With
each passing day, it becomes ever more apparent
that the General Assembly is headed toward another
battle over taxes. The Governor is calling for new
levies to support government-financed
transportation programs. The Senate is once again
asking for more taxes despite surpluses in the
billions of dollars — albeit it may not have the
support it had just two years ago. Once again, the
House of Delegates remains the last line of
defense against new taxes on every Virginia
family.
There
is no need to retell the story or the outcome from
the last tax battle. It is, however, worth noting
that the House has been proven right: The
Commonwealth would grow its way out of deficits,
despite record spending, an important lesson
moving into the current debate. To date the House
hasn’t presented a formal plan for
transportation. Rather delegates are talking about
fundamental reforms, both in designing and
financing our transportation system.
At
this point only one thing is certain in the House:
A majority has little or no interest for new
taxes. Hopefully we’ll learn from the past and
see that new taxes are not needed at this time.
Both
the Governor’s and Senate’s transportation
plan lack the needed creativity and innovation.
They are relics relying on traditional taxes, and
tax increases, to fund transportation projects.
These plans are stuck in the mindset that
government is the best provider of services. On
the other hand, the House provides leadership with
innovative structural reforms that will provide a
long-term solution.
Just
as our transportation needs have changed, so has
the way of financing them. Indiana Governor Mitch
Daniels announced last Monday that he’ll be able
to fully fund the state’s 10-year transportation
plan without raising taxes. How? A $3.8 billion
concession deal to operate the Indiana Toll Road.
Sounds similar to the Dulles Toll Road long-term
lease conversation.
In
the last 12 months, global capital markets have
discovered the U.S. highway market. Literally
trillions of dollars from global funds could be
invested in our highways. The Indiana deal is part
of a larger trend beginning to sweep across the
nation. So far, in just four states -- Virginia is
one of them i.e., Dulles Toll Road --more than $20
billion worth of proposals are pending approval.
So,
what should the Commonwealth do?
First,
embrace the global markets and consider leasing
other existing toll roads and bridges. These
revenues would greatly enhance the state's ability
to fund projects both in the immediate area and
throughout the state. There is great potential to
raise billions of dollars this way. In addition,
the state can further leverage this money with
other public-private partnerships. Projects using
this model would require far less public
investment than traditional funding or design. We
could get more projects, completed in less time,
for less money.
Second,
it should become a policy of the state to consider
and/or implement tolls for all new major capacity
construction. For example, any new lanes on I-66,
I-95, and the entire beltway should be financed,
in whole or in part, by tolling. In true
public-private partnership fashion, the state
could pay for a portion of these costs to lower
the resulting toll for users. Another advantage of
this model is the introduction of a pricing
mechanism to some of our most congested roads (See
"Putting a Price
on Mobility," Jan. 3, 2006) that could
provide a more long lasting solution to
congestion.
Third,
we need to consider total life-cycle costs for
construction projects. VDOT should seek 20-year
pavement warranties for all major reconstruction
projects. New Mexico was the first to experiment
with this and it’s proven quite successful.
Finally,
rethink very expensive rail projects. A recent
study by the Thomas Jefferson Institute, "Rail
at Any Cost," showed that the proposed
Dulles rail project in Northern Virginia is
roughly three times more expensive per new transit
trip than the development of a Bus Rapid Transit
system. As the study notes, that means that “a
high quality transit system could be built in the
Dulles corridor and in several other corridors in
Northern Virginia” for the same cost. Doing so
would bring more customers to transit, serve more
communities, remain flexible, and do more to
relieve congestion.
No
one doubts that our transportation system needs
investment and improvement. However, given the
reality of a large budget surplus and the
emergence of private capital in highways, the
lessons are clear. We can do better --
without new taxes.
--
January 30, 2006
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