Bacon's Rebellion

Lost in the controversy over transportation funding is the fact that the GOP transportation bill, as amended by Gov. Timothy M. Kaine, will make significant changes to the way local governments approach land use and transportation. We’ve chronicled that un-sung aspect of the transportation debate on this blog, mostly from a Republican perspective, mainly because Republicans got out front on the issue.

Now, we hear from Gov. Kaine. Responding to a question from yours truly during a blogger conference yesterday, Kaine praised the land-use elements of the controversial HB 3202. The bill has several worthwhile features, said Kaine, who gave specific credit to Del. Clay Athey, R-Front Royal, for his role in writing the legislation.

Said Kaine: “UDAs and UTSAs are very good ideas. We’ve turned the corner and we’re embracing the notion that land use has to be a part of transportation.”

By UDAs, Kaine was referring to Urban Development Areas, which would require fast-growth counties to create districts designed to accommodate future growth. Local government would concentrate their infrastructure in the UDAs and encourage more compact, New Urbanism-style development, while developers would be forewarned that efforts to develop outside the areas would not be supported. Kaine liked the idea so much that he expanded the eligibility to far more counties and cities than the Republican authors originally contemplated.

By UTSAs, Kaine was referring to Urban Transportation Service Areas, which would typically overlay the UDAs. Kaine amended the legislation to expand the authority of local governments to levy impact fees. He expects that most eligible jurisdictions will jump at the chance “in fairly short order.” Impact fees will help raise revenue for transportation projects and offset development taking place outside the UTSAs.

I don’t yet fully understand the impact-fee aspect of the legislation, but I anticipate that it could become the most far-reaching piece of the bill. We can anticipate lots of sturm and drang as local governments debate setting up UTSAs and adopting impact fees, especially if local home builders associations mobilize to oppose them. Normally, I’m leery of impact fees, which can load disproportionate impact of new development onto developers and newcomers, increasing the cost of real estate and making housing unaffordable. But they may prove worthwhile if they’re used as a cattle prod for developers to create more balanced, more compact and better connected human settlement patterns.

Perhaps the most encouraging news from the Governor is that the current legislation is not the last word on land use reform. Last year, the state broached land use issues when it passed a bill requiring the Virginia Department of Transportation to analyze the regional traffic impact of rezoning projects, Kaine said. This year, UDAs, UTSAs and impact fees constitute another step forward. Looking ahead, Kaine said that his transportation accountability commission is looking into land use issues as well. “I think there will be more [legislation] to come. This is not the work of one session or two.”

Several days ago, I raised a question about Gov. Timothy M. Kaine’s amendments to the GOP transportation package, which seemed to represent a dramatic turn-around from previous stances. (See “Kaine Submits Transportation Amendments,” March 26, 2007.) After criticizing the use of debt to pay for transportation improvements, I asked, was Kaine really amending HB 3202 to borrow $500 million more than the $2.5 billion the Republicans had proposed?

Kaine’s amendments seemed at such variance with his previous rhetoric, and the rhetoric of fellow Democrats, that I wondered whether I even properly understood the amendment. Turns out that I did. During a blogger conference yesterday, the Governor illuminated the thinking behind this important amendment.

The General Assembly proposed issuing $2.5 billion in debt, with debt service to be paid out of the General Fund. But HB 3202 identified no particular source of funds, Kaine explained. “If you’re going to issue long-term debt,” he said, “you should use a transportation revenue source to back up the bonds.” He found a long predictable, long-term source of revenue — the tax on automobile premiums — to cover the debt service. Because the tax generated enough revenue to cover the debt service on $3 billion, he decided the state might as well borrow the full $3 billion.

In other tweaks to the legislation, Kaine lifted the restriction that would have limited the bond proceeds to Interstates and primary roads. His wording would permit the finacing of secondary road projects, making it possible to spread more money around the state.

Gov. Timothy M. Kaine held a telephone blogger conference yesterday afternoon. His most interesting comments came at the tail end of the session, when a blogger identified as Joshua with Raising Kaine, the hugely popular pro-Democratic Party blog, asked the Governor about the political impact of his decision to work with the Republicans on their transportation legislation. Coming to an agreement with the GOP, as I read the sub-text of his question, neutralized the Democrats’ big campaign issue this fall.

