March 2013

By Joshua Elliott-Traficante

In New Hampshire, not only is spending on highways paid for entirely with user fees like gas taxes and registration fees but the user fees are often diverted to other uses. The largest recipient is the Department of Safety, ostensibly to pay for state troopers but smaller amount of money have been transferred to other departments as varied as Cultural Resources, Health & Human Resources, and the Board of Land & Tax Appeals.

In 2008, legislation was enacted to limit the diversions and ensure a greater share of dedicated revenues remained at the Department of Transportation. However, Governor Hassan’s proposed budget, rather than building on the progress made, reverses the gains made over the last two budget cycles.

 

Figure 1: Spending as budgeted, net of Highway Block Grants to municipalities, not accounting for lapses

The Constitutional Carve Out: “…including the supervision of traffic thereon”

In 1938, the New Hampshire Constitution was amended, requiring all taxes and fees related to roads, fuel, and motor vehicles be dedicated to highway construction and maintenance. It was passed after attempts were made in the previous session to divert highway taxes to other purposes. While the purpose of the amendment was to “prohibit the use of motor vehicle taxes and gasoline taxes being used for any purpose but for highways,” the language specifically allows funds to be spent for “the supervision of traffic thereon.” That carve out authorizes funds, now segregated in the dedicated Highway Fund, to pay for those state troopers who patrol the highways.

Highway Fund Diversion Cap:

When the highway fund seemed flush with money, loose interpretation of the constitutional language permitted larger share of the total highway revenues to be transferred not just to Safety but to as many as a dozen other agencies as well to pay for things loosely related to highways.

In 2008, the Legislature passed HB 1618 to limit diversions and ensure a greater share of the limited revenue went to its primary purpose. Phased in over three budgets, the new law requires 73%of the total revenue to stay at Transportation, caps the amount diverted to Safety at 26% and limits all other uses to 1% of total revenue.

 

Figure 2: Spending as budgeted, net of Highway Block Grants to municipalities, not accounting for lapses

The FY10-11 required at least 68.5% to stay at Transportation, a goal budget writers exceeded. For the FY12-13 budget, the minimum ratcheted up to 70.75% which budget writers met although they suspended the second half of the law to allow Safety to spend slightly more if needed but not at the expense of Transportation. They ended up meeting the goals and rendering the suspension moot.

Looking Forward: The Governor’s Budget and Full Suspension

The Highway Fund Diversion Cap law would require 73% of dedicated revenues stay with the Department of Transportation rather than 69.8% in the Governor’s current proposal. The Governor’s proposal would allow safety to spend 29.1% rather than their 26% statutory limit and would divert 1.1% of revenues to other sources rather than the 1% limit required by law. Though the differences in percentages seem small, the result is a diversion of $28 million away from highways.

In the recently released HB 2, the budget trailer bill, the entire section of the law stipulating the ratchets for the FY14-15 biennium have been suspended.

Result: Less Money for Roads and Bridges

While it is easy to get bogged down in ratios and statutes, the end result is that under the Governor’s proposed budget, more of the state’s Highway Fund, which is entirely funded by user fees, is not being used to fix bridges and repave roads. Instead it is being used for spending on other state agencies.

Though substantially paring down the Department of Safety’s take of Highway Fund revenues would not be enough to cover all of the costs of repairing the state’s infrastructure, it would be a good start.

Click here to download a .pdf version

Charlie Arlinghaus

February 27, 2013

As originally published in the New Hampshire Union Leader

The state’s budget laws are often ignored. The general public knows this and so routinely believes that, no matter what they hear, some wool is being pulled over their eyes. This skepticism is strongest in the area of transportation where we presume diversions and shell games are routine. The details often prove the public right. This year’s budget includes a diversion of $28 million of supposedly dedicated highway fund revenue in violation of a law that is only a few years old and already being ignored.

It is commonly accepted wisdom among the public that dedicated highway funds are routinely diverted to non-highway purposes. The constitution was amended in 1938 to provide that taxes and fees related to motor vehicles be used for no purpose other than building and maintaining highways and supervising traffic thereon.

This ironclad dedication exists with no other tax. But for as long as it has existed, people have believed that gas taxes were being diverted like a slush fund to other purposes. It became commonplace to rail against raiding the highway fund (where the dedicated funds are meant to reside). Nonetheless as much as 40% of funds were diverted under vague rationale – if you try hard enough, almost anything can be described as sort of, tangentially related to taking care of roads.

In 2008, however, legislators acted. Republican Rep. Ken Weyler and Democratic Rep. Marjorie Smith, between them chair of the House Finance Committee for six years, sponsored a highway spending cap. A minimum percentage of total gas tax and other highway fees had to be spent within the department of transportation — phased in until the percentage reached 73%. A maximum of 26% could be spent at Safety (on state troopers to supervise traffic in theory) and just 1% could be spent anywhere else.

It was a sensible law which I described as the best piece of legislation of 2008. I was critical of the 2011 budget for suspending the law temporarily even though legislators came close to the target. I worried that suspending the law would send a message that ignoring it is common practice. Ignoring it once makes it easy for legislators to smile at you as if you’re naïve and say “oh that! No one ever does that.”

