Monday, April 17, 2017

Statewide Contracting Plan Spotlight: Georgia

Georgia has a long history of being a strong home-rule state, so they have likewise adopted a strategy that has given counties and cities very broad powers to run their agencies as they choose.  After rejecting all efforts to centralize any responsibility to the state level for roads on three occasions in 1934, 1958 and 1985 it was clear that politics in Georgia typically favor a decentralized approach.  This was further exacerbated by the institution of a mileage cap on state roads enacted either in 1963 or 1973 that limited road mileage to an arbitrary number that has not been adjusted in over 50 years.  This ratio has further reducing the ratio of state responsibility from a high of 20% in 1963 to 14% today.  The problem with this approach is that it is a destructive transportation policy for local agencies and has made regional planning and coordination for maintenance and construction difficult with far too many competing interests and duplication of services.


A former state route in Cleveland, GA (GA 75 Spur) that would certainly benefit from a joint maintenance structure with other counties and cities, at least for traffic control.  The curve sign here dates to the early 80's and lines have long since faded out. 

While local agencies may enjoy broad powers to construct and maintain roads as they see fit, this approach is only effective in high population counties with properly organized highway agencies.  In all of Georgia's 159 counties, the vast majority are rural or very rural with 75% of the state's population in 8% of the state's land area.  This means that 92% of the state falls within a rural area thus the vast majority of counties are nowhere near prepared for the full responsibility of road maintenance.  Of this total:

  • 6 total counties have a population that exceeds 250,000
    • Note that two of those counties have recently seen significant chunks of the county's tax base divided up into new cities that took with them much or all (in the case of Fulton's) population meaning that the county provides little to no municipal services
  • 38 total counties have a population over 60,000
  • 32 total counties have populations under 10,000 residents
  • 86 total counties have populations under 25,000 residents
  • 3.8% of counties have populations adequate to operate a full-service highway agency
  • 23.8% of counties have populations adequate to support a highway agency without substantial state-aid
  • 54.0% of counties have populations much too low to be able to effectively operate a local highway agency with available local resources

With these statistics, why are all 159 counties running their own highway department?  Most are not capable of doing a good job even when they put their very best efforts forward, because they simply lack the technical expertise, resources, equipment or manpower to do so.  What about the 550 cities?  While some of those contract with counties, most are no better off when the county itself is too small to provide proper road maintenance standards on behalf of the cities.  Of those that are not, the vast majority cannot efficiently run an entirely independent street maintenance operation.


Dawson County has a population under 23,000.  While they have seen significant growth in the county, it is still a primarily rural county that lacks any engineering supervision of road maintenance and is underfunded for any significant upgrades.  Traffic control errors like the one above are still found across the county due to the lack of a traffic operations unit.  It would not make sense for the county to create this unit alone, but it would makes sense for them to be contracted in a cooperative with many other rural counties across the state to provide this service among with other road maintenance.  

However, changing an entire culture to a centralized system is not something that has ever been accomplished despite the periodic criticism that counties in Georgia are too small.  Many have proposed county mergers as a solution to the problem, but this is not an effective strategy for a number of reasons including:

  • Combined populations would likely remain too low.  
    • When at least 100,000 residents are needed to make a combined county work, it would take more than a two county merger in a rural area to make that happen.
    • The counties that proposed merging were already very low in population meaning the combined county would still be extremely low in population (likely under 10,000 residents)
  • Combining counties, especially in higher population areas, would only result in an uptick in municipal divisions making consolidation into a larger county actually increase the level of government
    • This would just further drill down road responsibilities and increase costs unless the state government made municipal divisions extremely difficult
    • The consolidation under this method becomes a political decision instead of a technical decision.  It does not address the root of the problem.
  • Merging counties on any grand scale is not a realistic proposal.  
    • Even Taliaferro County with less than 3,000 residents has not seriously put forth any plan to merge with an adjacent county
    • New larger counties with very large land areas would not be popular with residents of rural areas
    • Urbanized counties would use this as an excuse to further divide into smaller counties such as Fulton and DeKalb 
  • The number of combined counties would not be low enough to make any real difference
    • Effective county government has populations comparable to state government.  Very few counties would have populations of 500,000 or more
    • Only one or two would have that population concentrated in unincorporated areas.

A BETTER SOLUTION

One of the proposals for a cooperative system includes the farm-to-market system approach, but in Georgia this might not be the best strategy.  A simpler and easier to institute approach is for the counties and cities across the state to voluntarily form or be required to form a road maintenance cooperative pooling together engineers and technical experts to supervise maintenance and pooling together resources to provide higher standards with no cost increase and significant economies of scale.  Such a cooperative may or may not be administered completely separate from GDOT.  The cooperative would be set up as a means to give two options to all counties and cities across the state.  The name of this cooperative, if independent of GDOT, would most likely be the Georgia Local Roads Commission.  The Georgia Local Roads Commission (GLRC) would operate at one or both of two ways:

  • As a division of state government that is under limited regulatory authority of GDOT, but operates otherwise independent of GDOT
  • As a jointly-owned unit of all counties and cities statewide brokered by the Georgia Association of County Commissioners, Georgia Municipal Association and Georgia State Legislature

If part of GDOT, it would be most likely known as the Division of Local Maintenance & State Aid.  In either method:

  • As part of the agreement to form the cooperative highway agency, participation would be required in order to implement the program by all counties to some extent
  • All counties would be required to transfer engineering, installation and maintenance of traffic control and safety improvements to the cooperative unit (GLRC or DLMSA)
  • Rural counties with populations under 50,000 residents would be required to contract all routine road maintenance to the cooperative thus transferring employees, equipment and facilities to the cooperative (74.2% of counties)
  • Counties over 50,000 would be given the option to keep their own highway departments or to transfer the entire operation to the cooperative 
  • Cities would also be required to participate in that traffic control would be managed by GLRC or DLMSA.  Rural cities would be encouraged to transfer all street maintenance to the cooperative.
  • The state could provide incentives to joining the cooperative such as subsidizing operations fees

The Georgia Local Roads Commission or Division of Local Maintenance & State Aid would have the purpose of administering, not building roads.  That means that engineering services would be provided, maintenance would be provided and some resurfacing might be possible with that funding.  However, construction including designing or building roads would remain a local matter.  Rural counties could contract with the cooperative at their own expense for construction engineering, hire a private firm or use GDOT.

HOW WILL IT BE FUNDED?

The method of funding for the interlocal cooperative is based on shared resources.  Unlike a secondary state highway system, this is not a vertical means of consolidation but horizontal.  This means that although state resources would be made available to assist in operations and maintenance, the primary expense would come from the local governments that would all pay into the system.  It can be established one of two ways:

  1. The Contract Method  
    • Each member agency provides an operations fee if it is not otherwise subsidized by GDOT.  The operations fee would be based on the population ratio covering only costs of employees, equipment and facilities.  It would not cover any actual construction or maintenance.
    • Each member agency then makes its own budget thus providing a retainer for the cooperative to work with.
      • For instance, Floyd County provides $225,000 in FY 2019.  The agency may spend up to that retainer, but may not exceed it without permission from the county.  The county then reimburses the agency for what is actually spent that year and what is not spent is rolled over to the next fiscal year.
  2. The Collective Method
    • In this method, the cooperative sets a projected budget and presents it to the participating local agencies based on a sum of what each participating agency is willing to spend in that fiscal year
    • The ratio each local agency pays is based on the ratio of agency population (based on 10 year census) divided by population of all participating agencies
    • The cooperative will be legally obligated to spend in each county no more than what the county or city paid in.  
As already mentioned, state funding will also be considered for operational and nominal traffic control expenses.  In addition, the cooperative may receive additional funding through any service swapping contracts with GDOT.  The GDOT financial commitment should be around 1-3% of local state-aid funding.  This means out of a budget of $2 billion that $20 million-$60 million would fund operations and maintenance of the cooperative.  This commitment by the state will make it possible that the local financial commitment may be lowered.  For instance, if the cooperative budgets $45 million then state-aid funding would be deducted from that amount meaning that what each county pays may be much lower.

An example of each method is as follows:

The Contract Method

Rabun County is contracted for full road maintenance with the cooperative.  The county agrees to spend $200,000 in FY 2017-2018 for maintenance operations and staff.  The cooperative deducts all administrative and operational costs as needed and uses the rest to maintain roads in Rabun County.  This is actually not the best method since it will produce uneven results, but it will free the county to budget as they choose thus not infringing on local control.

The Collective Method

After gathering proposed budgets from all 159 counties and 550 cities, the Georgia Local Roads Commission has budgeted $45 million to spend in FY 2018-2019.  Pickens County has 29,431 residents as of the 2010 census while Georgia has 9,687,653 as of 2010.  This means that from 2010-2020 that Pickens County has an 0.3% financial commitment to that budget.  This means that the county's financial commitment in 2018-2019 is $136,709.  This also means that in services provided by the cooperative that $136,709 will be provided by the cooperative for routine maintenance services.  All local agencies must provide a budget, but agencies contracted only for traffic control will only pay in what they choose to pay for that service.

COST SAVINGS OVER TIME

Joining road maintenance into a single statewide agency under a joint funding strategy will not be easy to enact at first.  Employees absolutely cannot be fired, have wages docked nor demoted when something like this is done.  This means that employee/administrative costs will remain constant for awhile.  The strategies that need to be done to make sure that a transition is smooth are as follows:

  1. Set Attrition
    • This means a hiring freeze is put into place immediately until employment levels fall to necessary levels
  2. Keep existing employees on local payroll, but new employees in fully contracted counties should be employees of the cooperative
    • Keeping titles, wages and positions will be better for morale and will help to combine talents and ideas
    • New employees will be hired as an employee of the cooperative in a fully contracted county and not the individual county and city since direct local responsibility for roads will be diminished or eliminated
  3. Co-Locate Facilities wherever practical in fully contracted counties and cities
    • This means that municipal and county departments should be combined into a single operation
    • Small population counties should be joined with neighboring counties where practical
PARTICIPATION REQUIRED