I replicate Joshua’s question almost verbatim, but not quite; he spoke a little faster than I could type: “I see you as the coach for Virginia Democrats. I find the message from the transportation bill and this session not necessarily conducive to the goal of helping Democrats win. … In terms of winning in November, where’s the plan? How do we take the message and win the legislature?”

Kaine didn’t seem particularly concerned about the Democratic Party message in the General Assembly elections this fall. His response: “While I’m Governor … I define my role as 60 percent chief executive, 30 percent interacting with the legislature, and 10 percent [Democratic Party] coach. … My goal is getting results.”

Thank you, Governor. It’s nice to know that your Number One priority is the well being of the Commonwealth, not creating Democratic Party talking points for the next election. As one of the 40 percent or so of the electorate that classifies itself as “independent,” I, too, am far more interested in the well being of Virginia than I am of either political party. As for the merits of the legislation itself, I’ll leave that for another blog post. But your heart is in the right place.

Update: Well, at least the Governor’s rhetoric is in the right place. I was praising the Governor to a Republican delegate during the VCAP reception for Newt Gingrich last night. The delegate (who spoke off the record) seemed less than impressed. GOP legislators had boxed Kaine into a corner with the transportation legislation, he said. Politically, the Governor could not allow himself to be perceived as the one responsible for torpedoing a transportation solution that had proven elusive for so many years. As I interpreted the delegate’s meaning, once Republicans crafted a far-reaching legislative package, Kaine had to go along or he’d jeopardize the Democrats’ chances in the upcoming elections.

That’s a plausible interpretation. At the very least, give Kaine credit for this: He’s smart enough to know when to look like he’s rising above partisan politics. Virginians like that. Virginians do want results. And in the long run, governing well is the best political strategy of all.

Update: Not Buck Turgidson offers much the same interpretation as the delegate I quote above. Read his post on Bearing Drift.

A reader has passed along an “initial staff analysis” of Gov. Timothy M. Kaine’s proposed amendments to the Republican transportation package. Viewed in context of the broad scope of the legislation — transportation funding, VDOT reform and land use reform — the Governor’s changes seem modest indeed. View the PowerPoint here.

Among the important points not noted previously on this blog:

• CBT board. The Governor would eliminate a General Assembly bid to appoint a number of members of the Commonwealth Transportation Board — a clear power grab. This provision strikes me as a bargaining chip that legislators will willingly yield.
• Urban Development Areas. The Governor would expand the number of jurisdictions required to create Urban Development Areas (UDAs) where growth and infrastructure improvements would be channeled. Not only would the requirement apply to jurisdictions showing a 15 percent growth rate between the last two census years, the UDAs would apply to localities with populations over 20,000 showing a five percent growth rate — about 75 in all. Clearly, the Governor has accepted, even expanded upon, a key land use provision of the legislature.
• Impact fees. First, the Governor is extending to about 75 localities an existing road impact fee authority that is authorized for only eight counties now, and actually utilized only by Stafford County. Second, he kept in the bill the broad impact fee authority available to six large counties but limited their use to outside Urban Transportation Service Districts, and only for land zoned for agricultural being developed for residential purposes. (Thanks to Reader Roll Tide for correcting my previous explanation.)

Kaine accepted the following changes designed to improve VDOT performance:

– Performance Measures for Project Evaluation and Selection

– Competitive Bidding of VDOT Functions

– Automated Toll Collection

– Reassignment of Road Classification Based on Function

– Creation of Transportation Accountability Commission

The financing portion of the legislation — both the statewide piece and the regional pieces — is such a sorry mess, even after Kaine’s amendments, that my brain goes into a death lock at the mere contemplation of it. If you want details, you’ll have to consult the PowerPoint.

All things considered, this is extremely complex legislation, and we’ll be sorting out the implications for months, if not years, to come.

Quote of the day from Gov. Timothy M. Kaine (as published in the Washington Post):

“This isn’t a perfect bill. It wasn’t perfect when I got it, and it’s still not perfect. The speaker and I finished a phone call just a few minutes before I came in here, where we were both trying to earn sympathy from the other one by telling each other what we still didn’t like about it. But it is a deal that I can very sincerely say is significantly improved.”