Sure enough, a tiny diversion becomes a big one. Rep. Lynne Ober, a member of the finance committee had the legislative budget office check on compliance with the law in the governor’s proposed budget. She found that far from reaching the 73% minimum threshold, the budget misses that target by $28 million over the biennium.

In other words, the budget diverts $28 million of dedicated highway taxes and fees to non-highway purposes. Ober is an opponent of the gas tax and contrasted the diversion with the state’s urgent infrastructure needs: “She [Gov. Hassan] should have obeyed state law and put those needed funds into DOT for roads instead of trying to raise the gas tax.”

Ober’s cynicism about the diversion of funds highlights the struggle lawmakers have to earn people’s trust. Gas tax supporters want to raise an additional $120 million each year in dedicated money. But if the $120 million is desperately needed and absolutely, positively won’t be diverted, why is $28 million being diverted with only Rep. Ober raising the alarm?

Gas tax opponents may want the law observed to limit the need for more revenue. But gas tax supporters should also want the law followed to ensure existing revenues are spent as they are supposed to be and thereby create trust.

This diversion may be the tip of the iceberg. The governor’s budget summary includes a line in a spreadsheet indicating the state will raise $29.5 million for its general fund from “dedicated funds/other initiatives.” Which dedicated funds will be undedicated? What other initiatives? We’re not sure yet.

That explanation will wait for the arrival of what’s called HB2, the appropriation language part of the budget. That language required by law by February 15 hasn’t come and is often many weeks late. The law is routinely ignored because other people ignored it first and so we wait for explanation. Similarly, dedicated funds are not supposed to be undedicated but they routinely are so we’re expected to turn a blind eye.

The highway spending protection law is in its infancy. Whether it will have the force of law or become routinely suspended is probably in the hands of the current legislature.

Author’s Note [February 2015]: With the Capitol Corridor Study released, this paper is now out of date.

To read the updated version of this piece that incorporates the study’s findings, please click here or copy and paste the following link into your browser:

http://www.jbartlett.org/updated-commuter-rail-in-new-hampshire

February 2013

Josh Elliott-Traficante

This week, the New Hampshire Executive Council is taking up a contract for a study looking at bringing commuter rail to the state.

There is a common misconception that the state has not studied this idea recently; however two lengthy studies have been completed in the past six years. A 43 page study was done in 2007 by the Passenger Rail Taskforce which looked at service to Manchester and another of similar length was done in 2010 by TranSystems for the NH Rail Authority, NHDOT and the Nashua Rail Planning Commission which looked at the entire corridor to Concord. While neither study recommends for or against introducing commuter rail, they provide a wealth of information as to how much the route would cost.

From the studies it is clear that constructing the route in its entirety to Concord would cost roughly $300 million and require subsidies of $11 million a year to operate.

Since there has been discussion of extending rail either just into Nashua, or just as far north as Manchester with service to Nashua, cost estimates for these, calculated from data in the studies, have been included as well.

 

Q: What is the Capital Corridor Project?

A: It is a proposal to extend commuter rail service north from Lowell, MA to Concord, NH, with intermediate stops in Nashua, Manchester Boston-Regional Airport and downtown Manchester. Trains would run into North Station in Boston.

 

Q: How Much Would it Cost to Build?

A: Costs are highly dependent on the scope of the improvements, such as single or double tracking the line or how far the line would run. (i.e. just to Nashua or Manchester or all the way up to Concord.) NHDOT in the 2013-2022 Ten Year plan estimates the capital costs the cost at roughly $265 million[1] if the Corridor were completed in its entirety, while the most recent study puts the cost at closer $330 million in 2013 dollars.[2]

Lowell to Nashua: $53-$66 million

Lowell to Manchester with service to Nashua: $159-$200 million

Lowell to Concord with service Nashua and Manchester: $265-$330 million

 

Q: Won’t Massachusetts Pay for the Upgrades for the Section of Track from Lowell to the State Line?

A: Probably not. According to the Joint Statement of Principles Concerning Proposed New Hampshire Capital Corridor Service[3], signed between Massachusetts and New Hampshire in 2001, the state of New Hampshire is responsible for all capital improvements required, including those needed in Massachusetts. Furthering the point, Governor Deval Patrick’s recently released transportation proposal does not include the extension of commuter rail service north of Lowell, indicating a lack of interest in Boston for expansion on that line.[4]

 

Q: How Much Would it Cost to Run?

A: Once built, there are two different kinds of costs: operating expenses and ongoing capital expenses. Operating expenses are the day to day costs, such as salaries for employees and fuel for the locomotives. A number of factors that go into projecting operating expenses, such as the number of trains in service and how many runs a day they are completing. TranSystems[5]based their study on 5 round trips per day and the Passenger Rail Taskforce Study[6] with 4 round trips per day.

Lowell to Nashua: $2.7 million per year

Lowell to Manchester with service to Nashua: $8 million per year

Lowell to Concord with service to Nashua and Manchester: $13.25 million per year

In addition to operating expenses, there are also ongoing capital expenses beyond just building the railroad. Track needs to be replaced, locomotives breakdown, coaches need to be refurbished and so forth.

