Surface Transportation News #162

Surface Transportation Innovations Newsletter

Surface Transportation News #162

Misinformation on public-private partnerships

In this issue:

New Misinformation on Public-Private Partnerships

Anticipation that the Trump Administration’s trillion-dollar infrastructure plan will be based largely on long-term public-private partnerships (P3s) has led to a number of attacks on the P3 concept, most of which either fail to understand what it is or deliberately misrepresent it.

One of the cheapest shots is being presented as the work of Congress’s respected Joint Economic Committee (JEC). You can download a six-page summary on what appears to be a JEC letterhead, titled “Risks of Relying on Private Sector to Address America’s Infrastructure Needs.” But down at the bottom of each page, in small type, are the words “Prepared by the Democratic Staff of the Joint Economic Committee.” The report is largely an attack on the 10-page proposal from last fall’s presidential campaign, by Trump advisors Wilbur Ross and Peter Navarro.

Two of its criticisms are against the proposal’s call for federal tax credits for the equity investors—which I have argued are totally unnecessary, because there is no shortage of equity wanting to invest in US infrastructure: the shortage is of enough projects because most states don’t yet have workable P3 enabling legislation. Another is that the plan only deals with projects with bondable user-fee revenue streams, and therefore doesn’t address every infrastructure need. That’s true, and nobody ever claimed that it did. But there is a huge array of aging and inadequate airports, highways, and water systems that have or could have bondable user-fee revenue streams that would be good candidates. Would those fees be higher than what people pay today? Well, yes—things cost more to build today than 40 or 50 years ago, and current user fees aren’t enough; that’s why we have a large infrastructure backlog.

A more serious critique of P3 infrastructure is “No Free Bridge: Why public-private partnerships or other ‘innovative’ financing of infrastructure will not save taxpayers money,” by Hunter Blair, released by the Economic Policy Institute on March 21, 2017. Blair explains the difference between funding and financing, allegedly to debunk the notion that P3 concessions offer some kind of free lunch, which they obviously do not. He also seems to think P3s are being proposed because there is a shortage of financing, which he counters by defending traditional municipal bonding. But no serious advocate of P3s makes that argument. Instead, the case for P3s is based on advantages such as shifting (in particular) mega-project risks—cost overruns, late completion, inadequate user-fee revenue—from taxpayers to investors; tapping new pools of capital, including private equity and equity from pension funds; and guaranteed long-term maintenance, via enforceable performance requirements built into the long-term concession agreements. Blair never gets into those attributes of P3 concessions.

Blair does admit that boondoggle projects (with benefits far less than costs) “could be filtered out through the use of a P3.” He also concedes that, in principle, ongoing maintenance could be assured via a well-structured concession agreement, but then argues that most states don’t have the capability to craft or enforce such agreements. It is to address such needs that the U.S DOT has an office devoted to providing guidance on doing exactly that, including recommending that agencies such as state DOTs pay for high-caliber outside legal and financial expertise to be on their side of the table negotiating concession agreements.

But the worst part of Blair’s report is the section titled “Do P3s Yield Efficiency Gains?” Here he relies largely on a generally sound book by academic researchers Engel, Fischer, and Galetovic to make two of what he considers devastating critiques. The first is that “most of the lower costs for P3s come from sidestepping Davis-Bacon provisions that require the payment of prevailing [union] wages to construction workers.” I got in touch with Prof. Engel about this, and he expressed surprise, but in the book chapter that he emailed to me was the following sentence: “In general, PPPs often lead to efficiency gains because they allow firms to circumvent the provisions of the Davis-Bacon Act.”

In fact, the large majority of U.S. transportation P3 projects have received part of their financing from the TIFIA loan program and/or the issuance of federally tax-exempt Private Activity Bonds. A 2016 list from U.S. DOT’s TIFIA office listed 19 such projects. And because of the federal dollars involved in their financing, they are by definition subject to Davis-Bacon, Buy America, and other federal provisions. A larger table in Public Works Financing includes 32 such projects; besides the above 19, it includes three leases of existing toll roads, three totally private projects, two that were financed via all-debt 63-20 corporations and several others. I have no details on whether any of those used non-union contractors, but even if they all did, at most that would be 11 out of 32 projects—hardly what Blair claims are “most” such projects.

