Transparency, CTB Autonomy Guide New Vision for Transportation Governance

aubrey_layne

Aubrey Layne. Photo credit: Daily News

by James A. Bacon

The Virginia Department of Transportation (VDOT) has a system for dispensing its approximately $2 billion a year in construction funding that is so blindingly complex that only a few people understand it. If I started explaining it to you in detail, I’d probably have to shoot you halfway through to put you out of your misery.

But I’ll give you a quickie overview so you can understand what the McAuliffe administration, working with Republican leaders in the General Assembly, is trying to accomplish by overhauling the funding formula. The end result, said Transportation Secretary Aubrey Layne in an interview yesterday with Bacon’s Rebellion, will be to transfer decision-making power from the executive branch to a more autonomous Commonwealth Transportation Board, allowing the CTB to function as the policy-setting group it was always meant to be.

Construction dollars come from two sources: state and federal. Roughly $900 million a year in state tax revenues goes into the Transportation Trust Fund. Before anything is spent on state construction projects, money is siphoned into the Highway Maintenance Operations Fund to make up for that fund’s perennial deficits. More money is sluiced away for revenue sharing with localities, and yet more for various administrative expenses. Whatever is left can be spent on construction.

Meanwhile, the $1.1 billion or so in federal highway dollars gets sliced and diced, with dollars peeled away to pay off GARVEE bonds, to maintain U.S. bridges and highways, and to fund miscellaneous programs dictated by Uncle Sam. Whatever is left can be spent on construction.

Thanks to the influx of new state tax dollars, there’s a fair amount of money available for construction these days. But as a practical matter, expenditures are so hemmed in by legislative formulas that the system has little flexibility. Under the 2012 transportation funding overhaul, available funds are to be divvied up as follows: 25% to bridges, 25% to pavement, 25% to high priority discretionary projects, 15% to public-private partnerships 5% to unpaved roads, and 5% to intelligent transportation systems. If there’s any money left over — which there isn’t, even with the 2012 tax increases — additional sums go to unpaved roads and to Interstate matches, and the remainder gets divvied up this way: 40% for primary roads (distributed to each of nine transportation districts), 30% for secondary roads (distributed to individual localities), and 30% to urban roads (cities and towns).

“It is a maze. It is opaque,” Layne said. It’s also inefficient.

As a practical matter, little money trickles down to the localities. It’s like the Colorado River  — so much water has been sucked out along the way that there’s only a rivulet by the time it reaches the ocean. By the time money seeps down to individual transportation districts and individual localities, the amounts are so small they take years to accumulate enough money to actually pay for anything. As a result, money just sits there and gets eroded by inflation.

Another problem with the system, said Layne, who served on the CTB before McAuliffe anointed him transportation secretary, is that the executive branch effectively made all the key decisions. “When we came into office, VDOT was working off ‘the Governor’s List.'” The Governor’s List, an informal entity of obscure origin, was a list of projects reflecting the governor’s priorities, which VDOT then submitted to the CTB. “Where we are today, the governor sets the table,” said Layne. “As a CTB member, it’s hard to rearrange the dishes.”

(During the McDonnell administration, CTB members asked some questions and then invariably approved the requests — usually unanimously. The role of CTB members, I argued in “Kings of the Road” two years ago was to lobby behind the scenes to get projects in their transportation districts accepted by the administration. The board itself exercised little oversight.)

Layne’s goal, and McAuliffe’s, is to restore transparency and CTB independence. To make the policy-making board more independent, the administration is backing legislation that would curtail the executive’s ability to remove CTB members except where there’s cause. This would eliminate a repeat of instances like when former Transportation Secretary Sean Connaughton demanded the resignation of CTB member Jim Rich, a vocal proponent of the administration’s Charlottesville Bypass project.

