Proposition B: Road issues bounce businesses different ways

Steve Rowan knows firsthand how much Missouri's roads have deteriorated.

Yet Rowan, an independent contract trucker for Prime Inc. for the last 17 years, does not support Proposition B's highway improvement funding plan. Neither does the trucking company he works for.

However, the trucking industry's representative body, the Missouri Motor Carrier's Association, backs Proposition B because of the high maintenance and repair costs companies are incurring from damaged highways. Prime is one of the few members that disagree, said MMCA president George Burris.

Another group that favors the funding package because of the work it would generate are highway/heavy construction contractors and their suppliers, according to Dave Roling, president of APAC-Missouri Inc.'s Masters Jackson division. Roling said his industry has stalled because of the lack of road projects.

Who will pay?

If the 4-cent-per-gallon fuel tax increase passes Aug. 6 it would cost Prime an additional $200,000 a year, said John Hancock, a member of Prime's management team. The extra fees, he said, would be passed on to Prime's independent contractor drivers.

That does not sit well with Rowan.

|quot|I'm not against improving highways,|quot| he said, |quot|I'm for smart use of funds you currently have. If our money was spent as it should be, I don't think we'd have a problem.|quot|

Prime, the state's largest trucking operator and 33rd largest in the nation, paid the Missouri Department of Revenue $6.5 million last year via the current 17-cent-per-gallon fuel tax, licenses and permit fees, Hancock said, while the department generated about $1.8 billion in revenues for transportation. Rowan and others in the trucking industry, as well as some state legislators, are questioning if the funds were disbursed properly.

|quot|There's a lot of dollars going elsewhere that the general public does not know about and that this bill does not correct in my opinion,|quot| said Missouri Rep. Brad Roark, R-139th District.

According to the Missouri Department of Transportation's fiscal year 2001 financial summary, about 60 percent of the $1.8 billion budget was spent on construction, and about 25 percent, or $436 million, was spent on administration, service operations and other state offices like the Missouri Highway Patrol.

However, the new proposal would prohibit the State Auditor, State Treasurer, Department of Natural Resources and Department of Economic Development from receiving highway user revenues. Still authorized to use the fund, the bill states, are the Highway Patrol, Department of Revenue and Office of Administration. It also would officially mandate MoDOT have an inspector general to audit funds. Sharon Schulte has been in that position for the last two years.

Added costs are hard for the truckers to accept right now because the industry is struggling with escalating insurance, fuel and maintenance costs. According to Transport Topics, an industry publication, nearly 4,000 trucking companies went out of business in 2001. More are expected to fold this year.

|quot|This is not a good time for trucking right now,|quot| said Burris. |quot|The member's cost of doing business is going up. There are different views on (Proposition B), but the majority view was to support it.|quot|

Burris said many of MCCA's 800 members approve of the tax increase because maintenance and repair costs have been escalating due to the bad roads.

Hancock feels this would be a compromise by the trucking industry.

|quot|The problem with that is you could compromise yourself right out of business,|quot| he said.

Prime grossed more than $500 million in revenues in fiscal year 2001, but netted less than $50 million. He said it was the first time Prime experienced less than a 10 percent profit margin since its bankruptcy in the early 1980s.

If Proposition B passes, Hancock said, |quot|it will put additional carriers out of business in Missouri.|quot|

The tax will not just be on local carriers, however. All commercial vehicles are charged for the number of gallons of fuel used while driving on Missouri highways, regardless of whether the fuel was purchased in Missouri.

Contractor struggles

Trucking isn't the only struggling industry. Highway/heavy contractors are feeling the effects of MoDOT's tight spending, said APAC Missouri's Roling.

For the highway/heavy contractor, known locally as APAC Masters Jackson, 60 percent of its work is for MoDOT projects. |quot|This year that number is decreasing,|quot| Roling said, because there are fewer projects to bid on.

Roling said APAC Masters Jackson hasn't had any MoDOT jobs to bid on since early spring.

While some in the trucking industry are at odds over the issue, highway contractors know they need the work it would create.

|quot|Obviously this will be a great thing for highway/heavy construction companies and related suppliers,|quot| Roling said. |quot|We are very dependent on that market and the MoDOT funding source. Without Proposition B, my number one worry would be, What are we going to be doing for work in the upcoming years?' |quot|

Roling said virtually every bit of backlog the company has right now will be completed this year.

Roling couldn't say how much work the proposed projects might create for APAC Masters Jackson because all public sector work is competitively bid, with no guarantee APAC would have the lowest offer. He said it would not increase company employment or wages locally.

Cheaper now than later

Howard Fisk, of J. Howard Fisk Limousines Inc., realizes that any fleet- operated business will pay more in operating costs if Proposition B passes, but that is something he is willing to do.

|quot|Supporting this is going to cost me money, but I do support it,|quot| Fisk said. |quot|Building it today is going to be cheaper than 10 years from now, when the cost for building it is greater.|quot|

Fisk said he will not pass the increase to his customers, at least not in the near future.