Blair’s second claim is that governments are taken advantage of by “opportunistic renegotiation” of concession agreements. This is a serious problem in parts of Europe and much of Latin America, where most of the concessions are not financed by toll revenues, and where government-business relationships are often, shall we say, cozy. I took part in a conference on this very subject at George Mason University several years ago, and was shocked to learn how common this practice is, especially in Latin America. But here again, Engel, Fischer, and Galetovic’s book’s section on U.S. P3s includes a table of 20 P3 concessions, and identifies eight of them (40%) as having been subject to “renegotiation”—a point Blair gleefully cites.

I have followed all eight of those projects, and none of them experienced the kind of “renegotiation” that is common in Latin America. Here is the list:

  • Port of Miami Tunnel—completed on budget, a few months late, at substantial cost savings compared with FDOT’s initial estimates.
  • I-495 Beltway Express Lanes—to maintain debt service after a low-traffic first year, Transurban, on its own, made a significant additional equity investment.
  • Pocahontas Parkway—defaulted on its debt service, changed hands several times, but no taxpayer bail-out.
  • Indiana Toll Road—filed bankruptcy due to over-leveraged initial financing and recession-induced traffic decreases; was repurchased by pension funds at a large premium over initial price. No taxpayer loss or bailout.
  • South Bay Expressway—bankrupt due to low traffic from Great Recession; equity wiped out, debt restructured; TIFIA office says no net loss; SANDAG bought toll road out of bankruptcy at half price, a great deal for them.
  • Las Vegas monorail—bankrupt due to low revenue; no taxpayer bailout.
  • Dulles Greenway—had to be refinanced due to early revenue shortfalls; the concession term was extended by the State of Virginia, but there was no taxpayer bailout.
  • SR 91 Express Lanes—profitable and successful, but bought out by OCTA to void a stringent non-compete clause.

As part of my email discussions with Prof. Engel, I sent him this list, and the only two points he made to justify any of them as having been “renegotiated” concerned the Indiana Toll Road and SR 91. In both cases, he pointed to taxpayers’ money benefiting the company involved. Because the State wanted to shield Indiana motorists from the increased toll rates for several years, it made a deal with the company to charge residents lower tolls initially, and compensated the company with shadow tolls. But that was the state’s initiative, not the company’s. As for SR 91, the company had no intention of selling what was moving forward as a profitable concession. When the County insisted on buying out the contract, the company rightly insisted on a market-based purchase price, which was calculated by a neutral third party based on the expected net revenues over the remaining years of the concession.

Prof. Engel and his co-authors have concluded, and say so in their book, that P3s are “the best option for transportation infrastructure,” and have devoted several books and many articles to this subject. But in this case, I think their definition of “renegotiation” has been shaped largely by their greater familiarity with the Latin American experience than that of the United States.

» return to top

Some Surprising Possible Consequences of Autonomous Vehicles

My in-box these days is flooded by commentaries and studies dealing with our autonomous vehicles (AV) future. It’s hard to keep up, but three recent items struck me as particularly interesting.

The first was from Scientific American, “How Pedestrians Will Defeat Autonomous Vehicles,” by Karinna Hurley. She summarizes a recent paper in the Journal of Planning Education and Research by Adam Millard-Ball, on the subject of the interaction between AVs and pedestrians in cities. Millard-Ball begins with the reasonable premise that AVs “will almost surely be programmed to avoid hitting people.” But, as a consequence, pedestrians will come to understand this, and the result will be a new cross-walk game of chicken. He then offers three possible outcomes of this new situation:

  • Pedestrian supremacy—if those on foot always win out, a consequence would be much slower car travel in the city, with walking becoming more efficient than motoring.
  • Regulatory response—in which the blame for pedestrian-car accidents is shifted to law-breaking pedestrians, which could be politically untenable.
  • Human driver return—in which many people revert to driving their own vehicles to retain the advantage of faster travel in the city.

