Gov. Jeff Colyer announced the decision Monday to lower the fee assessed cities and counties in Kansas to convert federal highway grants into state aid that comes with fewer bureaucratic strings attached and gives local units of government greater flexibility when prioritizing road projects.
The benchmark exchange rate at the Kansas Department of Transportation was 90 cents on the dollar from 2011 to 2017, which meant qualifying municipal governments accepting a $100,000 federal grant for transportation projects could exchange it for $90,000 in state highway financing.
In 2017, the cash-strapped administration of Gov. Sam Brownback slashed the rate to 75 percent and generated immediate discontent in local government, business and industry.
The new exchange rate is expected to make $4.5 million available to counties who voluntarily take part in this type of transfer, Colyer said.
"It allows us to cut regulation," said Colyer, who is seeking the Republican nomination for governor in August. "You're allowed greater flexibility in dealing with your transportation needs."
The governor said Johnson, Sedgwick and Wyandotte counties wouldn't be eligible to be part of this exchange funding option.
Kansas is a top-five state within the United States in terms of total miles of road. Local units of government in Kansas are responsible for maintaining about 90 percent of the network.
Max Dibble, a Phillips County commissioner and president of the Kansas Association of Counties, said he welcomed restoration of the 90 percent exchange rate in the federal highway program. The state's 105 counties have control of more than 100,000 miles of road and over 19,500 bridges.
"This allows use to further stretch our transportation dollars," he said. "This means safer local roads and bridges for our citizens."
He said county governments were under financial pressure to maintain road systems despite rising fuel costs, declining rural population and the state's imposition of a lid on local property taxes.
Alteration of the rate by the Colyer administration will allow more to be accomplished with $150,000 in federal funding exchange dollars received annually by Arkansas City, said Nick Hernandez, the city manager of Arkansas City.
"When you look at our mill rate, that's about 3 mills for a city our size. It's very important to see this increase," Hernandez said.
Federal funds exchanged for state funds can be used for local projects such as road construction, maintenance or preservation, safety improvements, sidewalks, disability ramps, bridges and low-water crossings. The exchange program allows local agencies to deposit federal funds over a period of years to bank money for larger projects or to finance projects that wouldn't have qualified under federal rules.
In a typical year, approximately $30 million in federal funds has been eligible for the exchange program in Kansas. The higher exchange rate in Kansas will be reflected in new contracts, Colyer said.
A joint legislative task force formed by the 2017 Legislature is starting to develop a big-picture infrastructure plan for Kansas. Due to financial problems at the state level, the T-Works highway program at KDOT for upgrading and expanding the transportation statewide stalled before all promised projects were completed.
State lawmakers drained much of the money reserved for T-Works to balance the budget, leaving little for major improvements and prompting reduction in the benefit of exchanging federal for state highway dollars. In addition to borrowed money for new construction, the state intends to reduce transfers this year from the state highway fund by nearly $60 million to begin addressing delayed projects.
“As we travel the state and talk to cities, we repeatedly hear transportation funding and infrastructure development is critically important to maintain and grow our state,” said Erik Sartorius, executive director of the League of Kansas Municipalities.