Youngkin should prioritize modernizing Virginia’s transportation funding sources
138467966 © Larry Metayer |


Youngkin should prioritize modernizing Virginia’s transportation funding sources

Virginia’s highway system is lagging behind neighboring Atlantic states.

Virginia Governor-elect Glenn Youngkin is likely reviewing how he wants to change many of the policies enacted under Virginia’s previous two governors, Democrats Ralph Northam and Terry McAuliffe. While the new governor’s top priorities are likely to be education and the economy, Virginia’s approach to transportation infrastructure should be high on Youngkin’s list of potential policy changes as well.

The COVID-19 pandemic has resulted in many changes to travel patterns, some of which are likely to be permanent. For non-commuting travel, about 80% of the total travel in Virginia, the biggest increase in vehicle miles traveled (VMT) has been from vehicles hauling freight. While some of this growth has been by rail and air, most has been by road. Approximately two-thirds of all manufactured and retail goods—ranging from everything from televisions to teddy bears—travel by truck. The U.S. Department of Transportation expects combination truck vehicle miles traveled to grow by 1.6% annually and single-unit truck VMT to grow by 2.3% annually.

Unfortunately, Virginia’s roadway network is unable to handle today’s traffic, let alone future traffic volumes. The biggest problem is the state’s decrepit Interstate network. Compared to other growing Atlantic coast states, such as Georgia and North Carolina, Virginia has rebuilt and widened relatively little of its existing Interstate highways network. The commonwealth’s Interstates were built in the 1950s and 1960s and many are reaching the end of their design lives and need to be rebuilt.

Virginia’s surface streets are in better shape. However, the state’s urban roads are congested and many rural roads have narrow, winding lanes that are a major safety problem today.

Building and maintaining a highway network requires both funding and financing. Funding is the revenue needed to build or maintain a highway and financing is the means of acquiring that revenue. Virginia does an excellent job leveraging financing thanks to the state’s Public-Private Transportation Act. The agency has entered into more than a dozen public-private partnerships (P3s), which have used private equity and bonds to help stretch taxpayer dollars further.

But the lack of sustainable funding has hamstrung the state. The Virginia Department of Transportation (VDOT) estimates it will cost $12.5 billion to add an additional lane of capacity on I-95 between Richmond and Springfield. The current plan is to use intelligent transportation systems and shoulder running lanes to relieve congestion, a short-term fix at best. The General Assembly issued $900 million worth of bonds to upgrade I-81, but that is not nearly enough for the needed reconstruction of the 325-mile Interstate. And improvement projects for lower-order roads face major delays.

Thus far, Virginia has relied on increasing the fuel tax for more infrastructure funding. The fuel tax has served us well for 100 years, but the growing number of electric vehicles, hybrid vehicles, and more fuel-efficient vehicles has caused each penny of the fuel tax to lose more than 50% of its purchasing power.

Going forward, Youngkin and Virginia should look to use the principles of value-added tolling to rebuild and add capacity where necessary to each of its limited-access highway corridors. The state should limit the use of toll revenue to those corridors, charge tolls that are enough to cover the capital and operating costs of the highway, begin tolling only after the highway has been rebuilt, offer fuel tax refunds for tolled miles driven (to avoid “double taxation”), and provide a better highway (less-congested, smoother pavement) than before.

There are several federal tolling pilot programs that the state could use. The oldest is the Interstate System Reconstruction and Rehabilitation Pilot Program, which allows a state to rebuild one of its Interstate corridors with tolling. Another option is the Federal Highway Administration’s Value Pricing Pilot Program, which allows states to charge variable tolls on an Interstate to reduce congestion. A third option is to toll the bridges along a corridor and use the proceeds to rebuild the Interstate.

In all options under value-added tolling, motorists using the highway would have their fuel taxes (for tolled miles) refunded. Drivers would use E-ZPass transponders that deduct tolls from a pre-paid account when a vehicle passes under a gantry. Prepaying with cash and pay by plate options should also be explored.

VDOT could sequence the corridors to rebuild the oldest, most congested Interstates first, either I-81 or I-95. The remaining two-digit, (I-64, I-66, I-77, I-85) Interstates and other limited-access highways would follow. Interstate spurs, and loops, which are generally newer, would be rebuilt last.

For surface streets, Virginia needs to prepare to implement a mileage-based user fee (MBUF) for all vehicles. Some Virginia residents have already taken part in pilot programs conducted by the Eastern Transportation Coalition in which drivers placed a plug-in device in their vehicle’s OBD-II diagnostic port and received a mock bill in the mail. Mileage-based user fees should have the same principles as value-added tolling —specifically charging drivers only enough to cover the costs of operating and maintaining the highway that the tolls are charged on and offering fuel tax rebates to drivers using them to avoid double taxation. In 2022, Virginia is set to begin a new, permanent MBUF program for owners of electric, hybrid, and more fuel-efficient conventional vehicles in lieu of an annual fee, but that program needs to be expanded to all drivers. 

When many hear mileage-based fees, they fear it is some government plot to track their movements. In reality, pilot programs testing mileage fees typically use private-sector account managers and drivers’ data is legally protected from being shared with law enforcement agencies and other government intrusions.

Some other drivers are concerned that they will pay a lot more with mileage fees than they currently pay in gas taxes, but MBUFs have proven to be less regressive than fuel taxes. With MBUFs all light-duty vehicles pay the same rate. With fuel taxes, drivers pay by the gallon and lower-income drivers tend to have less fuel-efficient vehicles. Some opponents of mileage fees also claim MBUFs are unfair to rural drivers, but most rural drivers would actually pay less money in MBUFs than they do in fuel taxes because they also tend to drive less fuel-efficient vehicles.

MBUF collection costs are higher than the gas tax but will decrease as the number of participants increases and economies of scale are realized. Some MBUF pilot programs are experimenting with smartphones as mileage reporting devices, which could further lower administrative costs. For drivers uncomfortable with location-based fees, non-location-based fees, and odometer readings are also an option.

Virginia’s highway system is lagging behind many similar or peer states. If the state’s leaders want to be better positioned to accommodate anticipated growth and create new economic development, they need to take bold action and move Virginia’s highway revenue mechanisms into the 21st century.