My second discovery was a provocative report from Ptolemus Consulting Group called Autonomous Vehicle Global Study 2017. I only had time to read the free abstract, which itself is over 100 pages long. Here are a few of its speculations.

First, as I’ve written in previous newsletters, driverless vehicles could seriously disrupt public transit. Without the cost of a driver, robo-taxis and shuttles could operate door-to-door services where public transport is uneconomic. And, “In turn, this will allow more people to move away from densely populated areas,” a point also made in my third discovery, “Will Self-Driving Cars Make the Suburbs Great Again?” by Nicole Kobie in New Statesman (Dec. 19, 2016). She reports on a presentation by Karen Harris of Bain & Company, based on the idea of spatial economics—as the cost of distance goes down, people won’t mind traveling longer distances, as long as they can make good use of the time. And this could accelerate a trend of professionals moving to exurbs.

Another speculation from the Ptolemus report is that AVs may increase urban traffic congestion. The report cites a study from the Center for Transport Studies, Imperial College London, in which the impact of making car travel as comfortable as light rail or high-speed rail, in terms of smooth acceleration, was weighed against congestion at traffic lights. At least with a mixed fleet of 25% AVs, their scenarios all showed that slower acceleration of the AVs (for a smoother ride) would increase congestion in the vicinity of the intersection—in some scenarios by 50%. In addition, the report looks at what may happen if most AVs are personally owned (rather than being in shared-vehicle fleets). Since the vehicle would go elsewhere after delivering a commuter to the office, its return journey would be empty, significantly adding to the number of vehicles on the road. They also speculate that visions of most people sharing rides in robo-taxis (which means sharing with strangers in a small, enclosed space, with no driver) are completely untested and might be found unacceptable by many people.

These are still very early days in the coming AV world. And regardless of how rapidly the technology improves, there are large unknowns in what choices people and institutions will make, and what the transition to this world will be like. My best advice at this juncture: do not count on any glittering scenario to be anything more than a set of guesses.

» return to top

More Talk of Interstate Tolling, Much of It Misinformed

Perhaps based in part on recent mentions from the White House and DOT Secretary Elaine Chao, Interstate tolling is increasingly being discussed by legislators and state DOTs. But I’m dismayed by much of what I read about these discussions.

Quite a few state legislators see Interstate tolls as the best way to bail out their inadequate state transportation budgets. Massachusetts Rep. Carolyn Dykema, vice chair of the Joint Committee on Transportation, was recently quoted in a local newspaper saying, “Any conversation to generate revenue is worth having. Tolling roads is an interesting idea. We know there are a lot of transportation needs. Roads and bridges are in desperate need of investment.” Similar comments have been heard repeatedly in Connecticut over the past year, and WNPR in that state recently noted that “A bill which would include tolls as a revenue raising source for transportation has already passed out of committee.” And similar language accompanied the passage of similar bills in both houses of the Indiana legislature in recent weeks, both of which include Interstate tolling as a hoped-for statewide transportation revenue source.

These aspirations are problematic for several reasons. Let’s first consider the legality of Interstate tolling. When Congress enacted the Interstate highway system bill in 1956, it banned charging tolls on any federal-aid highway (except for those toll roads which were to be incorporated into the Interstate system). Over the last several decades, various reauthorization bills have eased that ban somewhat. Today it is legal to replace a non-tolled bridge on the Interstate system with a tolled bridge. It is also legal to add tolled lanes to an existing Interstate, and to convert HOV lanes on urban Interstates to HOT or Express Toll Lanes.

But there are only two ways in which all lanes of a non-tolled Interstate can be tolled. One is if a state wins a slot in a federal pilot program that allows three states to each use toll financing to reconstruct (i.e., replace) the existing pavement and bridges with new pavement and bridges, along with any other modernizations that make sense. But this program allows only one such project for each of three states. Moreover, the toll revenues must be used only for the capital and operating costs of the replacement Interstate. That’s a very different proposition from slapping tolls on existing, unimproved Interstates and using the revenues to bail out the state transportation budget.