There’s a lot not to like in the transportation package passed by the General Assembly and amended by the Governor, but there’s enough in it for the major players in Richmond that the odds are very favorable that it will win final approval.

As House Speaker William J. Howell put it in a prepared statement issued late yesterday:

The Governor’s decision to stay within the structure of the legislation – eschewing his previous positions to insist upon massive statewide tax increases without regional components – is a very positive development. The fact that, for the first time, he has demonstrated a commitment to a judicious use of the Commonwealth’s AAA bond rating is certainly welcome news to those of us who have advocated this reasonable and widely accepted approach for many years.

Kaine tweaked the regional-funding components of HB 3202 for Northern Virginia and Hampton Roads sufficiently to bring local government officials on board, appeasing a major constituency that had opposed the original version.

Christina Nuckols with the Virginian-Pilot addressed an interesting angle that I obliquely touched upon in yesterday’s post when noting Kaine’s apparent back-pedaling on spending the General Fund surplus and issuing long-term bonds to fund transportation projects. Did he pull the rug out from General Assembly Democrats who’d been hitting those issues hard in recent months? Writes Nuckols:

Democrats were startled by Kaine’s decision to compromise after he had told them in a morning telephone conference that he would fight to defeat any diversion of money to roads.

“Less than two hours later, they called me back and said he’d changed his mind for some reason,” said Del. Lionell Spruill Sr., D-Chesapeake. “He gave in.”

Even so, Democratic leaders said they may be forced to back Kaine and accept the deal.

It will be interesting to see how the Home Builders Association of Virginia responds to Kaine’s amendment that would expand the scope of impact fees in fast-growth counties. Otherwise, no major constituency has yet surfaced in vocal opposition to the amended transportation package. Although Republicans reserve the right to withhold their judgment regarding Kaine’s amendments until they have a chance to study them, it’s inconceivable that they would punt the legislation this close to the goal line.

I’ve received an e-mailed copy of Gov. Timothy M. Kaine’s press release (compliments of Barnie Day) outlining the details of his amendments to the GOP transportation package. It’s not live on the Governor’s Web page yet, so I’ll post it on the Bacon’s Rebellion website and link to it for your reading pleasure.

I haven’t had a chance to dissect the Governor’s amendments yet, but I’ll return with comments when I can.

…OK, I’m back. Here’s my insta-analysis before I have to run off to an interview and Little League.

First of all, I’m confused. Kaine seemingly has back-tracked on two of the Democrats’ key rhetorical themes of the past few months. If I am missing something obvious, would someone please point it out to me?

Question One: Gov. Kaine has excoriated Republicans for wanting to finance transportation projects with General Fund revenues, including one half of the ongoing budget surplus. Transportation, he said, should not have to compete with other needs such as schools, health care and law enforcement, and he didn’t think the surplus, which can increase or contract dramatically, was a stable, ongoing source of revenue. So, now he proposes to increase reliance on the budget surplus, tapping two-thirds of the surplus? The inconsistency is so jarring that I must be missing something critical. If someone can enlighten me, please post a comment.

Question Two: Waving credit cards mockingly in the air earlier this year, Democratic legislators lambasted the Republican plan for “mortgaging our children’s future,” “putting state debts on the credit card,” and all manner of fiscal irresponsibility. Now comes Gov. Kaine, proposing to jack up transportation debt from the $2.5 billion the GOP legislators proposed to $3 billion. Again, a jaw-slapping inconsistency. Am I missing something?

So much for Return on Investment Analysis. Gov. Kaine never made a big point of this, so I can’t accuse him of inconsistency. I just don’t agree. He proposes increasing the percentage of bonds going to transit capital from 15.7 percent to 20 percent, and he wants to dedicate two cents of existing recordation taxes to transit funding. I’ve got nothing against transit — I just think it should compete on a level playing field with roads. All projects should be ranked on a Return on Investment basis. Anything that arbitrarily increases or restricts funding for a major transportation category is a sure-fire recipe for making sure that higher Return on Investment projects get overlooked.