Lowell to Nashua: $600,000 per year

Lowell to Manchester with service to Nashua: $1.8 million per year

Lowell to Concord with service to Nashua and Manchester: $3 million per year

 

Q: Would the State Need to Subsidize Commuter Rail?

A: Yes. Both the TranSystems[7]study and the Passenger Rail Taskforce Study[8] highlight the need for ongoing subsidies to keep the train from going bankrupt. These two studies estimate that passenger fares will cover between 30% and 50% of operating costs. In addition, there are ongoing capital costs that need to be paid for as well. Taking those into account, estimates of total subsidies needed every year are as follows:

Lowell to Nashua:  $1.9 – $2.6 million per year

Lowell to Manchester with service to Nashua: $5.8 – $7.5 million per year

Lowell to Concord with service to Nashua and Manchester: $9.25 – $12.25 million per year

 

Q: Where Would the State get the Money to Pay for It?

A: The studies are largely silent on the specific sources of funding for either the capital costs or the operating subsidies, aside from relying on Federal money.

For the roughly $300 million in construction costs, the state would likely have to depend on either Federal grants or borrow the money through a bond issue. The New Hampshire Rail Transit Authority does have the authority to both solicit Federal dollars and issue bonds. Last month however, the State Treasurer urged lawmakers to limit capital bonding to under $125 million, making the latter unlikely.[9]

Money from the Federal CMAQ program (Congestion Mitigation and Air Quality) can be used in the initial startup years to help cover the shortfall in operating costs. However, without special Congressional approval, it can only be used for a few years, not indefinitely. After the CMAQ money runs out, the state would have to find a source of money to cover the entirety of the shortfall itself.

 

Q: Couldn’t the State Use Money from the Gas Tax to Pay for Both Construction and the Subsidy?

A: No. Part II, Article 6-a of the NH Constitution[10]forbids the use of money from the Highway Fund on anything other than highways. In a particularly relevant case, the New Hampshire Supreme Court ruled unanimously in a suit brought by the New Hampshire Motor Transport Association (NHMTA v NHDOT 2004) that the state could not use highway funds to extend commuter rail into Nashua.[11]

 

Q: How Does the Downeaster, which Runs from Brunswick ME, Through the NH Seacoast into Boston, Address These Costs?

A: The capital costs of constructing the rail line were financed by issuing bonds, backed by the State of Maine, which were repaid with tax dollars. Federal CMAQ money is used to cover some of the operating losses. Under normal circumstances, CMAQ money is only allowed for the first several years of service, however, through special Congressional approval, Maine is allowed to use funds long after they would have otherwise been phased out. The remainder of the operating loss is covered by a state tax on rental cars. The Downeaster covers roughly 53% of its operating costs through fares.[12]

 

Links to Past Studies:

Passenger Rail Task Force Study: (2007)

http://www.nashuarpc.org/publications/transportation/rail_proposal_draft.pdf

 

TranSystems: (2010)

http://www.snhpc.org/pdf/NHCCorridorOverview.pdf

 

Click here for a pdf version of Questions and Answers on Commuter Rail in New Hampshire


[1]http://www.nh.gov/dot/org/projectdevelopment/planning/typ/documents/unfundedlist.pdf

[12] http://www.kjonline.com/news/senate-oks-downeaster-subsidy_2012-03-14.html

A Look at the Costs Involved

Josh Elliott-Traficante

Yesterday’s approval by the Capital Budget Overview Committee to use Turnpike Credits to help fund a transportation study of the Capitol Corridor has revived hopes of commuter rail in New Hampshire. The Corridor project, if completed in its entirety, would see passenger rail service run from Concord through Manchester and Nashua, continuing south into North Station in Boston.

The project in terms of costs can divided roughly into four segments, totaling roughly $270 million from various sources:

1)      The Study: $4.4 Million

The study itself, the one moved forward Wednesday, will cost $4.4 million and take roughly a year to complete. Of the money being spent, $1.6 million the funds being used would come from from the state, while the balance would come from federal grants. Usually federal CMAQ grants require a state match but a clause in federal highway legislation allows money raised by tolls to be counted as that state’s match, allowing the state to receive the grants. The toll money, however, is not spent on the project itself and remains in the Turnpike Fund.

2)      Capital Costs, Construction: $250 Million

$250 million is a rough estimate of construction costs for the route by the New Hampshire Department of Transportation, as part of the latest 10 Year Highway Plan. This would include building roughly half a dozen stations along the route, building a second line in most areas, upgrading the existing one, rehabbing and upgrading countless rail crossings as well as reconstructing and expanding several bridges, including two across the Merrimack River. No funding source has been identified.

3)      Capital Costs, Rolling Stock: $15 Million

What good is a railway without locomotives and passenger coaches? This money would presumably come from the Federal CMAQ program. However, since CMAQ funding is a fixed amount based on the total appropriations the state receives every year, every dollar used for this project, would mean other local public transit projects might go unfunded. Under the current federal highway legislation, $15 million would represent roughly 1½ times the state’s annual CMAQ allocation.

