Greater Greater Washington

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McDonnell transportation plan: Mortgage future, build roads

Governor McDonnell released a transportation plan for Virginia yesterday, which essentially boils down to: take away money from future generations, and use it to build only roads today.


Photo by woofiegrrl on Flickr.

Most of McDonnell's plan involves borrowing money. He wants to issue $1.8 billion in bonds backed by the state, and then another $1.1 billion in GARVEE bonds, which borrow against future federal transportation aid.

And what does he want to spend it on? The only thing he mentioned in his speech was: roads, roads and roads. "This is the best opportunity in modern Virginia history to build roads," he said.

What about transit, pedestrian and bike facilities, and more? Transportation Secretary Sean Connaughton promised to devise a list of specific projects, and perhaps McDonnell was oversimplifying in his speech, but it'd be a big surprise if his final list includes more than token transit and bike-ped projects.

Virginia is not sure how to pay for the second phase of the Silver Line, but it's a good bet that widening freeways will come far before that or any other rail projects.

Borrowing in this way, of course, essentially means spending future decades' transportation money. From McDonnell's point of view, why not? He won't be governor. The easiest way to get credit for starting a lot of projects when he has no money is to spend future governors' money.

Maryland got itself into a real pickle with very aggressive use of GARVEE bonds for the Intercounty Connector. They dedicated federal money to that project, but then the economy tanked and local tax receipts dropped. Since they'd bonded for the ICC, they couldn't stop that project, and instead had to cut maintenance on most existing local roads.

And like the District, Virginia is getting into risky territory already with its level of debt. McDonnell argues that low interest rates and the cost of construction make now a particularly good time to borrow, but his priorities are remarkably narrow.

The McDonnell administration also released a ""Multimodal Strategic Plan" for transportation. The plan does lay out a vision including transit, biking, walking and more, but has no specifics on how to achieve that goal.

Meanwhile, McDonnell wants to take control of Metro to bring in "accountability." If he gets it, how soon will it be until he suddenly discovers some ways for Virginia to cut its contributions to Metro so it can build even more roads?

Added: Borrowing money per se is not necessarily bad. However, that borrowing needs to be tied to some economic development goal that will increase the tax base enough to pay for it, or other revenue increases need to be found to pay for it. McDonnell is simultaneously arguing that Virginia should borrow money, but opposing any means of raising revenue to pay for it. He's just kicking the problem down the road.

And while creating sprawl will generate some economic activity to grow the tax base, those roads will have to be maintained, forcing revenue increases later as well. And it's the wrong land use pattern for Virginia, which is the bigger issue.

David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater. 

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You're right to criticize the governor's priorities, but I don't think it's necessarily wrong to use GARVEE bonds. It just means the commonwealth will have to raise taxes to fund more of its own projects in the future instead of raising taxes now.

by Eric Fidler on Dec 10, 2010 12:08 pm • linkreport

Thank god they got the Silver Line in before they elected McDonnell.

by Thayer-D on Dec 10, 2010 12:16 pm • linkreport

Weak.

You love bonds. If they're from Arlington to pay for streetcars or upgrading Metro's infrastructure.

You hate roads. And Republicans. We get that.

But don't hate on bonds to reiterate your points.

by Lou on Dec 10, 2010 12:21 pm • linkreport

Question is what do u get for 2.9 bn dollars with mass transit? A proper rail line to DC (kind of doubt it) ? What about the rest of Virginia?

If you want to be intellectually honest,you have to admit that not all Virginia can sustain mass transit. Sometimes building roads is just way more cost effective.

by Vincent Flament on Dec 10, 2010 12:28 pm • linkreport

@ Eric: The problem with that is that despite the 2008 election, most of Virginia is still pretty red. We all know that a GOP state legislature and/or governor are not going to raise taxes for anything, especially not things that are painted as "liberal" by Republicans, such as transit.

by Bryant Turnage on Dec 10, 2010 12:30 pm • linkreport

Lou: This isn't about me, it's about McDonnell's plan. Why don't you try discussing what you think about the plan instead of attacking me for my opinions.

by David Alpert on Dec 10, 2010 12:30 pm • linkreport

Actually, I'd say the reverse.