The other legal way applies only to regularly congested portions of an Interstate, typically within an urbanized area. Under the FHWA Value Pricing Program, variable tolling may be imposed on that portion of the Interstate for the purposes of congestion management. To be eligible, a state must be signed up as a partner in the Value Pricing Program. This approach is also very limited, since unless the state in question has a very large number of congested urban Interstates, only a small fraction of its Interstate lane-miles could be tolled.

To its credit, the leaders of the Interstate tolls effort in Indiana seem to understand these limitations, despite some of grandiose rhetoric we’ve heard in legislative debates. What the Indiana bills actually call for is to authorize the governor to apply for one of the slots in the Interstate toll-financed reconstruction pilot program. Also better-informed than most legislators in Connecticut is the state’s Office of Legislative Research, which has advised legislators that border tolls are unlikely to gain federal approval but that congestion tolls on congested segments would work.

But there is another reason to question the idea of Interstate tolls as the panacea for a state’s transportation funding shortfall: political feasibility. The trucking industry will fight tooth and nail against any proposal that involves simply adding tolls to existing, unimproved Interstates and using the money for other transportation needs. That’s the sole purpose of its Alliance for Toll-Free Interstates. AAA, representing ordinary motorists, may well join in such opposition, since they have a long track record of fighting against diversion of toll revenue to other uses. And there are also various tea-party and taxpayer groups, which would rightly view such an effort as a de-facto tax increase, rather than a better user fee.

To make headway, what’s needed is a genuine value proposition for Interstate highway users. Our aging and inadequate Interstates are analogous to a major bridge that is near the end of its useful life. The cost of replacing it is well beyond what the current DOT budget can handle. What is the least-bad way to pay for it? The users-pay/users-benefit principle argues for a toll that is limited to the capital and operating costs of the replacement bridge. Tolls would not be charged until the new bridge was in place and opened to traffic. And because the toll rate per mile would be more than the per-mile yield of current fuel taxes, users of the new bridge should pay only the new toll, not the toll plus the fuel tax. (Ask me how easy this is to do with today’s all-electronic tolling.)

This kind of customer-friendly approach has a realistic chance of winning the approval of highway users; it’s clearly not a money-grab, but is a genuine—and limited—user fee for a clearly needed highway project. An approach along these lines should also be a winner in competition for a federal tolling slot.

» return to top

Progress and Setbacks on Express Toll Lanes

Express toll lane (ETL) projects continue moving forward around the country, but not without some bumps in the road. Challenges have arisen in leading-edge Florida, and a political squabble in Illinois threatens at least one of that state’s first two projects. Meanwhile, Fitch Ratings remains bullish on the kind of ETLs that involve new lane capacity financed by toll revenue bonds.

Fitch’s March 7, 2017 “Peer Review of U.S. Managed Lanes” reviews 11 such bond-financed projects on which it maintains ratings—all of which currently have investment-grade ratings, including several still under construction as the report was being written. Those in this category include the now just-opened ETLs on SR 91 in Riverside County, CA; the I-77 project in Charlotte, NC; SH-288 in Houston; I-35E in Dallas; and C-470 in Denver.

Fitch’s report reminds us once again that if a state DOT expects to finance such lanes based on toll revenues, you can’t give away most of the lane capacity to two-person carpools or eco-friendly vehicles. Most states with serious plans for ETL networks have been revising their laws and policies along these lines. I was pleased to see this month’s 11-1 vote by the board of Los Angeles County Metropolitan Transportation Authority authorizing a study of increasing their HOV requirement from two to three, and for reconsidering the state law that mandates free passage for low-emission vehicles. Caltrans District 7 (Los Angeles) director Carrie Bowen was quoted in the Los Angeles Times saying, “It’s time that Caltrans looks at three-plus.” During 2016 on the I-110 HOT lanes, would-be toll-payers were barred from using the lanes for 306 hours during peak periods, when the lanes were filled to capacity by HOV-2s and eco-vehicles.

