Fork in the Road

The rubber is hitting the road for those involved in road and construction engineering in Missouri.

After 59.2 percent of Missourians shot down a 3/4-cent sales tax proposal to shore up transportation funding for the Missouri Department of Transportation, a number of construction projects in the Springfield area are headed to the back of the line. While MoDOT scrambles to manage budget concerns, road and highway engineers work to make up for the jobs that MoDOT can no longer provide.

Improvements included projects such as adding lanes on U.S. Highway 65 south of James River Freeway to Highway CC, as well as on James River Freeway between Kansas Expressway and Highway 65 and extending Kansas Expressway south of Republic Road to Plainview Road.

MoDOT Director Dave Nichols said the tax would have funded 815 different projects throughout the Show-Me State and subsidized a budget that has been steadily dwindling since 2008.

Since Missourians rejected the tax, the state must fall back to strictly maintenance, namely 34,000 miles of roads and 10,400 bridges, the seventh largest transportation system in the United States, Nichols said.

“Having federal jobs in the area is of course a positive thing for the industry,” said Jay Wynn, president and owner of CJW Transportation Consultants LLC. “The tax would have allowed for greater growth.”

Nichols said that just won’t be an option. “We can only do what is absolutely necessary,” he said. “No bells or whistles.”

Standing strong
But firms aren’t throwing in the towel yet.

In the wake of the failed tax, transportation and civil engineering firms, such as CJW, which does on-call work for MoDOT, have diversified its customer base.

“You can’t stay in your backyard looking for work anymore,” said Wynn. “You have to go find it.”

CJW has its design stamp throughout Springfield construction projects in places such as the intersections at Glenstone Avenue and Primrose Street and Fort Avenue and Sunshine Street.

To fill the void of lost MoDOT projects, which Wynn said makes up about 10 to 15 percent of its jobs, CJW moved its services into southwest Missouri, Oklahoma and Kansas. While the firm was not guaranteed to win the bids of MoDOT road construction projects if the tax was approved, just knowing there was work around would have meant a great deal, Wynn said.

“We would have had to compete, but it’s nice to just have the option to compete,” he said.

Wynn said CJW is seeing little overall impact from the rejected tax, because they didn’t depend on it.

“I’m sure it will affect the bottom line at some point, but for now we’re good,” he said.

Averaging one large project from MoDOT a year, with an undisclosed number of smaller projects in the hopper, Olsson Associates Inc. faces the same issues as other area firms.

“I think we are preparing for a scenario where that won’t be available,” Olsson Associates Vice President Kelly Turner said of the firm’s future with MoDOT projects. “We are still developing strategies to cope with this.”

Turner said they were prepared for the tax to pass and had planned for a strategy of growth, but even though it failed, he said the Lincolin, Neb.-based engineering and design firm is not projecting any staff reductions or revenue losses for this fiscal year firmwide.

“It certainly impacts our potential workload,” he said, declining to disclose what percentage of Olsson’s business in its three Missouri offices comes from MoDOT contracts. “MoDOT is a big client and a good partner, but we have other clients.”

No relief for MoDOT
Although CJW and Olsson Associates are on semi-steady footing right now, they are still proponents of aid to MoDOT.

“People see a lot of construction going on. They see those orange cones and think MoDOT is flush with money, and that’s just not true,” Wynn said. “If people really understood what MoDOT deals with every day – maintenance, safety, economy, new businesses, capacity – they would willingly give their money.”

Even though it is seventh in size, Missouri is ranked 41st when it comes to federal funding, Nichols said.

“If you combine Nebraska, Iowa and Kansas’ transportation systems, Missouri would still be bigger than all three,” he said.

As a result, Nichols said MoDOT took a bolder five-year direction in June 2011, reducing its staff by 20 percent, consolidating 131 facilities and selling 750 pieces of equipment. This new direction gave MoDOT an extra $500 million to work with in its budget during the past five years. However, Nichols said that cushion is dwindling without any other major funding source stepping up to the plate.

“We expect this to be devastating to construction and engineering firms,” Nichols said, noting MoDOT’s budget has fluctuated in the recent past.

In 2005, the government agency worked within a $1.3 million budget. In 2011, that fell to $700 million and it projects $480 million next year, about $5 million shy of what’s required to maintain current roadways. Nichols projects the budget to fall to $325 million by 2017 if no action is taken.

“There are a lot of businesses that rely on MoDOT,” Turner said. “If this funding issue isn’t figured out, there will be repercussions for every Missouri citizen.”

Even with these current setbacks, Nichols said the department’s focus is on the safety of Missouri residents, maintaining the current infrastructure and trying to start a new legislative conversation.

“We knew this day was coming,” Nichols said.

According to a January economic and budget brief by the Congressional Budget Office, federal spending for the U.S. highway system is already over budget.

“At their current levels, the taxes in effect are insufficient to fully fund the existing amount of federal highway spending,” according to the CBO.

MoDOT sought a tax because more money from the federal government is just not an option. Nichols said MoDOT is losing revenue every year, as taxes – such as the 17-cent-per-gallon fuel tax, which is among the 10 lowest in the nation, that makes up the majority of incoming revenue – don’t bring in enough to fill the needs of Missouri’s highway system and bridges.

“We just can’t keep up,” Nichols said.

With no hope of further funding from the federal government, he said MoDOT was depending on the new tax. Now that it is off the drawing board, the future of the road and highway industry is on shaky ground.

“We know that the conditions of the roads will be deteriorating,” Nichols said. “For now, though, we will make the best of our funding.”