4)      Operating Subsidies for 3 years: $5.25 Million

In addition to the capital costs of constructing the railroad and purchasing rolling stock, passenger rail will need subsidies. Every single regularly scheduled passenger route in the US relies on operating subsidies to run and New Hampshire would be no exception. Under NHDOT estimates, $5.25 Million would be needed over the course of the first three years of operation. Funding for this could also be done with federal CMAQ money.

It should be noted that these estimates do not include future capital expenses as well. While these are projections, they do give a sense of the cost of such a project. In comparison, the amount of money spent on just constructing the route ($250 million), spent elsewhere could fund the rest of the I-93 project from Exit 3 all the way up to Manchester, or it would fund all of the state’s pavement preservation and Red List Bridge needs for the next 10 years.

With more pressing transportation needs facing the state, such the maintenance and replacement of our aging infrastructure, one must ask, is passenger rail the best use of our limited resources?

Charlie Arlinghaus

September 19, 2012

As originally published in the New Hampshire Union Leader

In a few weeks, Maine will finish a $44 million project to extend a money-losing commuter train and lose even more money. Fortunately, retiring Sen. Olympia Snowe got them money in the federal budget to fund their profligacy. Some politicians in New Hampshire want to follow suit and spend money we don’t have in the state budget to restore a commuter train that last operated for parts of 1980 until the federal dole ran out.

Transportation policy both at the state and national level are at a financial crossroads. We have to make difficult decisions about what we can and can’t afford. Huge debts and operating subsidies are the way of the federal government but we can and should avoid them. Trains are a great deal if someone else is paying for them. But if we have to pay for them ourselves, they are inefficient and unaffordable.

There is a distinction between highways and railways. Highways, in large part, pay for themselves through user fees. Commuter trains don’t come anywhere close to paying for themselves and are usually subsidized with highway user fees.

The most successful rail project in recent history is the Downeaster train on the Seacoast. It is also roughly a model for the commuter rail advocates want to build in the central NH corridor to Concord. Yet, the Downeaster exists only through massive capital and operating subsidies.

For the Downeaster, none of the capital costs are supported by user fees. They are entirely subsidized. Nor is the debt service calculated as part of the operating costs. For the central New Hampshire commuter rail project, the capital costs are estimated to be roughly $300 million. According to rail authority chairman Peter Burling, a partial project just going to Nashua would be about $90 million instead. Supporters want the federal government and the state to borrow the money for those costs.

Next even after a 100% subsidy of capital costs, the train won’t support itself. The tremendously successful Downeaster project recovers only about half its operating costs and relies on a government subsidy for about $7 million per year. If the capital corridor were that successful, the state would need to find $5-$10 million per year in its budget.

Keep in mind that ever dollar we spend is a dollar that isn’t available for something else whether behavioral health, hospitals which were cut in the last budget, or the university system looking for more money.

Well, since we subsidize roads, shouldn’t we subsidize trains too? The problem is we don’t subsidize roads. Roads pay for themselves in user fees – tolls, gas taxes, registrations, etc. This is not true in every state but it is true in NH.

For highways, capital costs and operating costs are both supporter by user fees. Federally and in every state, some money is diverted from user fees and some added back in. But in the aggregate, user fees support spending. For total federal and state spending, over the last ten years we’ve raised $1.08 trillion in user fees and spent $1.03 trillion. Because New Hampshire isn’t one of the states that borrows money from the general fund like New York, California, or Illinois our numbers are even better.

In most states, local road costs are less reliable. But in New Hampshire, even local roads are largely supported by user fees. In 2010, towns spend about $230 million in the category “highways and streets” while state block grants and car registration fees totaled around $230 million. Neither the measure of revenue nor spending is as precise as the state data nor are they controlled by a trust fund but you can see the number is close.

Trains are wonderful and romantic but unaffordable. We can’t borrow the money for operating costs and then just write off the debt service. From 2007 through 2011, state debt climbed precipitously from $654 million to $939 million – a 44% increase after having climbed just 8% and 4% in the two previous 4 years cycles. Simply put, we don’t have extra borrowing capacity. This isn’t Europe.

Beyond the huge startup costs, we can’t afford to keep a train running. If we had additional highway user fees would you prefer to diver $5 to $10 million to a little used train or help towns pay for more bridge repair?

Using a recently released report from the Department of Administrative Services and its own independent investigation into the data, the Josiah Bartlett Center is publishing a series of stories on its investigative journalism website, NewHampshireWatchdog.org.

Monday:  NH state workers drive 1.5 million personal miles a year

Tuesday: NH takes the keys from Liquor Commissioners

Wednesday: DRED Commissioner defends giving Cannon GM “Company Car”

Thursday:  NH DOT claims employees save money taking home state cars

Friday: Some NH Commissioners keep state cars, some lose them

Among the investigation’s findings:

  • New Hampshire state employees drove state-owned vehicles more than 1.5 million miles in Fiscal Year 2011, more than enough to drive around the Earth six times or to make three round-trips to the Moon.
  • 233 state-owned vehicles, or 12% of the state’s fleet, has more than 15% of their miles used for non-business use.
  • 61 state vehicles racked up more non-business miles than official miles last year, and 135 logged more than 5,000 non-business miles.
  • Several New Hampshire Commissioners used their state-owned vehicle for extensive non-business use.
  • 14 vehicles exceeding 15% non-business use were redistributed within the state fleet, while 218 were retained.
  • Allowing state employees to use state vehicles rather than reimbursing them for their official travel cost taxpayers more than $1,000 each for more than 50 vehicles.

