Tax Increases Are Wrong Fix for Virginia’s Congestion Woes

State needs to turn to innovative solutions, not tax increases

As the special session on transportation funding approaches, Gov. Tim Kaine has once again proposed more taxes on Virginians to “solve” the road funding crisis. Kaine wants to increase auto sales taxes, vehicle registration fees and institute new levies on real estate.

Gov. Kaine claims his plan will provide another $1.1 billion in transportation funds. But by clinging to this same old stale, and increasingly unsustainable, approach to transportation funding, Kaine’s plan will do little to bolster mobility in the state.

Tax increases aren’t the answer. Thanks to Virginia’s public-private partnership legislation passed in 1995, a mechanism exists for the state to attract massive amounts of private capital to fund needed infrastructure projects.

With bipartisan support, public-private partnerships have been used successfully on a handful projects such as interstate highway maintenance. The state’s Department of Transportation has gained valuable experience reviewing and implementing these proposals. Why not further unleash the private sector to build – with strong public oversight – the new large highway and bridge projects we need to solve the transportation crisis here in Virginia?

Other states are doing it. Missouri is finalizing a contract with a private sector team that will finance a $500 million dollar rehabilitation of a staggering 802 bridges over a 5-year period, and then maintain those same bridges for 25 years. Missouri would never have been able to accumulate the funding for such a massive project through traditional means, like new or higher taxes. With 13,000 bridges to maintain in Virginia, we should be looking at similar types of innovative contracting.

Over 10 years ago, Virginia signed the first performance-based road asset management maintenance contract in the country securing a fixed-price long-term contract for Interstate highway maintenance using the Public-Private Transportation Act.

The turnkey concept established performance standards for a single firm to manage and contract for all maintenance. Because the concept was so new, the first contract was for 250 miles of various Interstate segments and covered all aspects of road maintenance and all work, labor, materials, services and equipment necessary to meet the asset specific outcomes and performance targets specified in the agreement. The required work ranged from routine repairs and preventive treatments, roadside maintenance including mowing, and restorative maintenance.

In 2000, the Florida Department of Transportation took Virginia’s lead and embraced asset management maintenance contracts, initiating an aggressive program of securing long term performance-based contracts for routine maintenance. By August of 2005, Florida had executed 17 contracts totaling $517 million or $69 million annually. The state estimated the savings to be $105 million, or 17 percent over the life of the contracts. In FY2003-4, they even reduced its request for highway maintenance funding by $9.1 million. It’s likely that Virginia could reap similar results if we were as aggressive as the Sunshine State.

Gov. Kaine’s plan will do little to tackle the major problem of congestion. The current Virginia Department of Transportation districts are largely a product of the late 1920’s; thus, the funding formulas used to distribute transportation dollars are an anachronism dating back to the era when roads were primarily used to bring produce from small farms to markets. Since only a small portion of the formula takes population into account, urban congestion is effectively ignored.

Hence, projects are not judged on their performance or ability to relieve congestion. Instead, the projects are often politically determined. There is little prioritization to get the most bang for the buck. With more and more Virginians wasting ever more time in gridlock, shouldn’t solving the congestion problem be a top priority?

As legislators approach the special session in June, it is time to take a hard look at the Governor’s proposal and think about innovative ways to solve the problems that he does not address. Simply raising the taxes on working Virginians, throwing more money after bad, and using the same old tired formulas will accomplish nothing but raising taxes. But if the legislature can demand the changes necessary to make the Virginia Department of Transportation accountable, bring the private sector into the picture and emphasize congestion-busting projects over political pork, perhaps they could really accomplish something worthy of a special session.