The GARVEE bonds are just a terrible idea. Creative -- states issuing bonds based on federal money coming in -- but still bad. Issuing more debt to maintain roads is also not a good idea.

But the reality is VDOT has been bled dry. Despite "finding" a billion dollars in VDOT funds, there is a lot of deferred work on Virginia roads that needs to be done.

Last time I checked, Alpert was saying Virginia doesn't pay much to WMATA, so they couldn't' get a seat. If that is true, how much can the Governor cut?

Look, I can't stand McDonnell. HE is a typical yankee bred Northern virginia transplant. His creepy ads involving his family still scare me. But he's been pretty good on transit issues, and the reality is roads are far more important to the state than transit. In nova, I think he understands the mix.

by charlie on Dec 10, 2010 12:36 pm • linkreport

@Vincent

Virginia's actually an interesting case for mass transportation. Although it's true that you'd never be able to cover most of the state's land mass, it would be actually quite easy to cover the people, given that the vast vast majority of the state's population live in 3-4 dense population centers. (DC, Richmond, and Norfolk/VA Beach)

by andrew on Dec 10, 2010 12:54 pm • linkreport

David, I suppose I could say I meant "you" as in GGW. It does tend to speak in a consistent voice. But whatever, it's your blog and you may objectify the pronouns as you wish.

As an aside, you may or may not realize that a portion of these bonds were authorized in the GA's transportation package in 2007 under Tim Kaine. A veto was pointless. So it's not entirely all the fault of the Governor of the moment, but more the actions of the GA, ie the will of their constituents.

by Lou on Dec 10, 2010 1:06 pm • linkreport

The portion of bonds authorized in 2007 (as Lou noted) is understandable and makes some sense, given the way those bonds will be paid back. What doesn't make as much sense is the GARVEE bonds, which will tie up a good portion of VDOT's future FHWA highway funding for years to come, as charlie noted.

And I say that as one of those "yankee bred Northern virginia transplants"...:o)

by Froggie on Dec 10, 2010 1:18 pm • linkreport

@Froggie; particularly grievous is borrowing money to essentially maintain and perhaps widen a few roads.

He is asking for 600 million more a year. I think the gas tax in Virginia brings in about a billion a year.

get maybe 250 million more in gas tax, and bring back the car tax (yeah, right!) to bring in about 250 million more.

Or build out some bonds based on future gas tax revenue?

by charlie on Dec 10, 2010 1:27 pm • linkreport

@charlie: the car tax still exists. It was a tax charged on cars that went to the county or city. It was "eliminated" by having the state provide the revenue to the county or city instead of the car owner.

So if you wanted new revenue from the car tax, you'd have to take it from the county or city, or increase the rate and charge the owner.

Increasing the gas tax is not going to fly considering the number of members of the House GOP that have signed Mr. Norquist's pledge.

And the bonds based on future tax revenue is essentially what the proposal is.

by Michael Perkins on Dec 10, 2010 1:48 pm • linkreport

@Perkins; well, I think you mean to say the car tax exists, but is exempted or greatly reduced for a majority of vehicles. The money the counties would have got is instead paid by the state. I'd agree the chances of restoring and/or increasing it is marginal.

And, yes, all future bonds are based on tax revenue. I'm suggesting, however, more of a specific asset class: gasoline tax bonds, issued for the purposes of road construction. Not sure if that instrument has any use in the worldwide financial markets.

by charlie on Dec 10, 2010 2:06 pm • linkreport

I'm so discouraged with the way metro is running itself that I would be in favor of having Gov. McDonnell have more say in how it is run. Yes, he is in favor of more roads but before the previous Governor Tim Kaine left office he said that everything in state government had been cut to the bone that there was nothing to do but raise taxes. Gov. McDonnell came in and found a way to do a good job without raising taxes. That is what our metro system is lacking, financial discipline. Our metro system has a cost problem not a revenue problem. Since almost everyone (maybe everyone?) on WMATA's Board is a Democrat things are very one sided from a political standpoint. When there are budget shortages the first instinct of the Democrats always seem to be tax increases or fare increases rather than cost savings.

