State Highway Fund suffering shortfalls

Everyone is well aware of the impact the economic downturn has had on Nevada's General Fund revenues. The state has now had to cut some $1.2 billion from its budgets to balance spending against the money available.

Well, here's the other shoe: The Highway Fund, the second biggest pot of money the state generates, is also suffering. One big reason for that is people are driving less because of higher gas prices, and thus generating less tax money for the state.

The Highway Fund is generated by gas and other fuel taxes, vehicle registration, title and other Department of Motor Vehicles fees.

According to Dennis Colling, head of administrative services for DMV, the department collects nearly $500 million a year in Highway Fund money. That money pays the cost of operating not only DMV, the Nevada Highway Patrol and the Nevada Department of Transportation " including the cost of building and maintaining much of the state's highway system.

And with a weak economy coupled with record gas and diesel prices, he said those collections are expected to fall $85.7 million short of projections used to build the agency budgets this biennium.

"And it's not just in one area," he said. "The collections are below projections whether it's titles, registration, the gas tax, custom license plates " it's across the board."

For this fiscal year, the Highway Fund projection used to build the budget was $482.8 million. He said when the final accounting is done for the fiscal year just ended, they expect actual collections will be $454.8 million " a $28 million shortfall.

It's worse for the fiscal year that began this past week. Colling said the state can expect to collect about $444.8 million of the $502.5 million originally expected " a $57.7 million difference.

For fiscal 2009, that is an 11.5 percent shortfall.

He said the biggest hits are in the diesel and gasoline tax revenues, which together account for more than two-thirds of state Highway Fund collections. Nevada relies on a fixed, per-gallon tax rate on fuel and, according to Colling, the amount people are driving and, therefore, the amount of fuel used is down. As a result, tax collections are down.

For the year just ended, diesel tax collections were $7.8 million below projections and gasoline tax revenues $12.3 million off " accounting for $20 of the $28 million shortfall for the year.

But, he said, with fuel prices well over $4 a gallon, the reason people are driving less is obvious.

In addition to the state Highway Fund collections, NDOT receives more than $200 million a year in gas taxes collected under federal law then reimbursed back to the states to spend on road projects.

Robert Chisel, administrative services officer for the department of transportation, said that at this point, that funding is probably stable and he doesn't expect it to decrease next year.

But into the future, he said, "there is concern over the federal Highway Trust Fund due to the same problems everyone else is having."

Nevada's federal Highway Fund share for this past fiscal year was $235 million and NDOT expects about the same for the fiscal year that just started. That money is used to reimburse the state for federal highway construction and maintenance projects.

Ginny Lewis, director of the Department of Motor Vehicles, said in an interview earlier this year the Highway Fund is no more immune to economic downturns than the General Fund. Colling pointed out that the current situation is made worse for the Highway Fund by the extreme increase in gas prices, which is having a direct impact on DMV revenues.