The proposed new funding formula would create transparency by simplifying the system, Layne said. A new 40/30/30 formula would replace the 25/25/25/15/5/5 formula and portions of the 40/30/30 formula cobbled onto it. The new allocation formula would distribute money as follows:

  • 40% for “state of good repair” projects, primarily bridges, Interstate high highway and primary road reconstruction.
  • 30% distributed to the nine transportation districts. Local governments could apply for funds. The hope is that money will flow to the highest priority projects within each transportation district and that localities will cooperate to push projects with regional benefit.
  • 30% distributed to projects of statewide priority. These projects will be rated under a new scoring system that tallies benefits, costs and Return on Investment. The CTB is not required to fund projects with the highest scores, but the scores will be public knowledge and the CTB will have to justify its decisions.

It’s difficult to know how these changes will work out in practice. Legislators likely will want to know whether their districts will get more money or less. Some may be concerned that the 30% allocated to projects on the basis of ROI will be steered mainly to Northern Virginia where congestion is worst and the need is greatest. But that’s not necessarily the case, said Layne. A Northern Virginia project may score high for benefits, but the cost may be high as well. Right of Way acquisition is far more expensive there, for example. He expects many downstate projects to show a high Return on Investment.

Layne argues that simplification, transparency and increased CTB autonomy will result in a overall better distribution of construction dollars. McAuliffe is willing to give up the political power that comes from maintaining the Governor’s List. His priority, said Layne, is, “Do the right projects.”

Layne said he wants a system that gets the most bang for the buck — “like I was allocating capital in my business.” He has told VDOT that it’s not in the road construction business — it’s in the asset-management business. With this reform package, he said, the CTB will focus on policy, and VDOT and the Department, Rail and Public Transportation and other executive offices will focus on carrying out that policy.

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23 responses to “Transparency, CTB Autonomy Guide New Vision for Transportation Governance

  1. Kudos for the “interview” and the excellent job of trying to explain it!

    Lane wrote an editorial in the Free Lance Star yesterday explaining some of the “why” behind the changing approach and he cited the prioritization of
    an interchange to serve a county over improving the mainline I-95 to allow better throughput especially during commute hours.

    And he basically said that there is a conflict between what the local folks might think is a necessary use of funds and what VDOT thinks or to put it different – VDOT has to worry about State level roads for connectivity and functionality and the localities don’t see that as their responsibility – and in the past the money was not effectively preserved for the state level roads and was being allocated to the localities for their projects – via the CTB and politics.

    So new bridges and CD lanes are needed on I-95 but the money got diverted to upgrading an interchange to enable more development in the county.

    Lane felt like that did not serve anyone very well least of all the folks who depend on I-95 – not only the daily commuters but the out-of-region folks trying to get from Richmond to DC or Florida to Maine.

    until this point – there’s never been the idea that the state needs to “reserve” some of the revenues for state level purposes and has always allowed (I think) the localities to use that money also.

  2. This article discusses how transportation money is spent, but does public information exist detailing where the state transportation money is being generated?

    Ex. How much of the state funding generated in Northern Virginia (District 8) compare to how much state money is spent in NOVA? …over a 5-10 year period.

    • I’ll go one step further – is NoVa entitled to all tax revenues generated within it’s boundaries and if so – what does VDOT have to maintain roads of statewide significance?

      How much of the gas tax should VDOT be able to keep for statewide purposes?

      This is sort of like the State with the income tax and sales tax.

      Some of it comes back to the localities but some of it stays at the state level to be spent on State priorities.

      what’s the right number/approach?

    • No one has performed that accounting. Methodologically, it may be impossible. How does one account for Interstate highways and U.S. highways that provide connectivity between NoVa and the rest of the world? Should NoVa chip in anything to build and maintain roads that link it with the Southeastern United States? Or should Interstates be the sole responsibility of the communities through which they pass, like Emporia and Doswell?

      • this is one reason I like tolls on these roads. It guarantees they will be funded and commensurate with demand.

        but this is not Solomon cutting the baby – the state does this with all revenues.

        It keeps some and it sends some back – and how much they keep and how much they send back has no more level of transparency and accountability than highway money.

