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Remarks
By House Speaker William J. Howell on Metropolitan
Washington Airport Authority & Commonwealth
Memorandum of Understanding
“Good
afternoon, and thank you for being here. I
am pleased to be joined by Delegate Dave Albo.
We have important issues to raise and discuss, so
I will get right to the point.
On
Monday, Governor Kaine announced a plan to
surrender the Commonwealth’s 20-year investment
in one of Northern Virginia’s key transportation
corridors and to use the revenues from the Dulles
Toll Road – including higher toll payments –
to pay for expedited completion of the rail link
to Dulles Airport.
Some
might debate the wisdom of using Dulles Toll Road
revenues for this purpose, given the immediate
need for transportation improvements that would
benefit far more commuters than will use a rail
extension to the Airport. However, my
purpose today is not to question the objective of
completing the rail extension all the way to
Dulles Airport using Dulles Toll Road revenues. In
fact, that’s a goal we embrace.
Rather,
our purpose is to question whether the Kaine
Administration has done its homework on how best
to achieve that objective. And, as Fairfax
Co. Board of Supervisors Chair Gerry Connolly
questioned on Monday, whether it has gotten the
best deal for taxpaying citizens and toll-paying
commuters.
The
short answer to both questions is clearly no.
No, the Governor has not done his homework.
And, no, the Governor has not gotten the best deal
for Virginia’s taxpaying citizens and
toll-paying commuters. Governor Kaine
told Virginians 5 days before the November
election that he would not support a tax increase.
What he said then was that Virginia had just
raised taxes, and now we need to “live within
our means.”
The
Governor has already spectacularly broken that
promise – demanding the Commonwealth take
billions more in taxes from working Virginians and
holding funding for teachers, law enforcement,
localities, people who rely on government
assistance for health care, and the rest of the
state budget hostage in the process.
Now,
with Monday’s announcement, he also has proposed
to give away one of the Commonwealth’s most
valuable transportation assets and leave on the
table hundreds of millions of private investment
dollars that could be used for immediate
transportation improvements in Northern Virginia
– without higher taxes.
Not
all of us agreed with the previous governor’s
tax hike plans. But at least Governor Warner
spent two years working with delegates and other
lawmakers reducing spending, cutting the budget,
and looking for alternatives before proposing a
tax hike.
In
contrast, the current governor’s motto seems to
be to tax first and ask questions later.
It
is going to take a few minutes, but Dave and I are
going to take the time to walk you through this
Dulles Toll Road transaction and shed some
much-needed daylight on it.
We
want to make sure you – and through you, the
public – understand the very important
particulars here, both on the Governor’s failure
to do his homework and on the resulting bad news
for taxpayers and toll-paying commuters.
Delegate
Albo will now focus briefly on the importance of
relieving traffic congestion along the Dulles Toll
Road and how the landmark Public-Private
Transportation Act of 1995 is offering
opportunities for progress.
Delegate
David Albo (R-Fairfax): Thank you, Mr.
Speaker. The
Dulles Toll Road is a vital transportation artery
– relied on by thousands of Northern Virginia
commuters and others each day.
Unfortunately, it is already a very congested
artery, with many commuters waiting in long
traffic jams.
But
because it is such a heavily used roadway, it is
also one of the most valuable revenue-producing
toll roads in the state. In fact, it is one
of the most valuable in the entire country.
It
is such a valuable transportation asset that,
during the last year, it has attracted investment
proposals from some of the world’s largest
companies that engage in the purchase, sale,
construction, maintenance and operation of toll
roads.
Using
Virginia’s innovative Public-Private
Transportation Act, or PPTA, these companies came
forward with proposals to pay state government
well over a billion dollars now for the right to
operate and maintain this one roadway into the
future.
All
of those private-sector companies based their
proposals on level toll rates. That is, they
based their offering price for the roadway on the
existing toll revenue stream plus the projected
increases already approved by the Commonwealth
Transportation Board, but no other toll increases.