By Grant Bosse

New Hampshire is somewhat inconsistent on which top officials drive government cars. Following a year long review on Non-Business Use of state vehicles, some Commissioners were allowed to keep taking their state vehicles home at night while other were asked to turn in their keys. Now lawmakers are looking at ways to improve management of the state’s motor vehicle fleet, and could ask state employees to reimburse taxpayers for every mile they drive off the clock.

According to a report presented to the Legislative Fiscal Committee this month by the Department of Administrative Services, 233 state vehicles accumulated more than 15% of their miles for Non-Business Use last year, totaling more than 1.5 million miles. Most of those miles were from employees in the Department of Transportation driving directly to and from job sites in the field. DOT persuaded state officials reviewing the use of state cars that letting these employees commute in state cars improved efficiency and was worth the cost in higher gas bills and automotive maintenance.

But not all those miles were from civil engineers and bridge inspectors. Several top bureaucrats also commute on the taxpayers’ dime, according to the DAS report. As we reported earlier this week, all three of New Hampshire’s Liquor Commissioners were asked to return their state vehicles after racking up significant miles outside of official business. But DRED Commissioner George Bald was allowed to keep his state car, which he drives to and from the office.

Health and Human Services Commissioner Nick Toumpas was the only employee at his Department to top 15% Non-Business Use in his vehicle. HHS has 105 cars in its fleet. According to DAS data, Toumpas drove his 2006 Chevrolet Impala 21,592 miles in Fiscal Year 2011, 10,108 of those for Non-Business Use. On August 11, 2011, Toumpas wrote a letter to DAS Commissioner Linda Hodgdon requesting a waiver to keep the car from being redistributed within the state’s fleet.

The Commissioner lives in Rye, NH. It would be inefficient to travel to Concord to obtain a state vehicle and then travel back towards Rye, for example, on state business. Further, paying the Commissioner personal mileage at the current IRS-allowed rate would be more expensive because the IRS-allowed rate ($0.555 per mile) is substantially higher than the state’s breakeven mileage ($0.33 per mile)

DAS estimates that paying Toumpas for his official travel would have cost $752 less last year than maintaining the state car. A five-member committee of state officials unanimously approved Toumpas’ request to keep his state car. But the panel rejected a similar plea from Corrections Commissioner William Wrenn.

Wrenn drove a 2007 Chevrolet Impala 26,662 miles last year, 13,162 of them off the clock. In an August 23, 2011 letter to Hodgdon, Corrections Director of Security and Training Christopher Kench requested a waiver for Wrenn.

This vehicle is used for commuting. However, much of the commuting involves directly reporting to required meetings and locations such as NH DOC prison facilities, court, Governor & Council Meetings, other State and local agencies and for emergency response capabilities as the Commissioner is on-call 24 hours a day.

The DAS report estimates that Wrenn’s use of the vehicle cost $1,314 more than reimbursement. Fish and Game Executive Director Glenn Normandeau was also asked to turn in the state-owned 2006 Chevrolet Impala that’s been driven by the last three Fish and Game heads. Normandeau put 22,405 miles on the car last year, 16,380 of which were Non-Business Use. He asked to keep the vehicle in an August 15, 2011 letter to Hodgdon.

This vehicle was purchased for, and is used as, the Executive Director’s vehicle. I am the third director to use this particular car (Director Perry & Acting Director Clark also used it) which currently has 114,000 miles. The vehicle is used only for official purposes and commuting by the Director. It carries state plates and seals. I personally care for this vehicle, including doing much of the mechanical work and maintenance in my own shop at home, recognizing it is unlikely in my tenure that I will ever see a replacement.

The Executive Director can be called or scheduled to be anywhere in the state at anytime including evenings and weekends. Having to come to Concord to pick up a vehicle in many instances would be a colossal waste of time – an hour out of my way if going north to Berlin or Lancaster. At 55.5 cents a mile the alternative of using a personal vehicle for business use will
not show any savings to Fish & Game.

DAS estimates that Normandeau’s personal miles cost $4,050 more than it would have to pay him for his official travel last year. Three of the five members of the committee considering vehicle waivers voted to deny Normandeau’s request, and the car was redistributed within the fleet.

Department of Safety Commissioner John Barthelmes got to keep his car after driving 2,217 of his 7050 miles last year for Non-Business Use. DAS estimates that allowing Barthelmes to take the car home saved the state $356 compared to reimbursing him for his on the job driving.

Legislative officials tracking state vehicle use praise the data, and Hodgdon’s efforts to compile and distribute it. Fiscal Committee Chairman Ken Weyler (R-Kingston) has been a long-time proponent of cracking down on fleet abuse. He singled out Hodgdon for praise.

“I’m very pleased. They’ve done a great job,” Weyler said.

Hodgdon thinks there is room for improvement in the system.

