Why fuel revenue indexing is NOT fueling our future!
Questioning the propaganda before you vote on ballot question number 5
This November, voters in Clark County will have the choice to vote yes or no on the following ballot question regarding fuel revenue indexing (Ballot Question Number 5):
Shall Clark County continue indexing fuel taxes to the rate of inflation, through December 31, 2026, the proceeds of which will be used solely for the purpose of improving public safety for roadway users and reducing traffic congestion by constructing and maintaining streets and highways in Clark County?
To begin, there are the very simple and obvious concerns briefly touched on in the Argument Against Passage outlined within the ballot question digest:
- Voting yes on this question could mean TEN separate tax increases, nearly doubling our gas tax related to indexing. The gas tax started at 52 cents a gallon in 2014 and may go up another 46.32 cents through July, 2026, based on conservative estimates [A vote to approve this … spending plan may increase the tax on a gallon of fuel to about 65 cents per gallon in 2018 and the tax may go up an additional 3-6 cents per gallon each year with the possibility of rising to $1.25 cents per gallon by 2026].
- If passed, this question could arguably result in one of the largest local tax increases, generating $3 Billion in bonding capacity over the next ten years.
- These taxes already in place since it became effective two years ago will stay in place for a minimum of ten years, and maybe longer, depending on the bonds issued.
- If approved, future tax increases may stay in place until thirty years after the last increase, and if bonded, cannot be changed by our leaders for five years. This is way too long for a tax to stay in place without the opportunity for leaders or voters to have the ability to review it and determine if it meets the needs of our community.
- Our income may not keep up with this rate of tax increases. The inflation rate used in this index, the street and construction inflation index, is currently much higher than the general population cost of living index. Since this proposed tax increase is essentially a flat tax, it will hurt the pocketbooks of lower income people who have to travel to work each day much harder than others.
The above are all excellent concerns to be taken seriously, but they focus primarily on the financial impact on the individual, which, while significant, is only one facet of this debate...
Southern Nevada Watchdogs maintains that voting in favor of fuel revenue indexing not only disproportionately hurts those in our community least able to afford it, but that the funding mechanism literally can’t responsibly fuel our future, let alone the next 10 years, as it is unsustainable.
To understand why, let’s first examine how the RTC, and Clark County, arrived here in the first place.
Bonding our way into oblivion
It was in July of 2013 that Tina Quigley of the RTC make her power point presentation to the Clark County Commission regarding what would certainly appear to be a funding crisis facing the RTC. In 2013, motorists in Nevada were spending $.52 in taxes on every gallon of gasoline purchased, $.09 cents of which went straight to the county to fund streets and highways projects. This revenue source generated an average of roughly 136 million dollars annually to spend on streets and highways, however, as of 2014, that annual revenue would be decreased to merely 22 million dollars a year. So what happened?
· Quigley explained that cars have gotten more fuel efficient, and there has been a decrease in the amount of fuel being purchased (hence a decrease in revenue generated from fuel purchases) but surely that couldn’t account for the $100 million plus decrease in revenue.
· Quigley went on to state the major reason, if not the reason, for the deficit was that the RTC and the County:
“had bonded against that revenue source (the $.09/gallon) to the point now that that revenue source is dedicated to debt payment as opposed to continuing to invest further in streets and highways programs.”
- Tina Quigley, RTC
The never ending tax increase: Bonding as a funding mechanism
In reviewing this year’s final budget released by Clark County, anyone can see Quigley is absolutely correct. In fact, some of our earliest long term bonds to fund major transportation projects, issued in 1992, will be paid off this coming summer. The original issuing amount in 1992 was 250 million dollars, and boy did we need it! Our little city was growing so fast, while much of the rest of the country was still coming out of the recession of the early 90’s, Las Vegas was expanding exponentially faster than our infrastructure.
Think of issuing bonds as similar to getting a loan. There are some purchases that are acceptable, probably even necessary, for an individual to ask for a loan to obtain, such as a house. Buying a home is a significant investment, but making such a purchase would be unwise if you couldn’t afford the payments. For example, if your home loan payment consumed all of your income every month, the bank wouldn’t give you a loan – it would be unwise for them to do so. In 2013, when Tina Quigley admitted that all of our revenue was dedicated to debt payment (minus 22 million), this is essentially the type of position the RTC was describing.
While issuing bonds is nothing new to the County, or the RTC for that matter, in recent years our apparent addiction to infrastructure projects is insatiable. Despite all of our revenue being “spent” before it is even made, the “roads” must go on, even if we have to pay 40 years into the future just to fund our ability to build for the next 10. Will we magically, finally be able to stop building, repairing and maintaining roads in 2026, the year the fuel tax will cease to be raised further? We’ll continue to pay the raised tax for 10, 20, or even 30 years after 2026, but that will be to cover the debt service on the bonds we’re issuing today to build roads today. What will we have to do in 2026 to generate revenue for similar projects? Bonding in this way is literally only “fueling” the next 10 years, and leaving the next generation holding the bag to pay for it for 30 years to come, while at the same time looking for methods to pay for the infrastructure needs they will have on top of it. If inflation increases faster than incomes increase (as we are seeing presently) we will be impoverishing higher and higher numbers of people as time goes on, and, as always, the people who are least able to afford it will be hit the hardest.
At least 4 Deceptive Statements or Out-Right Lies?