Some
of the private proposals also offered additional
benefits to commuters in the corridor – by
building additional lanes and making other funds
available for improvements to other roads in the
area. I was particularly interested in this
aspect because making commuting better for
Northern Virginia drivers benefits not just some
of my constituents, but everyone in the
region. After these forward-looking
PPTA proposals were submitted, the Metropolitan
Washington Airports Authority, MWAA, offered its
own plan to take over the Dulles Toll Road.
MWAA’s idea was to use the toll road proceeds to
complete rail to Dulles.
Unlike
the pending PPTA proposals, however, the MWAA plan
assumes there will be significant toll increases
above those currently projected.
In
addition, MWAA’s plan puts MWAA alone in charge
of the toll rates on this vital transportation
roadway for our region.
Since
the MWAA proposal was submitted, several of the
private companies who made PPTA proposals have
made it clear that they could offer the
Commonwealth an up-front payment worth billions
more if they were given the same toll-raising
latitude assumed in MWAA’s plan.
How
much more those companies actually would have
offered the Commonwealth we do not know.
And, we may never know because with Monday’s
announcement, the Governor abruptly cut off the
PPTA process and agreed to hand over the Dulles
Toll Road to MWAA without seeking competing
offers.
If
the goal is to use the Dulles Toll Road revenues
to pay for completion of Dulles rail, why would
the Governor not make sure we are getting the best
possible price to achieve that goal – and
perhaps generate hundreds of millions more for
other transportation improvements in our region
– by letting not just MWAA, but also these large
private companies bid on the toll road using the
same toll rate projections?
To
give you some idea of the revenue-generating
potential of such public-private partnerships, the
state of Indiana just concluded a transaction with
the Legislature’s approval.
Under
that Indiana transaction, private firms are paying
the state $3.85 billion up front, nearly $4
billion, for the right to operate and maintain a
single toll road in that state.
Indiana
is sensibly re-investing that $4 billion of
freed-up equity to swiftly build additional
roadways that will benefit the commuters and
commercial road users in that state. It is
the same thing businesses do every day to finance
capital expansion.
The
bottom line is this. You can deliver a whole
lot of congestion relief for commuters with $4
billion whether you are from Indiana or in
Virginia!
But
two things apparently are very different in
Indiana. One is that they have a governor
who doesn’t tax first and ask questions later.
Instead, he embraces innovative ideas and looks
creatively for prudent alternatives. And,
the other difference is that they have a governor
who thinks it is a good idea to get the
Legislature’s approval before giving away a
multi-billion-dollar asset owned by the state.
Mr.
Speaker, I understand your frustration at the
situation we’re now in. Bringing market
forces to bear on solving transportation and other
challenges facing our Commonwealth is the right
way forward. And, I commend your leadership
on this issue.
Speaker
Howell: Thanks, Dave. You’re right.
I do believe in treating Virginia’s
transportation systems like the valuable assets
they are.
Last
spring, I laid out my vision for Virginia to
pursue innovative and responsible new funding
options for expediting projects to reduce traffic
congestion, cut emissions, improve highway safety,
and enhance business productivity.
In
the summer, I spoke with Governor Warner when the
several PPTA proposals for the Dulles Toll Road
were first submitted. Likewise, in the first
meeting I had with Governor-Elect Kaine, I told
him how important it is for the Commonwealth to
acquire the financial analysis expertise and be
ready and able to take greater advantage of
innovative transportation financing now available
through global financial markets.
As
recently as last week, I met with our new
Governor. And, among other points, I expressed
concern about his handling of the valuable
transportation asset that is the Dulles Toll Road.
During
the 2006 Session, we worked in a bipartisan manner
with Governor Kaine to pass legislation, Senator
Saslaw’s Senate Bill 666, to put protections
into place to ensure that money from these
concession deals are re-invested in the same
corridor and not spent elsewhere. I strongly
supported that effort and believe it made our
process even better. Unfortunately, even
with those protections in place, the process was
not allowed to move forward for the Dulles Toll
Road.
