McDonnell to Propose $500 Million in New Transportation Revenue

Governor Bob McDonnell announced today that his administration is working on a plan to raise $500 million yearly by 2019 in new transportation revenues to fund roads, bridges, transit and passenger rail.

He provided no specifics in his keynote address to the 2012 Governor’s Transportation Conference in Tysons Corner but said details would be announced “over the coming weeks.” Said the governor:

My goal for our funding package is to generate at least $500 million in revenues annually by 2019. The new transportation revenues will be dedicated to maintenance, and will eliminate the shortfall which is causing more and more funds meant for construction to be instead spent just maintaining our existing infrastructure. This additional revenue will free up funds for new construction, and will lead to additional funds for transit and passenger rail.

Added McDonnell: “The time to address our transportation funding challenges is now.  We cannot continue kicking the can down the road.”

With stagnant transportation revenues and rising maintenance costs, the Virginia Department of Transportation expects to run out of state funds for new road projects by 2017. A broad coalition of cities, counties and chambers of commerce in Virginia’s urban crescent has called for new sources of revenue to bolster transportation spending. And Sen. John Watkins, R-Powhatan, has proposed a tax on the wholesale price of motor fuels sales.

Meanwhile, a coalition of environmental and smart-growth organizations has issued a press release denouncing the McDonnell administration for squandering billions of borrowed dollars on ill-conceived mega-projects, failing to review alternatives and running roughshod over local governments and regional planning organizations. New funding, contended the four organizations, should be tied to reforms in the Public Private Partnership Act, stronger legislative oversight, an active partnership with local and regional leaders, and an objective evaluation of alternative solutions and investments.


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13 responses to “McDonnell to Propose $500 Million in New Transportation Revenue

  1. I’m sure the pundits will go ape-crap when the plan is “revealed”.

    I’m none to happy about some of the directions he’s gone in and I’m betting the anti-tax types are going to have kittens….


    … this IS leadership….. we should recognize that….

    of course ObamaCare was leadership also before you get too giddy.

  2. Wait, so now he is no lnger going to kick the can down the road. Who has been our Governor for the past few years? It was him. So who was kicking the can down the road? Buy this guy a mirror so he can see it’s his job to create the funding. He ran on transportation and has been a total disappointment. Lets face it, his friends in his own party do not want to pay for anything. LaHood can only be his Sugar Daddy for the rail project. Now what is BOBBY gonna do?

  3. well I cannot agree.. that he’s done nothing about transportation.

    From Hampton Roads to Charlottesville to I-95 tolls to HOT Lanes to US 460 – he has taken the initiative

    folks may not agree but he has indeed moved the ball…

    what will “Bobby” do ? I suspect if 500 million is in the mix.. there’s going to be something significant.

    He’s last proposal in the GA was to bump up the sales tax percent to more funding of transpo and he has made several noises about indexing.

    How much of this is him and how much is Connaughton is hard to tell but when you advance PPTA as far as they have – to rile up a lot of groups, it’s hard to argue that he’s done “nothing”.

    • Tim Kaine did the Hot Lanes. Bobby can’t take credit for this project. But I do agree with your comment about Sean Cannaughton. He is in over his head. Need a new Transportation person.

  4. He will not want to raise taxes. So he will be using the P3’s. But where will the money come from? P’3s are ripe for corruption. He who has the money makes the rules. Who has the money? Trust me it will be from a foreign source. China or Spain. Is Virginia for sale?

  5. Kaine Did agree to the HOT Lanes and METRO expansion and McDonnell has fully supported both and he and Connaughton have
    used the TIFIA path to help fund HOT Lanes and other planned projects .

    The problem is with PPTA that the TIFIA is not only a loan that has to be be paid but it’s not an investor-grade loan which would require a much tougher analysis of where the money is going to come from to pay it back and whether or not that money is a sustainable source and an adequate source.

    In the case of US 460, McDonnell and Connaughton have decided that it does not have to stand alone on tolls as the payback mechanism but that the state will subsidize it.

    that means the state not only owes the money back for the TIFIA loan but it also owes the concessionaire the subsidized payments.

    where will this loan payback money and concessionaire subsidy come from ?

    I think this is part of the reason that McDonnell is seeking the 500 million.

    this is the alternate version of “starve the beast”.

    so McDonald and Connaughton have and are willing to sign TIFIA loan agreements and payments to concessionaires … commit the state to doing that – without a dedicated revenue stream other than the current gas tax and general fund.

    so I suspect what M and C are doing is getting ready to announce that we need 500 million in additional dedicated transpo money at least in part to pay back TIFIA and made concessionaire payments – and this is not a proposal to ask if they can make these arrangements, this is their propose plan to pay it back and the GA will be put in the position of having to approve additional taxes or risk defaulting on these loan and payment arrangements.

    Now.. I could have this wrong.. and I acknowledge that but one of the big problems in Va with PPTA is that this kind of thing is apparently not prevented from being done – outside the eyes of the public or the GA.

    The claim is that Govs cannot commit future GAs to financial obligations. I’m not so sure that is true with the current PPTA approach.

    But McD will be gone by the time it blows up and perhaps a clue as to the actual circumstances will be if Connaughton stays or goes.

    If he goes – then it will be just like George Allen downsizing VDOT and having it blow up later or even more like what Gilmore did with his “tax relief” that committed the state to billions of dollars to pay back localities when Gilmore decided to mess with their car taxes.

    So.. we seem to have a pattern with GOP Govs….on these things.,eh?

    • Larry, I’m pretty sure the TIFIA loans are covered by toll revenues in all cases. And I’m pretty sure that the $500 million McDonnell wants is for new transportation projects. Keep your eye on the outer Washington Beltway.

  6. Jim – how can the TIFIA loans be “covered” if the project does not bring in enough tolls to stand alone without subsidies? AKA US 460?

    Isn’t that the whole issue with roads like US 460 and the private investors ? They did the investor grade analysis and decided the road was not sustainable as a toll road so the state said “we’ll subsidize the shortfall”.

    Maybe I got this wrong… help me out here.

    • As I recall, and I’m willing to stand corrected, TIFIA doesn’t cover the entire borrowing costs of the projects that Virginia has submitted. It covers only a portion of the borrowing costs. It’s treated, in effect, as senior debt.

  7. Jim – would a private entity risk investment money in a project that could not pay for itself without subsidies and assume a subordinate position on the debt?

    I think Va will owe both of them and I’d be surprised in the agreement with the private entity made them second to TIFIA.

  8. that sounds “better” .. or perhaps I should say more plausible.

    I was doubting seriously that private investors would agree to junior status on the debt.

    so that means the Feds will take the hit if things go awry?

    As an aside – the GOP loves the TIFIA / infrastructure bank concept so much that my understanding is that they intend to cut the Fed Transpo money in half – back to the level equal to what they receive in gas tax money – and no more topping off with general fund money.

    If that happens.. Virginia will have NO highway construction money and I’d not characterize that possibility as a low probability.

  9. So, Jim. Today the governor recycled his proposal from last year to use general fund money for transportation maintenance. Sort of like using the I-95 tolls for maintenance; first time for everything. Now, he correctly points out that general funds have been used before, but that was for NEW construction on Route 58. No broad thinking here, just old wine in new bottles. Guy must be out of ideas. Guess old Grover scared him. Bosun

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