve their separate county road departments, transfer equipment and forces into the statewide agency and thus entrust the cooperative to provide a consistently maintained county road system unlike today where the difference between state-owned roads and county roads is often striking.

Furthermore, cities across the state often contract substantially with SCDOT for secondary road maintenance, and this is something they are going to lose soon as SCDOT prepares to scale back its operations on these roads.  Many smaller cities often have most or all streets under state control, and the revised system would limit that responsibility only to a few principal streets.  In this new interagency cooperative, entire city road networks could be contracted to the cooperative based on the goals of that city not the goals of the state legislature.  In general, if a city has a low population or falls within a low population county, it would make more sense if that city could contract every street to the cooperative (at their own expense).

Farm-To-Market Roads Retained in Urban Counties and Cities

On the other hand, the 13 counties and larger cities with a primarily urban population may be less interested in pursuing a system where a cooperative agency controls every street.  They would more likely choose the farm-to-market approach allowing major roads and streets to be handled by the agency while maintaining less important local streets on their own.

The way to handle this would be to have road maintenance in urbanized counties and high population cities limited to roadways of higher functional classification.  In general, routine maintenance by the cooperative would be required on roadways classified arterial or collector, including minor collectors, and optional on other roads.  This should be established in the by-laws as the option for counties that did not want to fully participate.  Obviously some roads currently on the secondary system would transfer to full county maintenance this way.

However, it is important to note that the counties would actually own the cooperative in this option.  Because of this, it is up to them to figure out how to make it work for them.  At least some participation should be required, thus the use of farm-to-market roads.  Perhaps the county itself wants to set the ratio, which is why a minimum of higher functional classification roads is a good base threshold.  This means:

  • Added together with state controlled roads, the minimum ratio in a county would be the total sum of all collector and arterial roads within the county, usually averaging around 25-35%
  • The maximum ratio is 100%
  • Adjustments could be made for ratios inbetween given the amount of investment the local government wants to put into the system since the cooperative system is something that the local agency pays into

In addition, counties who operate at the lower farm-to-market ratios could also set up a traffic control agreement per the Traffic Control Cooperative Plan with the cooperative to assure that traffic control is still handled by the cooperative on remaining county roads or city streets that otherwise are maintained by the local agency in lieu of the cooperative.  This means that the farm-to-market roads would have full routine maintenance responsibility while other county roads would have routine maintenance responsibility limited to only traffic control.

REVERSE CONTRACTING WITH SCDOT AS PART OF THE INTERAGENCY STATEWIDE COOPERATIVE

One possibility with using a county-driven statewide agency is to, in fact, allow SCDOT to completely exit the road maintenance business.  In effect, the statewide agency could enter an agreement with SCDOT to maintain state highways thus preserving the consolidated road structure present today.  SCDOT would become administrative in function directing the cooperative in maintaining their own roads while allowing the cooperative to maintain secondary state roads otherwise as they saw fit.  Employees would transfer to the cooperative from SCDOT as part of this approach.  It would be the same as if the state contracted road maintenance with a county except it would be equivalently contracting with a single county covering the entire state.  This approach would also allow the expertise that SCDOT has to transfer to the cooperative allowing what works today in South Carolina's road system to continue in the new system.  It would also help to better organize the system in case certain counties successfully opted out of the program meaning that at least the state roads within the county would remain part of the cooperative.

DEVOLUTION IS REPLACED WITH COOPERATION IN THIS NEW APPROACH

South Carolina's conversion to a locally-driven state secondary system could be easily done if the legislature holds off on transferring roads directly to the local level.  At present, South Carolina's state highway system is much too big to be considered farm-to-market, so the best approach is to pursue a transfer of the existing responsibility to either another state agency or to an interlocal cooperative operated jointly by all local agencies across the state.  The latter plan will allow the counties and cities to decide how secondary state roads may be structured instead of the state, and it will also allow local governments to have far more authority over construction and maintenance standards while not forcing every county and every city to assume that burden separately.  Either way, this new plan must split construction and maintenance responsibility.  In general, construction should become a local matter while routine maintenance and engineering falls to a statewide agency.

While new revenue sources are still needed, this plan achieves the goals of both the state and the counties.  This is because the counties and cities can keep roadways consolidated to a statewide level while the state can devolve primary construction responsibility and legal ownership away from SCDOT giving far more responsibility to the counties and cities.  If this new statewide responsibility is coupled with an expansion of maintenance to remaining county roads in addition to the cooperative statewide agency contracting for state primary route maintenance, the new system will be much better than the old one.  The best of both worlds can really be achieved if the counties can step up and come up with this better plan to replace the outmoded farm-to-market system with a true partnership approach that is mutually beneficial to both the state and the local agencies.

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