In
my view, his Administration’s actions on this
mega-project are shortsighted – almost
scandalously so. And, his recklessness in
dealing with this vital transportation roadway
only fortifies the concerns of those of us who
oppose his massive tax hike plans. The
last thing we should do is pour billions of new
tax dollars into an inefficient and unreformed
transportation bureaucracy that cannot sensibly
handle the valuable assets it already owns, let
alone spend billions wisely on new ones.
Let
me say this again so it is abundantly clear:
I am not second-guessing the decision to use
Dulles Toll Road revenues to accomplish
accelerated completion of rail to Dulles.
Many thoughtful people, including some in our own
party, have embraced this goal and have stood with
the Governor to support that general concept.
Indeed, we, too, support it and are prepared to
stand with the Governor, if he will go about it
the right way.
What
we are specifically questioning, and emphatically
so, is the wisdom of giving one of Virginia’s
most prized transportation assets away to MWAA or
anyone without sophisticated financial analysis of
the road’s value, without private-sector
competition to ensure that the state gets the best
deal possible, without guaranteeing immediate
improvements to relieve traffic congestion in the
corridor, without generating any up-front cash
payment the C’wealth can invest in other
transportation improvements in the corridor,
without protecting Dulles Toll Road commuters from
toll hikes by an unaccountable authority not even
controlled by Virginians, without fully exploiting
whatever opportunities exist to attract additional
federal funds for rail to Dulles, and without any
official consultation, review or approval by the
General Assembly.
Delegate
Albo: Speaker Howell has just highlighted
seven major failings of the Kaine
Administration’s Dulles Toll Road Giveaway Plan.
Let me walk you through them in layman’s terms.
The
Administration has not done the due diligence
necessary to analyze the long-term value of the
Dulles Toll Road.
I,
along with the Speaker, House Transportation Chair
Leo Wardrup and others, have recognized the urgent
need for the state to engage top-flight
professional services capable of providing the
Governor and General Assembly with sophisticated
financial analysis of these long-term toll road
concession proposals.
To
be most effective, that analytical capability
should come from a respected and independent
organization not beholden to the Virginia
Department of Transportation.
Unfortunately,
Governor Kaine has not acted to secure that
expertise. Yet, that has not deterred him
from rushing to surrender this
multi-billion-dollar asset for what may well be a
fraction of its true value.
Compounding the Administration’s failure to tap
the financial expertise necessary to evaluate
long-term concession opportunities like the Dulles
Toll Road, the Governor has cut off the PPTA
process – even before any evaluation had
started.
In
doing so, he has thoroughly prevented the private
marketplace from weighing in with its read on what
the Dulles Toll Road concession is really worth.
Private
companies – who have expended not
inconsequential sums of money in good faith to
develop and offer their PPTA proposals to the
Commonwealth – have been summarily rebuffed. And
they have been rebuffed by this new Administration
without even affording them an opportunity to
respond to the MWAA plan with their own
counter-offers based on comparable toll levels.
In
fact, it is our understanding that the Kaine
Administration made this decision without ever
even meeting with the private companies who came
up with the Dulles Toll Road concession idea in
the first place. Instead, the Governor’s
people struck a deal with MWAA behind closed doors
to surrender control of this valuable asset.
So much for this Administration’s commitment to
openness, transparency and accountability.
This
not only denies taxpayers and toll-payers the best
value for the asset. It also casts doubt on
the integrity and predictability of the PPTA
program – jeopardizing opportunities to attract
future investment offers from private companies
all across Virginia.
Just
a few years ago, we were hearing how our
innovative PPTA program – adopted with strong
bipartisan support – was a national model for
public-private infrastructure initiatives.
