Roads

What will VA and MD buy with their borrowing and taxing?

by Stewart Schwartz   •   February 24, 2011 12:56 pm

Business leaders in Virginia and Maryland are pushing both states to throw more money at transportation. Yet few of them would invest their own money this way. They would evaluate the underlying causes of a problem, consider a range of alternatives, and adopt the most efficient solutions.

Photo by charamelody on Flickr.

Perhaps they forget that our nation is broke and that we need to use our money more wisely. Key priorities should be to fix aging bridges, roads and transit systems; link better land use and our transportation investments; and fund those projects which will reduce our oil dependency and the risk/impact of higher energy costs.

Amid strife in oil producing nations and oil spiking past $100 per barrel, we are reminded once again that our oil dependency is a national security issue. High gas prices and long distance commutes are also a family budget issue. Yet Governor McDonnell and the Maryland "Blue Ribbon Commission" call for business as usual.

With minimal debate, Virginia Governor McDonnell's $4 billion transportation plan, which includes $3 billion in debt, is poised for final approval. All that remains is a small conference committee holding closed door meetings to resolve differences between the House and Senate versions.

In Maryland, the "Blue Ribbon Transportation Commission" chaired by Gus Bauman, who is known for his former leadership of a booster group for the Intercounty Connector, is recommending a gas tax hike and an array of other new funding.

Ironically, the cost of construction and debt for the ICC has been a major contributor to the decline in available transportation revenues in Maryland, consuming $1.1 billion of the state's federal revenues and diverting toll revenues from all of Maryland's tolled bridges and tunnels. Our partners warned about the financial risks in a 2007 report.

How will Maryland spend its money?

As the Maryland General Assembly considers a proposal to raise the gas tax, the Coalition for Smarter Growth, 1000 Friends of Maryland and seven other conservation and housing groups under the banner of "Transportation for Maryland" (T4Md) have released a position statement and specific criteria that must be met for any tax increase for transportation in Maryland. T4Md's release responds to the failure of the commission to demand fundamental reform in what Maryland is buying with its transportation dollars.

T4Md recommends the following priorities for transportation funds:

• Maintain and repair existing infrastructure, including roads and bridges before building new;
  
• Revisit near-term spending decisions and long-term project selection to fund projects that meet the growing demand for more transportation choices that save time and money and help reduce our dependence on foreign oil;
  
• Spark innovation and cost-savings through a competitive transportation solutions program; and
  
• Fund the biggest jobs creator, public transportation.

Planning for major transportation projects must also routinely consider integrated land use, urban design, street network and transit alternatives that will support more efficient development. Too often, for major transportation projects, we see a failure to fairly and objectively evaluate a range of alternatives, especially integrated land use and transportation alternatives.

Cheap loans from Virginia, big profits for road builders

In Virginia, the legislature will be granting a blank check to Governor McDonnell. It looks like most of this money—$1.5 billion supplemented by low-interest taxpayer funded loans—would go for Public Private Transportation Act (PPTA) projects and the large multinational companies that build these private toll roads.

The loans would be made by a new Virginia Transportation Infrastructure Bank and would be funded by siphoning $150 million from core services (education, health care, police and fire, etc) and another $250 million from road maintenance accounts as a result of the VDOT "audit."

According to Virginia Transportation Secretary Sean Connaughton, the loans would be very low interest (2 to 3 percent) to companies that he says make a 14 percent return on their investment. Grants and loans are in addition to the 75 years of toll revenues signed-away to the companies.

Under the PPTA the Governor and Secretary of Transportation have total control over the negotiation of the contracts, so they will have complete discretion over the $1.5 billion fund.

As is the case with Maryland's transportation commission, Governor McDonnell has not addressed his state's $3.5 billion in structurally deficient bridges, about $1 billion in deficient pavement, or the significant operating and maintenance revenue shortfalls faced by the state's transit systems including Metro. His plan also ignores oil dependency and rising energy prices.

Would you buy this road?

Symbolic of the potential misallocation of resources, Governor McDonnell has said his top priority is Route 460. Quiz question for Northern Virginians: where is it?

This 55-mile new limited access highway would run through empty farmland and parallel to an existing highway and freight railroad. The existing highway carries far fewer trips than most other highways in Virginia and fewer than roads like Route 7, Route 50 and Route 236 in Northern Virginia.

A proposal from the private toll road builder calls for $782 million in subsidies from Virginia taxpayers and $491 million in low interest loans. Northern Virginians provide the largest share of tax revenues, so Northern Virginians will be primarily subsidizing this unneeded highway.

If Route 460 is the poster child for how not to spend our scarce resources, Governor McDonnell's failure to make a strong case to save federal Metro funding and the small share of his total package which "might" go to transit—11.5 percent—is evidence of his lack of support for transit.

So we're not buying Governor McDonnell's debt plan or a Maryland gas tax increase, unless the money is used wisely to address the priority challenges faced by our nation and our region. Anything else would be a huge waste of our tax dollars.

Stewart Schwartz is Executive Director and a founder of the Coalition for Smarter Growth, which he built into the leading smart growth organization in the Washington, DC region, addressing the interconnected issues of land use, transportation, urban design, housing, and energy. A retired Navy Captain with 24 years of active and reserve service, he earned a BA and JD from the University of Virginia and an MA from Georgetown University.