Out of Control Policy Blog

Rethinking Transportation Funding

The difficult economic times are having significant impacts on state transportation departments across the nation.

Today, The Richmond Times Dispatch and The Washington Post reported that Virginia's transportation revenues will decrease by $2 billion over the next six years. And this is not a temporary decline. Virginia Secretary of Transportation, Pierce Homer, declared: "These changes are structural and long-term in nature. They are not cyclical." He also added that, "the prospects for increases in federal funds, which pay for 60% of new projects is unlikely."

The Commonwealth of Virginia is fortunate to be one of a handful of states with legislation that supports public-private partnerships, which has allowed the state to utilize the private sector in order to meet its residents' transportation infrastructure needs. Despite the dearth of state transportation funding, Virginia's $1.4 billion High Occupancy Toll (HOT) lanes project on the beltway will continue on schedule. Virginia's Pocahontas Parkway (Route 895), the product of a public-private partnership, was completed 18 years ahead of schedule and is about to be extended to the Richmond Airport. This project needs no further state revenue support and will also continue apace.

Texas sounded a similar alarm regarding funding. The Fort Worth Star-Telegram reports:

For weeks now, state and local officials have predicted that the economic crunch and a lack of state resources will make it much harder to deliver promised road projects for the next few years. Last week, those thoughts crystallized as the Regional Transportation Council approved a scaled-back version of the state's 10-year Unified Transportation Program that includes funding cutbacks – painting a more realistic picture of what can be afforded and what can't.

Like Virginia, Texas can close the financing gap by bringing in the private sector to develop toll roads. As the Texas Department of Transportation officials said, "There is no reason to panic...The shortfalls can be made up with alternative sources beyond the usual funds driven by gas taxes – including toll financing and agreements with private developers."

In these tough economic times, states need to rethink transportation funding and consider a new way of doing business. State Departments of Transportation (DOTs) should learn from Virginia and Texas and consider how they can leverage their tight transportation budgets with the help of the private sector. Hopefully state legislatures will encourage state DOTs to consider this new way of doing business by passing legislation that enables them to take advantage of public-private partnerships.

Shirley Ybarra is Senior Transportation Policy Analyst


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