There are several talking points and “facts” that the RTC has used as part of their propaganda to sway the public, and Clark County Commissioners to pass the fuel tax initiative, such as (1) the notion that indexing will fuel our future, (2) the representation of what could actually be done with the 22 million dollars of available revenue, (3) the notion that we would only have 22 million dollars of available revenue until 2023, and (4) the language in the ballot question itself.
1) The notion that “Indexing fuels our future”
Despite all of our revenue being “spent” before it is even made, the “roads” must go on, even if we have to pay 40 years into the future just to fund our ability to build for the next 10. Will we magically, finally be able to stop building, repairing and maintaining roads in 2026, the year the fuel tax will cease to be raised further? We’ll continue to pay the raised tax for 10, 20, or even 30 years after 2026, but that will be to cover the debt service on the bonds we’re issuing today to build roads today. What will we have to do in 2026 to generate revenue for similar projects? Bonding in this way is literally only “fueling” the next 10 years, and leaving the next generation holding the bag to pay for it for 30 years to come, while at the same time looking for methods to pay for the infrastructure needs they will have on top of it.
2) The representation of what could actually be done with the 22 million dollars of available revenue
According to Quigley's presentation to the RTC in July of 2013, she stated that 22.4 million could only build 1 interchange. It's interesting to note that there is an interchange project listed in the proposed projects for the RTC, but the price tag associated with it is merely 6.4 million. Seems we could build exactly 3.5 interchanges with 22.4 million dollars at this price:
PROJECT: US-95, Ann Rd to Durango Dr
Construct the US-95 north to CC-215 east ramp, the CC-215 west to US-95 south ramp and the US-95 south bound collector distributor road which is within the US-95, Ann Road to Durango Drive improvement project. This first phase of the proposed system to system interchange will construct two direct access ramps easing congestion and enhancing safety on the local streets and throughout the interchange.
Estimated Cost: $6,400,000.00
3) The notion that we would only have 22.4 million dollars of available revenue until 2023
According to Quigley's presentation to the RTC in July of 2013, she stated that at least until the year 2023, we would only have 22.4 million dollars of available revenue. This is incorrect.
As previously mentioned, by the summer of 2017, 3 bonds sold against the 9 cents of fuel tax revenue the county receives will be paid off.
This will free up an additional $23,217,000 MILLION dollars that is NO LONGER dedicated to debt service 5 years before 2023. That means we would actually have $45,617,000 million dollars available for streets and highways beginning in July of 2017. (CLARK COUNTY FINAL BUDGET FY 16-17; Debt Schedules/Tax Rates Page 193).
4) The ballot question asserts:
“... the proceeds of which will be used solely for the purpose of improving public safety for roadway users and reducing traffic congestion by constructing and maintaining streets and highways in Clark County.”
Consider whether or not the following projects meet the above criteria as a layman understands it. The following details have been taken from: http://www.rtcsnv.com/fri/projects.html
l “Conducting Analysis” to generate a business plan for “multi-modal” transportation:
PROJECT: Paradise Rd/Swenson St, Russell Rd to Sahara Ave
Conduct an analysis of the existing conditions and emerging trends affecting the economy of Southern Nevadas Resort Corridor (including the Convention District), potential growth sectors, land use changes, issues affecting visitor as well as employee mobility, and the resultant demand on the transportation system to develop a comprehensive business plan for the evolution of a multi-modal transportation system that connects economic centers, prioritizes transportation investments, and provides financing/funding alternatives. The transportation investment plan will consider different modes and users, include both public and privately-owned facilities and operations, and provide an analysis of alternate scenarios that together will lead to specific recommendations for roadway, transit and other transportation improvements with corresponding costs, investment strategies, and phasing. The final deliverable should be a comprehensive business plan that utilizes transportation and infrastructure development as a community development tool to facilitate economic growth and enhance the experience of residents and visitors.
RTC Project #: 013D-FTI
Estimated Cost: $2,970,000.00
l Strictly a “beautification” project, not pertaining to the roads structure or safety:
PROJECT: Sir George Dr, Nellis Blvd to Stewart Ave
Sir George, Nellis to Stewart - removal of the existing green asphalt within the median island and replacement with stained exposed rock concrete and decorative boulders
RTC Project #: 176B-FTI
Estimated Cost: $900,000.00
l Arguably, the following will likely be attributed to “improving public safety,” but it is interesting to note all the projects requiring cctv's and fiber-optic cable installation...
PROJECT: Stewart Ave, Pecos Rd to Nellis Blvd
Upgrade Transit Signal Priority and Emergency Vehicle Preemption. Fiber and CCTV's.
RTC Project #: 144S-FTI
Estimated Cost: $753,250.00
PROJECT: CC-215, Tenaya Way to Aliante Pkwy
ITS: Fiber, CCTVs, DMS, Flow Detectors and Travel Time Signs.
RTC Project #: 144S-FTI
Estimated Cost: $3,351,500.00
PROJECT: CC-215, I-15 to I-515
ITS: Fiber, DMS, Signal Modifications.
RTC Project #: 144R-FTI
Estimated Cost: $975,500.00
PROJECT: CC-215, I-15 to Cheyenne Ave
ITS: CCTVs, DMS, Flow Detectors and Travel Time Signs.
RTC Project #: 144R-FTI
Estimated Cost: $3,863,000.00
See the Documents Library for more info