Land use and traffic flow. There are shreds of good news. The Governor has signed side legislation (not part of the infamous HB 3202) that will accomplish a number of worthy goals:

• Subdivision roads. SB 1181 strengthens standards for accepting subdivision streets into the state system by increasing connectivity standards for roads and subdivisions, enhancing the overall capacity and efficiency of the transportation network.
• Corridor management. HB 2228/SB 1312 promotes traffic flow and interconnectivity on the state’s road system, ensuring that new and existing roadways are not degraded by the creation of too many and poorly spaced intersections, turn lanes, median breaks, and other impediments.
• Incident management. HB 2163/SB 1144 allows VDOT vehicles to participate in clearing cars and restoring traffic flow after an accident, improving clearance time.

The press release provides only a cursory summary of very detailed legislation, so the significance of many of the Governor’s amendments is not immediately evident. I await more details.

The Governor’s press release is now online. Here it is.

Marc Fisher, a metro columnist for the Washington Post, has launched a full-scale assault on the HOT lanes proposed for the Washington metro area, mainly on the grounds that they benefit only the rich and powerful. He uses three key arguments against the congestion tolls:

1) Lexus lanes seem unfair to low- and middle-income commuters who can’t afford to shell out the big bucks. In Virginia, where prices could vary according to traffic volume, planners say it could cost up to $42 per day roundtrip between Prince William County and the Pentagon on the HOT lanes scheduled to be built along Interstate 95.

2) Folks tend not to believe the new lanes would really save much time. After all, look how congested HOV lanes have become on I-95.

3) The structure of these deals, with private companies winning the right to profit off traditionally public infrastructure, sets off many people’s stench meters. Because public dollars built almost all roads in the first place, exorbitant tolls feel like double taxation.

None of Fisher’s arguments hold water. Point for point, here’s why

1) Hot lanes unfair. HOT lanes along I-95 might cost $42 for commuting both ways, but few low/middle-income people would use it for that purpose. They would use the lanes only when time was at a premium. The lanes would give them an option they did not possess before. Insofar as new HOT lanes took traffic off existing lanes, low/middle-income motorists actually would benefit.

If low/middle commuters do choose use the HOT lanes to cut the time of their drive to/from work, they can avail themselves of numerous options: car pooling, van pooling, buses and other forms of ride sharing in which riders share the cost of paying the toll. Ride sharing with one other passenger would cut the cost per person in half; sharing with two would cut the cost by two thirds.

2) Hot lanes don’t work. If the lanes don’t save much time, then people won’t use them and they won’t have to pay the charge. D’oh! Ideally, tolls would be set at rates consistent with a level of traffic that optimizes traffic flow through the HOT lanes. If the lanes are congested and the traffic flow is sub-optimal, then the rates need to be raised until conditions improve. It’s called dynamic pricing.

3) Stench meter. There is no intrinsic reason that HOT lanes must be privatized. VDOT could introduce congestion pricing just as easily as a private company could. The advantage of public-private partnerships is that the private sector would invest a billion or more dollars of private capital into upgrading the Interstates, doing what the state cannot afford to do.

Fisher might argue that the state could afford to upgrade the Interstates itself if it just had more money. Why not raise taxes? Well, we could. Just two problems. First, you’d have to raise taxes a lot more than a billion dollars in order to generate a billion dollars for I-95 or I-495; state road revenues go through a complex distribution formula that makes it all but impossible to steer the money where it’s needed most. Second, just adding more lane-miles of Interstate doesn’t incentivize the kind of car pooling and van/bus riding that is essential to maximize the carrying capacity of the roads.

Finally, as far as the “fairness” factor is concerned, I find the issue wearisome. The reason people spend years earning college degrees, working hard and saving their money is so they can have more money than if they don’t. The advantage of having more money is that you can afford things you could not otherwise afford. You can ride in a Lexus instead of a Hyundai. You call up a satellite-navigation map on your touch-tone screen instead of unfolding a paper road map. You can put a double latte from Starbucks in your cup holder instead of a cup of joe from Quick-Stop. And you can pay tolls to whizz along in HOT lanes instead trduging bumper-to-bumper in the congested lanes. That’s the whole point of making more money! Otherwise we’d all jump out of the rat race!

(Hat tip to Tobias Jodter for passing along the story.)