Posts about Transportation Financing

Any transportation plan, the House Democrats say, should:

1. Generate at least $1 billion in new money per year.
   
2. Rely on a realistic, dependable source of revenue, based on Virginia's actions, not potential federal changes that may or may not happen.
   
3. Not transfer monies that otherwise fund schools, health care, and public safety.
   
4. Fund not just maintenance, but construction, including rail and transit.
   
5. Provide additional revenue both immediately and into the future.
   
6. Give authority to Northern Virginia and Hampton Roads to raise additional funds for their own transportation needs.

These are solid principles, and they offer a stark contrast to McDonnell's plan. The governor's proposal would raise far less, and relies on money from the general fund, as well as from a federal Internet sales tax that has not passed Congress.

The 9 specific bills that Democrats cited as true to those core principles are HB1677, HB1878, HB2063, HB2179, HB2253, HB2333, HB1450, HB1472, and HB1633. The House could pick one of those 9 to push, or it could try to amend one of them to combine the best provisions from all.

Republicans control the Virginia House, and the Senate is evenly split, so any plan will need GOP support to pass.

Although it's true that some questionable highway projects would surely be built if Virginia ultimately adopts this transportation funding plan, this also offers far more support for transit and urban needs than the governor's proposal, and it doesn't include as many harmful, regressive policies. This is a far more reasonable outline.

Cross-posted at BeyondDC.

It's somewhat troubling that O'Malley hasn't yet decided whether or not it's worth fighting for these two major transit projects, both of which have been decades in the making. The state is on track (or perhaps, off-track) to run out of transportation money in 2017 for roads and transit.

O'Malley cannot increase transportation funding on his own. No, he'll need the legislature to also agree. But O'Malley has demonstrated his ability to get things done. In the 2011 session, gay marriage narrowly failed in the House of Delegates. But this year, with the charismatic support of the governor, the bill made it through both chambers.

If Governor O'Malley stands on the sidelines during the transportation funding debate, he might have doomed it, and the Red and Purple Lines, to defeat. But on the other hand, his support could be the crucial factor that makes a deal possible.

Gas tax has mostly declined since 1933

The real problem is that Maryland last raised its gas tax since 1992. Since that time, inflation has driven down the value of the 23.5¢ tax by 36%. In fact, the gas tax has been decreasing ever since it's high point in 1933, except for periodic raises in the tax rate. In 1933, the value of the tax was 3 times what it is today.

What could Maryland do?

It's not entirely clear what proposal the legislature will put forward this year.

Last year, the proposal was to do away with the exemption on gas sales from the state's 6% sales tax. The current 23.5¢ tax on gasoline is an excise tax—it's 23.5¢ on each gallon. The 6% sales tax is a 6¢ tax on each dollar spent.

The current average price of a gallon of gas in Maryland is $3.26. If gas were subject to Maryland's sales tax, the cost would increase by 20¢. This would basically double the tax on gasoline. As a result, last year, the proposal called for phasing in the sales tax on gasoline by 2¢ every year for 3 years.

This would bring in a good deal of money for transportation. Another positive impact of this would be to index the gas tax to inflation, meaning that it will lose less value over time.

Another approach that the state is considering is raising the state's sales tax to 7% and earmarking the increase for transportation. It's not immediately clear how much revenue this will bring in.

Maryland must act

Doing nothing is not an option. If Maryland does not raise revenues to pay for transportation, the state will be unable to build important infrastructure. For years, O'Malley's plan to improve MARC has sat on the back burner. Now, the state's inaction on transportation funding is threatening two more of the governor's priorities: light rail lines in Baltimore and the Washington suburbs.

Both of these rail lines have the ability to be transformative in their communities. Local officials and citizens have been working since the 1970s to plan for the Purple Line. It would be such a waste for O'Malley's inaction to condemn this project to the dustbin of history.

And that's why Montgomery County officials are considering asking the state to give it the authority to levy its own gas tax. The county is concerned that the state legislature will continue to punt on the issue, and they're not willing to take the risk that one of the most important transportation projects in the region will die on the vine.

This is the time for O'Malley to step up and push the legislature to do the right thing on funding. It will move Maryland forward. And perhaps more persuasive to the governor, it will further bolster his reputation as a doer. Something clearly important for O'Malley's presidential ambitions.

It examines the PPTA's history and process, and highlights two recent projects for in-depth analysis: the I-495 Express Lanes in Northern Virginia and the Downtown Tunnel/Midtown Tunnel/MLK Extension in Hampton Roads. The study also analyzes the substantial policy issues the Act raises and offers recommendations for reform.

The PPTA authorizes private entities to build, maintain and/or operate "qualifying transportation facilities" under an agreement with state or local entities such as the Virginia Department of Transportation (VDOT). The intent was to reduce the up-front costs to government by attracting private sources of funding and to tap into private sector creativity and efficiency through competitive bidding to speed and improve building projects.

