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Reason Foundation

The Virginian-Pilot

Tunnel Project Needs to Move Ahead

Improvements are vital to mobility, port commerce and regional economy

Shirley Ybarra and Leonard Gilroy
April 13, 2012

Many local officials are trying to delay the $2.1 billion expansion of the Midtown Tunnel. Some are worried about the expected toll rates. Others want the government to build it. It is this never-ending political gamesmanship and short-term thinking that make building critical infrastructure so difficult.

Freeways aren't free. And neither are tunnels.

The possibility of a $1.84 toll for the tunnel during rush hour reflects the costs of building and maintaining this important project. Legislators and pundits suggesting that the government should raise gas taxes and build the tunnel are fooling themselves. Drivers are not about to embrace a 10-cent a gallon, or higher, increase in the gas tax they'll feel every time they go to the pump.

A national Reason-Rupe poll of 1,200 Americans asked voters if they'd rather pay for new transportation projects through higher gas taxes or pay tolls when they use new roads.

Fifty-eight percent of Americans said new roads should be funded by tolls, while just 28 percent said new road capacity should be paid for by tax increases. A whopping 77 percent said they'd oppose raising the federal gas tax.

And let's not forget that Hampton Roads voters shot down a one-cent sales tax increase for transportation at the ballot in 2002, just as Northern Virginia voters did with their proposed half-cent sales tax increase.

More importantly, the gas tax is no longer a viable way to pay for major projects. Cars keep getting better mileage per gallon, which means the tax delivers less and less to government coffers. That Toyota Prius is racking up the mileage on roads while paying less in gas taxes thanks to its fuel efficiency. In fact, electric car owners, like those driving Nissan Leafs, will cause wear and tear on roads while never paying the gas tax.

The government has been promoting and mandating fuel efficiency for decades. As a result, gas tax revenue is dwindling.

Unless the state and feds want to reverse course by banning fuel-efficient and electric cars and mandating Hummers, it's time to face facts: The United States and Virginia need a new long-term, sustainable funding source for transportation. User fees and tolls are the fairest, most equitable way to do that.

The Midtown Tunnel public-private partnership is a great example of why that's the case. The region and state are expected to put in $362 million to build a $2.1 billion project. It is a project Virginia and Hampton Roads simply cannot afford on their own.

The private company picking up the tab will then try to make its money back over 58 years. They'll do so by charging tolls to only those people who drive through it. If you don't use the tunnel, you don't pay the toll.

North Carolina, Texas, California, Florida, Indiana, Illinois and many other states are doing the same thing - using public-private toll roads to finance, build and operate critical highways that cash-strapped governments can't afford. Transportation officials know private investment and tolling are two of the few realistic solutions available to keep up with growing populations that will only worsen traffic congestion and wear down our roads.

And though some complain that the private company building the Midtown might someday reap a 13.5 percent annual return on its investment, the reality is that there are no guarantees and the government has smartly shifted the risk onto the private sector. If the project fails to live up to financial expectations, the company loses its money. Taxpayers will not be on the hook for the losses - as they would be if government built the tunnel and it underperformed.

There seems to be general agreement that the Midtown expansion and related improvements are vital for the region's mobility, port commerce and regional economy.

The current public-private partnership deal is the best and only realistic way to get it done: The private sector risks its money, and the people who use and benefit from the tunnel pay for it.

Shirley Ybarra, a senior transportation analyst at the Reason Foundation, was Virginia's secretary of transportation in the Gilmore administration. Leonard Gilroy is the foundation's director of government reform. This commentary was originally published in The Virginian-Pilot on April 11, 2012.


Shirley Ybarra is Senior Transportation Policy Analyst

Leonard Gilroy is Director of Government Reform


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