by Jim on Dec 10, 2010 2:09 pm • linkreport

It is true that current borrowing costs are low. However, to be responsible the state should be raising revenues to support the cost of borrowing. Virginia legislature has shown no willingness to do this. North VA neighborhoods are desperately in need of road maintenance which has been neglected for years.

by Interested on Dec 10, 2010 2:11 pm • linkreport

@Interested, wait a week or so until the details of the next budget become clearer. There will have to be mechanisms put in place to service the debt.

by Lou on Dec 10, 2010 2:20 pm • linkreport

@Lou, is that true for GARVEE bonds?

by Jim Titus on Dec 10, 2010 2:26 pm • linkreport

@Jim Titus, I think they are still working out some of the details to confirm some state revenue that can be used to apply as credits against the GARVEE bonds. Those are not assured as available at this point. Which is to say I doubt those will be activated unless the repayment is almost certain. They might be among the lowest risk in this pool, for that reason.

by Lou on Dec 10, 2010 2:46 pm • linkreport

@Bryant

I wouldn't say that's a fair assessment. The maps made Virginia look like a huge sea of red in 2008, despite the fact that the state voted for Obama.

Virginians are a whole lot more liberal than they want to admit they are. They just don't like the label.

by andrew on Dec 10, 2010 2:59 pm • linkreport

HOT Lanes projects constitute the largest chunk of all transit dollars present and proposed in VA.

In PA - their Gov is proposing them as well. Erlich didn't win in MD, but if he had won, billions in contracts would have been written to HOT-up the MD beltway and I-270.

This corporate welfare funding mechanism known as HOT Lanes is spreading like a cancer around the country.

If the public were more willing to accept more traditional publicly-set up toll authorities, this would have nver started happening - the case of "no taxes!" taken way too far I am afraid.

by stevek_fairfax on Dec 10, 2010 3:27 pm • linkreport

If it weren't for (1) grossly overpaid state employees (in the 20-50% range) and (2) "prevailing wage" laws meant to keep minorities out of federally funded construction jobs, we'd have enough money for all the roads and transit we need, without raising taxes.

The second issue is that state-funded roads are what leads to the need for state-funded transit. We haven't founded a major city in the country in 50 years because the taxpayer subsidizes sprawl. Why the hell is Manassas (or Dumphries) part of the DC metro area? Because we build these big interstates out there, then they get overcrowded, then they need a train and a bigger road. It's an absurd cycle that we have to break. The solution isn't to build trains out there. The solution is to end sprawl by curtailing the government's ability to build roads. Before they had to compete with state-funded roads, private companies ably provided the best trains and transit service in the world in the U.S.

The third issue that we have allowed transit to become a left-right issue and this is a center-right country. It's the wrong way for the flag to be planted. We need to change the discussion to (1) How much transportation money do we have (2) what percentage do we want to spend on transit. As long as transit=tax increases, we're never going to get things straightened out.

Unfortunately, this article even emphasizes that dynamic. When can we stop linking transit with tax hikes in the voters' minds? Saying we need new taxes for transit means it's less important then everything the government is already funding, otherwise we'd be reallocating existing resources there.

by Gleb on Dec 10, 2010 5:04 pm • linkreport

@Gleb
I find your comments pretty ignorant across the board.

We haven't founded a city because we have all of the cities we need. This is a global phenomenon, not an American one.

Nevertheless, people have to live somewhere. We are witnessing a gradual migration back to the cities (made possible largely because cities are safer now than they have been in decades) but it takes time. Now that the baby-boomers are approaching retirement, there is less demand for the suburban lifestyle. However, there needs to be much more migration before mass-transit becomes truly viable. If you need a car at your destination, mass-transit is not usually very helpful.