But, with the Kaine Administration giving private
investors the “back of its hand,” we are now
hearing from the private sector that confidence in
Virginia as an open, honest, stable place to do
business has been shaken. If this is not
corrected, companies with dollars to invest will
take them to Indiana and other states. And,
Virginia taxpayers will pay a high price for the
opportunities lost because of this
Administration’s erratic actions behind closed
doors.
Despite
the fact that toll road users will be paying
higher tolls, the Governor’s MOU with MWAA does
nothing to increase road capacity and assure
timely congestion relief on the roadway.
Amazingly, the MOU leaves that entirely up to MWAA
– requiring only that MWAA “consider”
proposals for transportation improvements that
will relieve congestion.
Any
responsible plan for the transfer of this valuable
asset to MWAA would do more than lamely ask MWAA
to “consider” unspecified roadway improvements
in the future – especially since MWAA’s
statutory mission relates to airport access and
not making life better for commuters. A
truly responsible plan would contractually require
specific and immediate actions to help improve
traffic flow for toll-paying road users.
Indeed, the Governor’s MOU leaves on the table
one new PPTA proposal that offered to spend $300
million in private assets to immediately build 4
new congestion-priced HOT lanes – at no cost to
the state.
To
give you a sense of how out of line the
Governor’s priorities are here, consider this:
Even when the entire Dulles rail system is
operational, it is projected to attract only about
48,000 riders along the entire route. Yet,
already today – right now – using 2004 data,
there are 76,000 cars on the Dulles Toll Road
every day at Route 28 and 129,000 every day where
it crosses Route 7. Many of those people sit
on that road a long time each day.
Yet,
the Governor hands MWAA a “blank check” for
billions for rail to the airport and does not make
any specific provision for increased toll road
capacity that would help the commuters already on
that road. The commuters, by the way, who
will be paying the higher toll rates.
Perhaps
the most shocking thing about the Governor’s
giveaway to MWAA is that it forfeits entirely the
opportunity for the State to receive an up-front
cash payment that could be used – not only to
pay for rail to Dulles, but also to fund
additional immediate transportation improvements
in the corridor.
This is not mere speculation. Just last
Friday, the same private company that offered to
construct $300 million in HOT lanes at no cost to
the State also offered to include in that package
an up-front payment of $500 million in cash to the
State. And, this would have been on top of
using the existing toll lane revenues to pay for
rail to Dulles.
That
is $500 million – payable right now – that
could have been used – not by MWAA, but by the
Commonwealth of Virginia – to fund needed
transportation improvements elsewhere in our
region and give commuters relief. And, bear
in mind, that’s just one team’s proposal.
Who knows how much more other PPTA companies might
have offered if the Governor had not suddenly
killed the PPTA process and surrendered completely
to MWAA the discretion over whether and when to
build HOT lanes and all control over the resulting
revenue.
The
effect is to simply forfeit outright at least $500
million in cash – perhaps much more – at the
very time when the Governor is telling Virginians
there is a transportation crisis and he needs to
add billions to their tax burden.
It
appears that Governor Kaine is so wedded to his
idea to raise taxes that he was unwilling to have
other innovative ideas on the table that may have
reduced the need for more taxes.
The
Governor’s giveaway does not just surrender a
valuable asset that is the property of Virginia
taxpayers. It also surrenders all protection
from high toll rates for Dulles Toll Road
commuters.
MWAA
is an unaccountable authority whose board is not
even comprised by a majority of Virginia
appointees. I agree with Fairfax County
Board of Supervisors Chair Gerry Connolly when he
said “lost in the haste to accept a proposal are
the interests of commuters.” And, I know
that the Speaker shares concerns expressed by the
Coalition for Smarter Growth who question MWAA’s
new role in Tyson’s given its lack of experience
with land-use planning.
The
Governor’s MOU will give that unaccountable body
the unfettered authority to set toll rates on the
Dulles Toll Road. Worse still,
commuters are in danger of getting doubly shafted.