“I’m trying to get the right people in state vehicles,” Hodgdon tells New Hampshire Watchdog. “We should be paying mileage at $.55 per mile, but these cars are not for personal use.”

Hodgdon asked the Fiscal Committee to raise the reporting threshold for Non-Business Use from 15% to 20%. The higher trigger would have removed 43 of the 233 vehicles in the report, accounting for about 10% of the 1.5 million Non-Business Miles driven by state employees last year.

Senate President Peter Bragdon (R-Milford) was lead sponsor of SB 402, which directed Hodgdon to track state vehicle use. He’s pleased that this year’s report provides a baseline for how the state manages its fleet.

“We now have the information on the vehicles we did not have before and that provides more transparency. And now we know where the issues are,” Bragdon told the Union Leader. “I want to let the system run a little bit and then see as we go along.”

Lawmakers are already seeking reforms, including a proposal to have state employees reimburse the state for any miles they drive outside of their official duties. Senate Finance Committee Chairman Chuck Morse (R-Salem) has introduced SB 314, which would require employees to reimburse the Highway Fund $.55 cent per mile including but not limited to their commute. Such a system would have generated $827,000 last year. Weyler is a co-sponsor, and believes that asking state employees to pay back the state would decrease the number of nights they take home state cars. SB 314 will be referred to the Senate Finance Committee when the Legislature comes back into session in January.

Health and Human Services State Vehicles

Corrections State Vehicle Requests

Fish and Game State Vehicles

By Grant Bosse

Of the 1.5 million miles that New Hampshire employees drove state cars for Non-Business Use last year, 1.1 million were in the Department of Transportation. The agency responsible for the Granite State’s roads and bridges has the largest number of vehicles in the state’s fleet, and by far the most of those cars and trucks outside of official business. But DOT officials insist that letting workers take state vehicles home at night can ultimately save taxpayers money.

DOT has 606 cars and trucks that fall under SB 402, a law passed last year to cut down on state vehicle expenses. Under the law, agencies must now track Non-Business Use of vehicles under 10,000 pounds, and turn in the keys to any vehicles with more than 15% Non-Business Use unless they can justify its continued use to a panel of state officials led by Department of Administrative Services Commissioner Linda Hodgdon. A recent DAS report found that 179 DOT vehicles tripped the 15% NBU threshold, along with 54 cars from across all other New Hampshire departments.

30% of DOT vehicles were used extensively outside of business travel, compared to just 4% for all other vehicles. Fish and Game and Health and Human Services each had only one car in the report despite each having over 100 vehicles in their departments. DAS calculates that the average state car costs $.33 per mile to operate, putting the total tab for employees driving their DOT vehicles to and from work at $384,000. But the same DAS estimates also take into account how much the state would have paid to reimburse employees for official travel if they had not had access to state cars. Those savings drop the total cost of Non-Business Use within DOT to just over $100,000 in Fiscal Year 2011.

Deputy Commissioner Mike Pillsbury says letting DOT employees take work vehicles home more than pays for itself. Pillsbury says that most DOT vehicles don’t just transport workers to and from work. They are needed on the job site because of the specialized equipment, signal lights, and communications gear they carry. If Civil Engineers, Bridge Construction Superintendents, and other key employees had to drive to Concord or nearby maintenance shed to pick up these vehicles, DOT would have to start paying them the minute they turned the key in the ignition.

“We’d rather have them on the job site at 7:30 in the morning than driving to Concord to pick up the truck, being on the clock for the whole ride, and starting construction that much later,” Pillsbury explains.

Pillsbury stresses that employees only take home DOT trucks when it is more cost-effective to home to their job, and often only during construction season. He says that no top officials drive state cars. But that wasn’t always the case. Former Commissioner George Campbell, who stepped down this fall, shows up on the DAS report.

Campbell drove a state-owned 2007 Chevrolet Malibu 23,549 miles last year, 14,618 miles for Non-Business Use. That means 62% of Campbell’s miles were off the clock. In an August 10, 2011 letter to Hodgdon’s committee, DOT Assistant Director of Operations William Janelle requested a waiver to keep Campbell’s car.

DOT headquarters are located in Concord, however often the commissioner is required to travel to any one of the six regional district offices or 102 maintenance patrol facilities, various cities or towns to address specific concerns, Governor & Council meetings, public hearings for design projects or ongoing construction projects. These meetings can often occur at the start or end of the day on weekends or during evening hours.

The Commissioner has 24/7 responsibility for all transportation operations. In the past major traffic incidents such as multiple car pileups, bridge collisions and winter storm events required the Commissioners presence. In addition when natural disasters occur the Commissioner is ultimately responsible for transportation activities ESF 1 & ESF 3 at the Emergency Operations Center. This typically involves both monitoring the condition of transportation infrastructure in the field and briefing the Governor and local communities regarding the status of the ongoing response.

The Executive Council confirmed Christopher Clement to take over DOT on September 14th. Pillsbury says neither Clement nor his top assistants drive state-owned vehicles. According to Pillsbury, the only top DOT officials with state cars are the chief Highway Engineer and Bridge Engineer, who are on call to respond to accidents 24 hours a day.