A statewide cooperative does not have an existing agency to shore it up in the way that a contract with GDOT has.  This means that a patchwork of counties and cities widely disbursed will make such a plan unsuccessful.  You cannot have one county in Northeast Georgia and 5 in Southwest Georgia and 2 in Central Georgia participating.  The administrative costs would be extreme, economies of scale not achieved and benefits in terms of better roads would not exist.  If only clusters of counties participated, then this would mean that the Regional Roads Plan was adopted, because a statewide operation would not be possible.  While the Georgia Local Roads Commission could exist to help broker and assist in such agreements, its functionality as an organization able to supervise and use its own forces would not exist. 

For this reason, a requirement must be in place that all counties under a certain population must contract their road maintenance to the cooperative and that overall 75%-80% participation is necessary.  While a few holes will not undo the entire operation, the network must be dense enough and patched together in such a way as to operate as intended: as a highway agency dedicated to maintaining local roads.  The plan has a clause, of course, that allows urbanized counties to opt out.  This does not mean that they are able to opt out completely, however, as this plan requires that traffic control is exclusively administered by the cooperative agency.  Traffic control means traffic signs, pavement markings, traffic signals, roadway safety features (rumble strips, crash barriers, guardrails) and the engineering staff required to plan and supervise it.  Thus, all counties and cities will be participating, but all maintenance services must be transferred to the cooperative in rural counties.

So why do you ask that rural counties completely throw their hat into the ring?  The reason is because the rural counties do not have the means to separate off that responsibility with the same results as an urban county.  An urban county may have $250,000 to spend on traffic control while the poorest county may offer only $5,000 (barely enough to install a couple stop signs and stripe one road).  A rural county may have next to nothing budgeted for traffic control, but if they consolidate their entire operation into a cooperative then the streamlining of resources either frees up greater funding for that purpose or stretches that $5,000 much further as it is consolidated with other purchases and can be done more cheaply.  Likewise, the urban counties should not have their funds redistributed to the poorest county at the expense of their own needs.  While state-aid can offset this expense and possibly lower the threshold of full-service counties, the general conclusion is that counties with under 60,000 residents should handle only construction leaving maintenance to the experts working in the Georgia Local Roads Commission.  That means at present 38 counties would be allowed to remain partially free, and that number will grow as the state's population continues to soar.

REVERSE CONTRACTING

A horizontal consolidation approach of puzzle piecing the road system into a single agency has its drawbacks in that interest has to be high and a willingness to abide by the basic rules required.  Furthermore, it is expected that other counties will not want to fully participate: including those that fall below threshold.  For that reason, it might be beneficial to have the cooperative pursue a vertical approach as well with them taking over state road maintenance on surface state routes, at least for the purpose of traffic control.  The addition of state payments per mile to the cooperative will save money while strengthening the purchasing power of the cooperative.  If the cooperative takes over full road maintenance on state roads in urbanized counties, then it will make it easier for them to provide traffic control-only services for the other county roads and municipal streets within that county.  It works on a similar principal as county/city maintenance contracts on state roads except that it applies statewide.

WHY DO THIS WHEN THE COUNTY/CITY DOES A GOOD ENOUGH JOB?

Road maintenance is a complex operation that takes a significant amount of taxpayer money.  A strategy that is local will keep the road usually in adequate repair, but the costs are higher and the standards are lower. It is impossible to coordinate plans, get the most bang for your buck or have frequent enough maintenance when you entrust that responsibility to so many local jurisdictions.  Traffic control especially suffers when handled on a local level, and at the very least that should be centralized.  The idea of combining all road maintenance into a statewide cooperative is designed to bring all road maintenance operations into balance so that everything is more consistent, more uniform and a backlog of needed work is reduced or eliminated.  Furthermore, it allows local agencies to have access to equipment and materials that they otherwise would not have without depending on the state, contractors or expensive consultants.

Since regional agreements of only 10-15 counties might be difficult for local governments to financially manage, a statewide cooperative might be the ideal solution.  With costs very minimal for participation due to the high rate of participation, local agencies could partner up with each other to provide the best roads at the least cost creating for themselves an agency that provides the same level of centralization that a state DOT can provide.  Compare the cost of one PTOE engineer (assuming $100,000/year) for Dawson County.  In a region with 13 counties (per the Regional Roads Plan), the cost to the county would be $3,613.  However, that same engineer, assuming universal participation of all cities and counties, would drop to $229.  Which plan is more likely to be feasible in a rural area?

While most likely to be used in rural areas, this plan may be the compromise needed so that rural areas can pool resources over a wider area while more concentrated areas like the Atlanta suburbs may operate separately.  Either way, this plan maintains a division of powers between GDOT and the local governments while lightening the burdens on local governments to maintain a huge responsibility: over 100,000 miles of roads or 86% of the road system.

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