A remarkable part of the roads' asphalt covering is uneven and endangers traffic safety, causing losses in the transport industry, hindering the development of the state economy as a whole.
At the end of 1999 in Latvia there were 864 km of bad road surfaces - 11 percent of all black-top Latvian roads. Delay in repairs is making eventual repair more expensive.
The repair of the state roads is financed from the state Automobile Roads Fund. The greatest share of the ARF funds comes from the gas excise tax. At the moment only 50 percent of the tax is directed to the ARF funds. The Road Builder's Association has asked that the share be raised gradually to 85 percent over the next five years. According to their calculations, this percent of the tax is paid by the auto drivers themselves, those most affected by the roads' quality.
"Currently the Automobile Roads Directory has substantial financial problems," said ARD economist Girts Augstkalns. "Gas tax and annual vehicle duty paid by car owners make 70 percent to 80 percent of the road fund. But there is one problem. From the 50 percent of the gas tax transferred to the fund from the Ministry of Finance, we subsidize bus transport in the countryside, the national railway and also donate to municipal automobile road funds. So only around 30 percent of the gas tax goes to national roads after these three payments."
In June 1999, the Ministry of Transport initiated an increase to 75 percent the share of gas tax transferred to the ARF. The Cabinet did not support the increase. Moreover, when in August 1999, the new Skele government amended the budget, the already allocated 60 percent share was reduced to the current 50 percent.
"Our idea now is to get the earlier promised 60 percent and then gradually raise the sum to 85 percent, which certainly will not happen in a year. Then we will be able to finance the country roads and also build new national roads," Augstkalns said.
The funding for roads reconstruction and current repair has increased constantly from 1993 to 1999 (except 1995). In 1999 it reached 37.7 millions lats. But this year, the budget has only 32.7 lats for this purpose. With the existing share of the gas tax transferred to ARF, its budget will continue to decrease next year, say the calculations of the Latvian Road Builders Association. The number of kilometers of roads renovated gives a clear picture of the state's investment in road repair during the last 10 years in Latvia. During the first eight years, after Latvia re-established its independence, the number of kilometers restored equaled the number repaired in the last two years of Soviet rule, namely around 1,600 kilometers, or 200 per year compared to 800 per year.
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