Pillsbury adds that taking home specialized cars and trucks isn’t much benefit for DOT employees, since they can’t use them anything other than getting to and from the job site. The state does end up picking up the costs of those employees commutes, since it pays for gasoline and maintenance for state vehicles, saving state workers from hefty gas prices.

Hodgdon and her colleagues approved 175 of the 179 waiver requests from DOT, but also directed the Department to cut its vehicle fleet by at least 10 cars. Hodgdon says it may often be cost-effective to let transportation workers take their state vehicles home, DOT needs to improve how it tracks and manages its fleet.

“They can do better,” Hodgdon added.

Over a third of all miles driven by the 179 DOT vehicles in the report were for Non-Business Use, drawing the attention of Senate President Peter Bragdon, who sponsored SB 402 last session.

“We now have the information on the vehicles we did not have before and that provides more transparency. And now we know where the issues are,” Bragdon told the Union Leader in response to this Fleet Week series. “I want to let the system run a little bit and then see as we go along.”

By Charlie Arlinghaus
December 21, 2011
As originally published in the New Hampshire Union Leader

Legislators too often ignore the negative but unintended consequences of an action motivated by good intent. The governor’s veto of a bill regulating auto title loans is just such an action. Although very well intentioned, sustaining his veto would hurt the people he’s trying to help.

Like many states, New Hampshire regulates the rate of loans, particularly the loans we find less desirable and more distasteful to middle class sensibilities. Not every American has the ability to take out a loan against the value of a home whether a mortgage or an emergency home equity line.

Small consumer loans include pawn broker loans, payday loans and auto title loans. Payday loans are the most commonly discussed product. They are an unsecured advance on a customer’s paycheck at the highest interest rates. Payday loans have essentially been banned in New Hampshire driving their customers to the internet and to loans from Indian reservations advertised on television. Whether that choice was sensible or not, legislation under consideration does not address payday loans at all. They are still off the market.

What is under consideration is adjusting the rates and terms of automobile title loans in New Hampshire. In 2008, legislation in New Hampshire capped interest rates on title loans as an attack on supposedly predatory lending. Instead those loans were driven from the market.

Opponents have watched them go and said good riddance. Yet most of those opponents have no need for a short term loan. These loans are intended for those who are unbanked or underbanked in financial terms. In other words, a title loan is a service for people who don’t have recourse to another method.

For any loan of any type, some of the overhead costs of the lending company are taken up by charging fees. For a consumer receiving a mortgage, those fees are many thousands of dollars. However, the fees are rolled into the mortgage and paid for over thirty years. The bigger the mortgage and the longer the term, the smaller the fees look when announcing them as a percentage. For a bigger mortgage, the fees look smaller while for a smaller loan the same fees appear larger.

For small consumer loans, there are also overhead costs and fees. Yet the loan is often for just one month and 80% of the loans don’t last most than five months. Covering overhead costs on a $500 loan in a month sounds much higher as a percentage than taking those same costs and spreading them over thirty years and $200,000.

Nonetheless, the interest rate expressed in annual terms sounds obscenely high. Under the proposed law, rates would still be capped but at a rate of 25% each month. The rate cap is not arbitrary. A Tennessee study of their title loan industry found the monthly rate to simply break even was 18%. That helps explain why banks and credit unions haven’t stepped in under the current law which is about a sixth of that break even rate.

The best reason to allow title lenders is that they are a better alternative for consumers. Federal bank regulators have found that the primary competition for small consumer loans are overdraft fees, bounced check charges. In fact, that’s the biggest reason to take out a loan – to avoid bounced check fees. No one suggests a bank not charge a fee for bouncing a check or would ever suggest it was usurious. Yet if you calculate those fees the same way, the annual percentage rate is in the thousands. By comparison, even over 10 months, a title loan’s charges would 138%.

A title loan is a better option than paying overdraft charges which may be ten times as expensive. It is a better option than paying for unsecured payday loans which have a much higher rate and are unregulated over the internet. To refuse to allow consumers this option does not change their situation because you wish it so. They don’t suddenly buy everything on layaway. Their need doesn’t vanish. It merely takes away the lowest cost option they might choose and drive them instead to the other alternatives of much higher fees they might have avoided or internet loans that cost much more.

By Grant Bosse

Commissioner George Bald is satisfied that no one in his department is abusing the privilege of driving state-owned vehicles, even if he was a little sloppy in keeping track of his own mileage. The head of the Department of Resources and Economic Development defends his decision to let the General Manager of Cannon Mountain take home a “company car” every night, putting more than 18,000 personal miles on the vehicle in Fiscal Year 2011.

“There are a lot of requirements that people have to meet with different companies and travel the district. I don’t feel there is any waste going on with people in DRED using state vehicles,” Bald tells New Hampshire Watchdog. “And if they take them home, it is because it was going to be less expensive than for them to be driving to Concord to pick up the vehicle.”

DRED had eleven of its 168 state vehicles show up on a recent report detailing cars and trucks with more than 15% of their miles for Non-Business Use last year. A new state law, SB 402, requires that agencies track that mileage more carefully and redistribute vehicles above that threshold unless a they receive a waiver to let employees keep their state cars. Ten of those eleven vehicles received waivers, including Bald’s own car.