        I think – again – the way that Virginia does roads leads to this quandary.

        we are one of just 4 states where VDOT maintains all roads and it leads to the suspicion that VDOT is not allocating in proportion to money collected.
        In the 46 other states – the DOT gets the gas tax money – to maintain state level roads and the localities are responsible for local roads.

        Should NoVa have the authority to decide to not spend their funding allocations on I-95 and help folks out of region and state and consider VDOT the responsible party?

        Looks like we can’t have it both ways. If VDOT is the responsible party – how are they funded?

      • I am more interested in money generated at the state level.

        Interstate highways and U.S. highways should be allocated within Federal Transportation Funding. Most of the rural “connecting” areas are in the “maintain” bucket within the 40% allocation. I am more concerned with the other 60%.

        Someone should create an info graphic of this new allocation concept.

        • Have you seen this:

          https://www.dmv.virginia.gov/webdoc/pdf/tracking_dec14.pdf

          so just like sales and income taxes – is there any real accounting of these revenues at the locality generation level?

          I think you can roughly calculate … by looking at sales tax revenues – returned to the locality – the 1% for local and schools.. that ought to let you calculate how much of the rest of the sales tax the state keeps.

          You can also do something similar for the jurisdictions that participate in VRE with the 2.1% fuel tax – because each jurisdiction has an “account” that shows how much they got in gas tax revenues.. their “share” that goes to VRE and how much they keep (if any).. or how much extra they must add.

          so in those localities – if you know how much the 2.1% gas tax generates – you could figure what the 5.1% state gas tax generates but good luck on the Federal gas taxes. About the best you could do would divide the fed transpo money by the population of Virginia then use the per-capita to figure Fairfx or NoVa.

          • I have seen this document….there are ways to reverse engineer the numbers but you would think the information should be able to be provided on a county/city level.

    • I was told that state law forbids reporting gas tax collections by locality. Such reporting might make it harder on lobbyists, including CTB members.

      • I’d be curious to see that law. And I’d not be shy about contacting my representatives in Richmond if it really does exist.

        but also – it’s not like you cannot calculate a fairly close number by looking at the metrics that are available.

        it’s just more popular to have conspiracy theories -methinks. We do the same thing for schools, right?

        every locality I’ve ever heard from says that they are getting cheated out of their gas tax revenues and they point the finger at NoVa or SW Va as the culprit stealing all the gas tax revenues.

        if you listen to all of them at the same time – it’s amusing.

  3. if you do a really rough calculation –

    let’s say a billion dollars in Fed money ( largely what is used for construction).

    then divide that by 8 million population of Va – you get = 125 per capita
    and if you multiply that by 2 million ( population of NoVA) – you’ll get
    about 250 million.

    that’s per year.

    my guess would be that NoVa could easily spend that much on transportation improvements – each year – and then some.

    4-lane limited access roads run 40-100 million a mile. one interchange can cost 40-250 million. I believe the HOT lanes on 495 cost more than a billion (but thats a separate accounting since it tolls – just using the money as illustrative of infrastructure costs). One traffic signal can cost 400K – 2 million … etc..

  4. For what it’s worth, under the proposed formula, the Construction District Grant Programs (the 30% allocated to the transportation districts) would be dispensed as follows:

    Northern Virginia — 20.7%
    Hampton Roads — 20.2%
    Richmond — 14.4%
    Salem — 9.6%
    Staunton — 7.8%
    Lynchburg — 7.1%
    Bristol — 7.1%
    Fredericksburg — 6.9%
    Culpeper — 6.2%

    • so for NoVa it would be 20.7% of the 30%?

      so 1/3 of a billion = 300 million = 1/5 of that = 60 million?

      • Larry — pretty much.

        According to a handout I received, the Construction District Grant Programs would be allocated $171 million in FY2021, the only year indicated. 20.7% of that would be $35.4 million. Not very much!

        If you live in the Culpeper district, you’re looking at $10.6 million!

        Imagine the current formula, which slices the numbers even finer.

