How to Stretch Those Transportation Tax Dollars

focus2aby James A. Bacon

The Commonwealth of Virginia has expended way more effort in recent years figuring out how to raise taxes for transportation than it has ensuring that those tax dollars are well spent. That’s not for a lack of opportunities. In its new publication, “The Innovative DOT: a handbook of policy and practice,” Smart Growth America (SGA) argues that there are many techniques for stretching our tax dollars.

In the second of eight focus areas, the report explores three big ideas relevant to Virginia:

  • One funding pot. Put all transportation dollars for roads, rail and other transportation infrastructure in one big pot and allocate dollars based on Return on Investment. The project that provides the greatest benefit gets funded first, regardless of transportation mode.
  • Asset management. Adopt an Asset Management program for inventorying transportation assets, appraising their condition, and prioritizing maintenance expenditures. Timely preservation of assets can prevent the accelerating degradation of assets once they have begun deteriorating.
  • Performance metrics. Identify goals — congestion relief, facilitation of commerce, economic development, energy savings, pollution mitigation, coordination with local land use — and rank proposed transportation projects by the degree to which they improve those metrics.

Bacon’s bottom line:

 By pigeonholing our transportation dollars between roads and rail, Virginia may be under-investing in some areas and over-investing in other areas. The idea of throwing all transportation dollars into a single pot has a certain appeal. In theory, it would facilitate financing of projects, regardless of mode, that offered the greatest public benefit. 

Here’s my reservation: This idea conflicts with the goal of nudging transportation toward a user-pays system. If we emphasized a Value Capture approach (special tax districts on property owners benefiting from an interchange or Metro station) to project financing, it would be manifestly self-defeating to put those dollars into a Big Pot. The same logic applies to a Mileage Based User Fee (MBUF), especially if, as I advocate, those dollars are dedicated exclusively to maintenance. However, insofar as the Big Pot is filled with tax dollars derived from general taxes like the sales tax and an impartial methodology exists to rank road and rail projects, the idea might have merit.

Maintenance accounts for about 40% of all dollars by the Virginia Department of Transportation (VDOT) this year. VDOT began to build an asset management system about a decade ago. The department sends out vans equipped with sensors to measure road conditions across the state and publishes an annual “State of the Pavement” report every year that summarizes road quality and driving conditions.

Deficient lane miles in VDOT transportation districts (from left):
Deficient lane miles in VDOT transportation districts (from left): Bristol, Salem, Richmond, Hampton Roads, Fredericksburg, Culpeper, Staunton, Northern VA.

That’s a big step forward compared to the ad hoc practice of the past, in which district engineers drove around and tried to figure out what needed to be done. But there still is a long way to go. According to a December 2012 Federal Highway Administration document, VDOT still was in the pilot-project phase, testing the validity of the system before implementing it statewide. VDOT had adopted a philosophy of incremental roll-out to gain staff buy-in and minimize risks. VDOT may be moving at a snail’s pace, but it does appear to be moving in the right direction… and it has been doing so for the past 10 years.

The idea of performance metrics is making inroads in Virginia as well. The Secretary of Transportation’s office is devising a set of metrics for purposes of long-term planning, and a task force including VDOT and the Department of Rail and Public Transit is hip-deep into a three-year process to determine how to rank road projects by congestion mitigation. The goal is to have 25 to 30 major highway, transit and technology projects rated by December 2014 to guide the distribution of construction dollars in 2015.

Asset management systems and performance measures will never capture the public’s imagination. There are no ribbons to cut, no ceremonial spades of dirt to overturn, no photo ops. But they hold out the potential to ensure that tax dollars are more effectively spent. That beats higher taxes any day.

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4 responses to “How to Stretch Those Transportation Tax Dollars”

  1. Speaker Bill Howell agrees, at least, with SmartGrowth that there should be “return on investment” studies of all transportation projects. In a letter to me outlining the concept, he illustrated that he knew that a project near Cville, the so-called Western Bypass, was the poster child for why we must begin to consider costs versus benefits. Obviously, what is included, or how the return is calculated, becomes a key BUT at least ROI-thinking ensures that the discussion has some connection to money.

    Here, the local newspaper, the Daily Progress, refuses to ask a massive monetary question of proponents: “Why should taxpayers buy a $300+ million highway when VDOT research consistently illustrates that spending $80-$90 million on two overpasses will decrease more congestion, stop more accidents, and increase traffic speed much more than the highway?” A more specific question, “Why does any secretary of transportation accept a $135.9 “design-build” construction bid when his own VDOT staff was clearly telling him that constructing the highway would cost between $297 and $413 million and when federal research was explaining that design-build always costs more money, in the end, than the traditional ‘design-bid-build?’” might lead to a Pulitzer Prize.

    1. How are those poor land speculators going to make their fortunes if VDOT is not allowed to build new infrastructure near their holdings?

      The Media gets orgasmic at the idea of any spending of tax dollars.

  2. Salz – I’m quite sure the folks down in Hampton would take the money for that bypass off your hands for a tunnel!

  3. Our Culpepper district member from the CTB actually offered to spread the wasted money to other projects, like the Hampton projects, the Elizabeth River Crossings, if I remember correctly. His consistent comments illustrating that the “bypass” was, at best, a boondoggle was the reason the sec trans of his own party fired him…and the reason that the legislature is looking at three or four bills to return some independence to the CTB.

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