Bald drives a 2006 Chevrolet Impala LS, and last year drove it 25,980 miles, according to a report submitted by Administrative Services Commissioner Linda Hodgden to the Legislative Fiscal Committee earlier this month. Bald says he drives the car to and from work.

“I live in Somersworth, but I generally work out of the Concord office. I do take it home every night. Sometimes I’m going up to Colebrook or Berlin from here,” Bald explains. “I could have a meeting in Portsmouth in the morning, and Keene in the afternoon.”

State rules, and federal tax guidelines, treat a public employee’s commute as Non-Business Use. The distance between home and the office does not count as official travel. And while Bald submitted details mileage reports for ten of his department’s vehicles, he could not precisely account for his own mileage.

“I didn’t keep the records as well as other people have,” Bald readily admits. “Whenever I gas up, I note the mileage, but I wasn’t as good at keeping the mileage between various trips.”

Hodgden says that committee charged with considering vehicle waivers had to estimate how much of Bald’s mileage was taken up by Bald’s 40-mile commute.

“We did a low, medium and high version based on prior years and in all cases, it was better to have him drive a state vehicle than pay him $.55 to drive his own vehicle,” Hodgden concluded.

Bald argues that taking home state vehicles isn’t much of a perk, since most state employees don’t like leaving their personal vehicles in Concord, and they can’t use their state vehicles for anything once they pull into their driveway. State policies prohibit transporting family members or running errands in government cars.

CANNON CASE STUDY

2010 Chevy Impala: Photo from Chevrolet.com

The state car that has drawn the most attention following the publication of the DAS report is the 2010 Chevrolet Impala LS driven by Cannon Mountain General Manager John DeVivo. That car registered 18,842 miles of Non-Business Use in FY11, second most of any car in the state fleet. But it is also the only state car garaged outside of New Hampshire. DeVivo lives in Bethel, Maine, and Bald says he gave DeVivo permission to take the Chevy home every night.

“He’s on call 24 hours a day, seven days a week. In the winter he runs Cannon Mountain, but in the summer he runs all of Franconia Notch State Park,” Bald explains. “I felt it was important for him to have a vehicle because he wasn’t being compensated for being on call. He’s driving a billboard. There’s no doubt as to what it is. There’s no personal use of it.”

DeVivo’s out of state commute drew the ire of Josiah Bartlett Center President Charlie Arlinghaus, who highlighted the case in a Union Leader column previewing this Fleet Week series.

“I’m sorry he lives in Maine but why am I taxed so he can drive a state-owned Chevy Impala home every night instead of buying a car like the rest of us?” Arlinghaus asked.

Bald took issue with the idea that taxpayers are footing the bill, since Cannon Mountain’s operations are paid for entirely with user fees.

“There are no tax dollars that go into that vehicle. There are no General Fund dollars going into Cannon Mountain. Cannon Mountain is 100% supported by user fees,” Bald reiterated.

DAS estimates that the cost of maintaining DeVivo’s vehicle for 30.973 total miles is $3,488 more than it would be to simply reimburse DeVivo for the 12,131 miles in official travel he logged last year. Despite that additional expense, Bald made a case for letting DeVivo keep the car in his August 17, 2011 letter to Hodgden.

When John was hired in 2007 into the Unclassified Position as Mountain Manager and with the realization that the position serves at the pleasure of the Commissioner, it was agreed that John would be assigned the use of a state vehicle. This decision was based on the 24/7 nature of the job, the 15-18 hours of commuting time each week, the need to travel extensively in New Hampshire (and occasionally in western and southern Maine) beyond the commute, and the desire to put a Cannon logo in front of folks in lesser-marketed areas in Cannon country along the Route 2 corridor (Franconia, Twin Mountain, Jefferson, Gorham, and Shelburne) twice a day, on roughly 270 days a year. As with the electronic tethers (cell phone, mobile/global email, and laptop), the vehicle is a necessary tool for the job at hand, and John agreed to more than offset its use (financially) with an annual 4-1/2 month winter seasonal cottage rental at his own expense, to allow for even closer and more consistent contact with the organization.

As in the private sector, most state employees are responsible for getting themselves to and from work. And most employees who take home state cars do so in order to avoid having to drive to Concord or a nearly depot to pick up a state car for official travel in the morning. Such an arrangement saves the state money on each trip, even though it increases the amount of Non-Business Use on state vehicles. But Bald argues the Cannon Mountain GM should be allowed to take home a company car even if he isn’t traveling on state business the next day.

“It’s operated as a business would be operated, so that would certainly fit under the category of company car,” Bald says.

Bald says the decision to let DeVivo commute in a state vehicle has been well worth it.

“Four years in a row, we’ve had Cannon Mountain in the black. For his compensation, having a vehicle is a very small cost given the amount of work that he does and the responsibility he has,” Bald concludes.

Hodgden and the waiver committee agreed, voting 5-0 to let DeVivo keep driving the car. Overal, the panel allowed the continued use of 218 of the 233 cars and light trucks that crossed the 15% Non-Business Use threshold.

Dred- Bald Mileage Estimate

NH DRED State Vehicle Requests