    • How were these numbers determined? Population?

      • Not sure.

        Layne and Deputy Secretary Nick Donohue mentioned one formula that was based on population and area, but I can’t remember if that was the Construction District Grant Programs or the High Priority Projects.

        • this is a huge change in several ways but to include the role of MPOs in selecting projects. No longer are they allocated “their share”. Their projects have to compete statewide against other projects on the “scoring” criteria and even locality projects have to compete with other localities within a given VDOT district!

          The MPOs are going ape-crap over this .. but I’m not sure if the localities have a clue judging from local reaction.

          Some of this is aimed at the MPOs who do not see their responsibility to be the statewide roads that go through their districts.

          You can see this in Charlottesville – where some wanted 29 to become a Charlottesville asset and folks from outside of Cville trying to use 29 to get through Cville were not considered a responsibility of Cville.

          I think it’s things like this that have led to some of these changes.

          VDOT had to assert itself or risk more and more situations where the locality and the MPO considered the road money for their purposes – not inter-region or statewide or inter-state.. priorities.

  5. Thank you for the analysis on this issue. There is a lot to appreciate in what Mr. Layne is doing. My one concern is how this new funding allocation will work for very rural localities. Whether MPO’s are the mechanism, or just localities working together, most regional initiatives tend to be focused on the locality in the middle- the urban area. The loss of designated unpaved road funds is a very real and serious loss to localities with little revenue and many miles of unpaved roads. I wonder if this new formula will find any money for those- after all, they do not tend to move lots of cars, have regional impacts, or a high ROI. The improvement of these roads, through the Rural Rustic Road program, does however, radically improve safety and quality of life for those that use them.

    • the unpaved roads are a good question and one of the things pointed out locally is that some unpaved roads come from ad-hoc subdividing of land without building a proper road.. that can be maintained.. and so they try to get the state to take it over gratis.

      what”s developed locally is a cost-sharing basis where VDOT will put up half and then the county will put up 1/4 and the property owners the last 1/4.

      VDOT normally will offer the county to upgrade any road on a cost-match basis – up to a million dollars I think.

      but I essentially agree – don’t want to see the rural road or other programs go away but I do think some of the costs belong to the property owners if the road is essentially a private road and by the way, VDOT thinks cul-de-saced subdivisions with only one entrance are also de-facto private roads these days.

      so along with these other big changes.. I’m wondering if other things are also on the table.

      keep in mind – once more – in 46 other states unpaved and subdivision roads are the total responsibility of the county not the state DOT.. and pretty sure they don’t get any of the state gas tax.

      we’ve been spoiled in Virginia but now – VDOT is between a rock and a hard place on money.. and changes are afoot in terms of priorities and what can be afforded.

    • I’d trade you some road money for an adjustment to the LCI that equalizes differences in cost of living before the formula is applied.

      • cost-of-living is an interesting concept – if you apply it across the board for all state allocations.

        for instance, when you build a road in NoVa – cost-of-living goes into the price of it – automatically –right?

        TMT – are you familiar with this:

        ” The State recognizes this cost by providing nine
        NoVa school divisions a COCA, and since 2007, another nine divisions on the outer perimeter of Northern Virginia a “phased-in” COCA (see map, next page).

        The amount of the COCA has varied in recent years, but is typically 9.83 percent in additional funding for instructional staffing and 24.61 percent in additional funding for support staffing. Divisions receiving a phased-in COCA typically receive one-quarter of these amounts.”

        http://jlarc.virginia.gov/reports/Rpt434.pdf
        page 10

        Technical Report: Cost of Competing Adjustment for School Divisions in Northern Virginia

  6. In the matters that I looked into, the roads of the statewide significance were those where, in my opinion, rampant corruption (including for example bogus “paid for results” traffic studies), and strong arm political tactics played a roll.

    Could the McDonnell Administration’s misconduct in trying to get the C’ville by-pass planned approved and built happen again under these new rules? And if not, why not?

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