They will be subject to unlimited toll increases.
Yet, they get no guarantee of any congestion
relief on the toll road they travel.
Under the Governor’s MOU, the burden of paying
the balance needed for Dulles rail is shifted from
the federal government to toll road users.
There is already some federal support for the
project and no one can say for sure whether any
more federal funds would have been forthcoming.
But, it is sure now that toll road users will pay
the cost instead.
Under
the Governor’s MOU, the pursuit of federal
funding is not even mentioned and is evidently
abandoned. As a result, Dulles Toll Road
commuters will bear the burden of paying for a
rail system that few of them will use. And, they
will rightly question why it is that other transit
systems across the U.S. are funded largely with
federal funds. But, in this corridor of
unique importance to national security, local
commuters – instead of federal taxpayers – are
forced to carry a major portion of the load.
But
like the millions – possibly billions – in
private dollars left on the table by the
Governor’s giveaway, we will never know how many
federal dollars have been forfeited.
Finally,
some may think it old-fashioned, but Speaker
Howell and I happen to think it is wise that,
before a governor takes a State asset worth
billions and just signs it away, he ought to go
through a meticulous evaluation process.
Then, he should present his conclusions and
recommendations - openly and forthrightly to the
public and to the General Assembly for approval.
Those
checks and balances on the Executive Branch are
needed to prevent rash, cozy or ill-considered
deals – like this one – that are not in the
Commonwealth’s best interest.
Simply
put, we can find no precedent in the history of
Virginia’s state government for a governor to
unilaterally give away an asset worth billions
without legislative approval and without an open
review process that has been endorsed by the
General Assembly. There
has been no public debate of this giveaway,
despite the significant impact is will have on the
Northern Virginia economy. As someone I know once
said, there’s got to be a better way.
Frankly,
I would very much like to return to the
“Virginia way” that has served us well.
Speaker
Howell: Well, those are the things the
Governor has done wrong – or has left
undone – to the detriment of taxpayers and that
of toll-paying commuters.
What
are we proposing to do about it? I
have three remedies to recommend today for the
deeply troubling failings we have just cited and
reviewed with you. First, I call on
our Governor to promptly appear before the
legislative Money and Transportation Committees
and report on his proposed transfer of the Dulles
Toll Road. Many members have questions they
will want to ask.
The
Governor likewise should make the Secretaries of
Transportation and Finance and other
Administration personnel available for a detailed
presentation and questioning on the financial
analysis and assumptions underlying the MOU.
And, he or his representatives should address
specifically the actions they will take in the
forthcoming contract negotiations with MWAA:
-
to
guarantee timely congestion-reducing increases
in new road capacity;
-
to
protect toll road users from excessive toll
rates;
-
to
secure any available cash payments for use on
other transportation projects in the corridor;
and
-
to
pursue federal and local funds for the project
to reduce the burden on commuters.
Second,
unless the concerns addressed above are satisfied
by the Administration’s presentations and
testimony before the responsible legislative
oversight committees, I intend to request a
comprehensive JLARC investigation of the proposed
transaction.
Such
an investigation and report should address not
only the financial merits of the transaction and
the availability of better private-sector
alternatives, but also the integrity and stability
of the PPTA process given the Administration’s
actions on this project. Since the
Governor has not done so, JLARC will be encouraged
to engage a nationally respected, independent
third party to analyze the deal and to help
determine what is in the best interest of the
taxpayers of Virginia.
Third,
and finally, depending on how the Governor
responds to this appropriate oversight of the
Executive Branch by the General Assembly, I am
prepared to explore with colleagues in both
chambers and on both sides of the aisle the
possible need for the General Assembly to reserve
the right to review and approve this transaction
before it goes into effect.
There
obviously are a lot of different views here at the
Capitol on the underlying transportation issues
– such as whether to raise taxes, whether to
sell toll road concessions, and so forth.