Since it was enacted in 1995, only four PPTA projects have been completed (Route 288 and Route 895/Pocahontas Parkway around Richmond, Route 199 around Williamsburg, and the new Beltway express lanes). Another 17 projects are partially completed or currently under construction, under contract, or under consideration.

The PPTA has expanded far beyond the General Assembly's original intent to supplement the traditional transportation improvements process. It is now the major method for constructing large new projects, and it concentrates decision-making in the Governor's office with little effective oversight.

Moreover, as the report notes, it "has evolved into a process in which large private-sector construction consortiums propose design/build/operate projects funded using as much state/federal funding and taxpayer-subsidized debt as can be negotiated with the state, coupled with toll revenues that are as secure and protected as possible."

There are significant differences between the PPTA agreements made between the Commonwealth and private entities. The I-495 Express Lanes project, for example, increases transportation capacity while still leaving existing toll-free transportation choices in place for the public. This agreement does not contain any "non-compete" clauses that limit future transportation improvements, although it does have a troubling provision that could increase taxpayer liability or dissuade high occupancy vehicle (HOV) use. The private partner is taking on true demand risk in return for its investment.

In contrast, the Downtown Tunnel/Midtown Tunnel/MLK project expands an existing free facility already once paid for and currently maintained by the state, but with no viable travel alternative for the public. There is little rationale for the amount of state subsidy provided and the contract allows for automatic toll escalation and penalties for creating competing transportation alternatives.

In another project, the proposed $1.4 billion new Route 460 between Petersburg and Suffolk, the state plans to provide $1.1 billion public in direct subsidies (tolls will cover the rest) to build a destructive highway that will parallel an existing, relatively uncongested route. This project is a much lower transportation priority than many others throughout the state, yet it is slated to receive the highest subsidy.

The report recommends a number of reforms to the PPTA, including:

• Providing more information to the public (including the cost-benefit analysis), and requiring a public hearing at least 30 days prior to signing a comprehensive agreement;
  
• Increasing the role of the Commonwealth Transportation Board, and other oversight boards, by requiring it to evaluate and approve a proposed comprehensive agreement before it can be approved, and giving the Board greater independence by limiting the ability of the Governor to remove members without cause;
  
• Creating a greater role for the legislature in the process, such as requiring the findings of the cost-benefit analysis to be provided to the General Assembly prior to initiating a PPTA procurement process to ensure that the assumptions contained in the analysis can stand up to public scrutiny, and by requiring the Assembly to approve subsidy levels (particularly debt) and the use of toll facilities;
  
• Ensuring greater competition by requiring more bidders; and
  
• Adding conditions for prioritizing state PPTA subsidies.

These solutions will help ensure that the PPTA process is good at producing public benefits for as low a price as possible.

Recent PPTA deals show why the current debate over transportation funding needs to focus on ensuring that taxpayer funds are spent wisely—and not just on raising more revenues for transportation. The legislature needs to improve the PPTA before the state signs additional agreements or authorizes any additional funds for public-private transportation projects if we are to promote smarter transportation investments and adequately protect our communities and environment.

WMATA got that $150 million in fiscal 2012 (which ends September 30). A continuing resolution approved last week will continue this funding level through at least March 31, 2013. But after that, sequestration would take hold.

The HTF gets most of its money from gasoline taxes. Thanks to Congress's refusal to raise the gas tax, even to keep up with inflation, there hasn't been enough money in the fund to meet its obligations for the past several years. Thus, Congress has chosen to infuse general fund money into the HTF to keep it solvent.

These general fund infusions may be subject to sequestration, but none of the HTF's obligations to the states and transit agencies will be reduced. The most likely result is that Congress will have to infuse more general fund money into the HTF sooner. The White House Office of Management and Budget (OMB) will have some leeway in applying the sequestration within each federal department and agency.

The WMATA cut is not the only way sequestration could hurt our region. If OMB chooses to apply the cuts retroactively to TIGER grants that the US Department of Transportation has already awarded, this would delay the completion of TIGER-funded projects like bus priority improvements and completing the Anacostia Trail.

Another possible victim is the Silver Line, much of whose funding comes from the Federal Transit Administration's New Starts program, which is not funded by the HTF. Many other capital projects in the region, including the Purple Line light-rail corridor, have yet to receive federal funding, and any reduction in the amount of money available for grants would put them even farther back in line.

The only alternative to sequestration is another grand debt-reduction deal from Congress. But such a deal could hurt some programs more than sequestration would, in order to preserve others. Even transit-friendly members of Congress from Maryland and Virginia may vote to axe Metro in the end if it means preserving other pots, such as Pentagon spending, that provide huge sources of employment for their constituents.

While members of Congress are campaigning in their districts throughout October, consider taking an opportunity to remind them how important investments in infrastructure that reduces traffic congestion and enhances mobility in a sustainable manner are to you and to the region's economy.

You can also make the point that we could avoid this whole sequestration mess altogether if they could muster the gumption to raise taxes on the wealthiest Americans, place a small tax on financial transactions, or finally raise the gas tax.

Besides, deficit spending really isn't a bad thing, especially with the economy in recession.