If you look at VA's six year plan (http://syip.virginiadot.org/Pages/allProjects.aspx) most of the individual projects do make a lot of sense. Most fall into two categories, 1) major improvements to completely inadequate highways like I95 between Fredericksburg and Occoquan and 2) incremental improvements to improve traffic flow in neighborhoods. These are the kinds of investments that will keep VA viable as a place to live and work in the future.

By the way, you can't just reallocate funds - those funds are allocated based on laws that have already been passed - things that constituents are depending on. It can be done, but not by snapping your fingers. That's what politics is all about.

I didn't vote for McDonnell, but I am pleased with the pragmatism he is showing.

by movement on Dec 10, 2010 11:46 pm • linkreport

Steve K: HO/T lanes in themselves are not the problem. The problem is in VDOT's application of them....namely some of the details put in place with the Beltway HO/T lanes and proposed for the 95/395 HO/T lanes (namely that the private company keeps the revenue-and-then-some and VDOT has to pay them if HOV usage is above a certain percent).

by Froggie on Dec 11, 2010 8:58 am • linkreport

BTW: Democrats are to blame for this. After two democratic governors that did good jobs, VA democrats had all chance to get s third D gov in a row, but were stupid enough to nominate Creigh Deeds.

by Jasper on Dec 11, 2010 12:38 pm • linkreport

@ Froggie: well aware of the problems with the Fluor contract ;) for the HOT Lanes. That said, I propose to you that HOT lanes in general are a poor design solution, even if one is a supporter of more highway lanes. VA politicians took it as the "best deal they could get" because the idea was it would be "free". We of course know that it is not, and will in fact be more expensive to taxpayers than had VA just bucked up and built it themselves (like the Mixing Bowl and Wilson Bridge projects - which were built on time and under budget I might add). The only benefit to the state that I can see is it takes some transportation money off their books for VA to keep its good credit rating.

by stevek_fairfax on Dec 11, 2010 1:27 pm • linkreport

@Steve K
Not sure why you are so against the concept of HOT lanes. What makes them a poor design solution in your opinion? Have you described your POV outside of this thread?

by movement on Dec 11, 2010 4:43 pm • linkreport

@Steve: the arguments you cite against HO/T lanes in general are still pretty much Virginia-specific. I implore you to look at what MnDOT has done.

by Froggie on Dec 11, 2010 4:45 pm • linkreport

HOT lanes are causing environmental damage on the beltway.

by Fred on Dec 12, 2010 7:27 am • linkreport

The governor's plan does not clearly address road maintenance. Borrowing money for new projects is appropriate, if one has a funding source to pay back the borrowed money and keep the facility fully functional with regular maintenance and repairs.

by Steve Yaffe on Dec 13, 2010 12:26 pm • linkreport

Ah well. The value of my house just went up.

#worserworservirginia

by oboe on Dec 13, 2010 12:56 pm • linkreport

The hot lanes at least are showing the true price of building the roads but I don't like the fact that they have a rate that changes with out warning I feel that the hot lanes should be a sold one price all the time.

by Ocean Railroader on Feb 8, 2011 11:12 pm • linkreport

@Ocean Railroader:
Think of it this way: If you go to the airport only 3 hours before a flight leaves, do you expect to be able to purchase a ticket for the same price as someone who bought the ticket 3 months ago?

The more people who use HOT lanes (well, roads in general actually), the lower the level of service. So, in order to keep the HOT lanes moving, you raise the price of entry as more people do it.

I assume by your handle, that you've taken Amtrak. They use the same basic principle. Seats are allocated to 4 or 5 buckets. Once all the seats in the cheapest bucket are sold, the price increases.

It's simply supply and demand. The old model, where the price of the road (typically toll-free altogether) doesn't really work all that well, because there's no incentive (other than time lost) to shift your trip to a less busy time or less busy roadway.

Plane tickets and train tickets aren't "one price all the time;" neither should freeway driving be.

by Matt Johnson on Feb 9, 2011 9:43 am • linkreport

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