But, whatever the members’ views on those
issues, I believe a multi-billion road giveaway
with the stroke of the governor’s pen –
without an open, competitive process, and without
General Assembly consultation or approval – is
something that will make everyone here
uncomfortable.
We
have a solemn duty to assure public confidence in
the Commonwealth’s actions – and confidence in
the marketplace – when we engage in transactions
of this magnitude.
I
have served in the Legislature for ten terms or
almost twenty years, and this is the beginning of
the sixth administration that I have worked with.
But I have never seen a situation where a public
asset was dealt with in this manner. So far
as I know, it is unprecedented in the history of
Virginia’s government. In light of
the many concerns, it would be prudent for our new
Governor to put this transaction, and any further
contract negotiations with MWAA, on hold until the
General Assembly can review it, understand it, and
perhaps act on it.
We
fully anticipate the Governor will criticize these
steps for causing delay, since on Monday he
stressed the urgency of the transaction due to
escalating construction costs. We agree on
the need to move expeditiously, and will do so.
But
the reality is that neither MWAA nor the state
agencies involved had even conceived of funding
Dulles rail in this manner until the last few
months. It was only after the private
companies last year submitted their unsolicited
PPTA proposals regarding sale of the Dulles Toll
Road concession rights that this idea suddenly
came forward.
And
since it is not MWAA, but those private-sector
PPTA companies, who are offering up-front cash
payments to the State – money that could be used
immediately to begin construction on both Dulles
rail and other needed transportation projects in
the corridor – it would be irresponsible to rush
to give the road away to MWAA without fully
exploring the competing private-sector
opportunities to secure even more new construction
value from surrender of the Dulles Toll Road
concession.
Finally,
I return to the larger significance of the
Governor’s actions here – given the extreme
demand that he is currently making on taxpayers.
It is not too much for Virginians to expect that,
before the Governor demands billions more in taxes
for his Administration to spend, he exercise
appropriate fiduciary responsibility over the
valuable assets already within his control.
It
is al too obvious that he has not exercised that
fiduciary care in his actions on this Dulles Toll
Road matter. And, unfortunately, this
repeats a troubling pattern with this new
Administration.
Previous
governors who proposed major new legislative
initiatives either entered office with a clear
mandate for proposals laid out in the preceding
election. Or, they took the time to convene
a bipartisan commission and hold a special
session. Or, they did both.
This
governor had the opposite of a mandate. Remember,
his current effort to raise taxes every year by $1
billion directly contradicts what he promised
Virginians in his campaign. But, that did
not deter him from coming into the Regular Session
– his first as governor – with a
hastily-assembled plan for billions in new taxes.
It
was a proposal that lacked any effort to lay the
groundwork for a bipartisan consensus on
transportation. Since then, we have
seen a continuing series of erratic,
ill-conceived, and unfortunate missteps on the
part of this Administration.
You
do not reach a bipartisan transportation consensus
by threatening important bills simply because they
are proposed by those opposed to your plan to
increase taxes. You do not reach a
bipartisan transportation consensus by waging a
political campaign consisting of inaccurate and
misleading radio ads and “robo”-calls.
You do not reach a bipartisan transportation
consensus by holding hostage billions of dollars
needed by people for education, research, mental
health, the Bay and other worthwhile programs –
thereby denying the state’s citizens a budget.
And,
you certainly do not reach a bipartisan
transportation consensus by taking abrupt,
unilateral action to give away one of the
Commonwealth’s most valuable roadways without an
open process or legislative approval – leaving
hundreds of millions of construction dollars on
the table.
In
closing, we are prepared to work with the Governor
on Dulles rail, the Dulles Toll Road, and
transportation in general. It will be much
easier to do so when he ceases taking rash and
ill-considered actions that make real progress
toward a budget agreement and transportation
consensus more difficult at every turn.
I thank you for your attention and bearing with
us. Now, we would be happy to try and answer
questions you might have.”
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