Florida DOT’s plans for ETL networks in all four major metro areas (Jacksonville, Miami, Orlando, and Tampa) faced a legislative challenge, in the form of a bill that would have called a halt to building ETLs. That bill was rejected by the House Transportation Committee in March. But the planned 100-mile Tampa Bay Express network was put on hold last year by FDOT, in the face of considerable opposition by neighborhood groups and rail-transit advocates. The latest attempt to resolve the controversy involves a trip to St. Louis by FDOT officials and 10 Tampa-area citizens to learn how Missouri DOT managed the reconstruction of I-64 in that metro area.

Chicago is poised to become the next major metro area to implement ETLs, with two projects in the planning stages: adding ETLs to both the Eisenhower Expressway (I-290) and the Stevenson Expressway (I-55). Given major state budget problems, Illinois DOT has proposed going ahead with the I-55 project as a long-term P3 concession; building trades groups and planning groups are on board with this plan, as is the State Senate. But the ongoing political battle between House Speaker Mike Madigan and Gov. Bruce Rauner is the current roadblock to House passage. Madigan is holding out for legislative approval of the negotiated concession agreement, which would create such major political risk that no serious bidders would pursue the project.

Meanwhile, as Fitch and others note, many ETL projects are meeting or exceeding their projected traffic and revenue—including I-95 in northern Virginia, NTE in Fort Worth, I-95 in Miami, and I-405 in Seattle. That kind of track record will encourage more such projects in other congested metro areas.

» return to top

The Surprising Revival of Vehicle Miles of Travel

The Federal Highway Administration in late February released its latest Traffic Volume Trends report, finding that vehicle miles of travel (VMT) increased 2.9% in 2016, to a near-record 3.2 trillion miles. Even more surprising, VMT per capita continued the uptrend that began in 2014. The 2016 figure is 10,065 miles per capita, just a bit less than the all-time high of 10, 117 mi./person recorded in 2004. Eno Transportation Weekly‘s Jeff Davis reported (Feb. 20, 2017) that growth in VMT/person over the last three years has averaged 1.7% per year, which exceeds the 13-year trend (1992-2004) of 1.3% per year.

These results call into question the widely discussed notion, popularized by anti-car groups like the Public Interest Research Group (PIRG), that fundamental behavioral changes were at work, with an attitudinal shift away from car culture, especially among Millennials, and a shift from driving to biking and walking. I questioned that hypothesis at the time, and a recent study in the Journal of the American Planning Association bears me out.

In “The Driving Downturn,” Michael Manville, David King, and Michael Smart compare the evidence for the “peak car” explanation for the decline in VMT and VMT per capita (2004-2013) with the “economic” explanation—that the sharply increased cost of fuel and the impact of the Great Recession on employment—largely accounted for the VMT changes. They summarize their findings as follows:

“We find substantial evidence for the economic explanation. During the downturn, the cost of driving rose while median incomes fell. . . . Mass driving requires a mass middle class, but economic gains accrued largely to the most affluent. We find less evidence for ‘peak car.’ If Americans voluntarily drove less, they would likely use other modes more. However, despite heavy investment in bicycle infrastructure and public transportation in the 2000s, demand remained flat while driving fell.”

Their paper goes into details on their analysis, which I’m omitting here. But several of their findings on “little evidence of mode shift” are worth noting.

  • Walking: They reviewed data showing that between 2002 and 2013 the share of Americans who walk regularly did not increase. Moreover, over 60% of walking trips were for exercise, recreation, or dog walking, which are not substitutes for driving.
  • Biking: Bike trips per capita peaked in the 1970s, and between 2001 and 2009, biking’s share of all trips increased marginally, from 0.9% to 1.0%. Sales of bikes dropped, from 67 per thousand people in 2005 to 57 per thousand in 2014. And because most are short, few bike trips can replace driving.
  • Transit: The supply of transit, as measured by vehicle hours of service, has tripled since 1970, and that expansion continued during the driving downturn. But this did not result in much additional ridership. Americans took 0.65 transit trips per person per week in 2012, up from 0.64 in 2004. And those numbers are little different from earlier years: 0.64 in 2000, 0.68 in 1990, 0.72 in 1980, and 0.68 in 1970.

But the most important comparison is provided not by rates but by absolute trip numbers. Manville et al. report that between 2004 and 2013, while highway passenger miles of travel decreased by 561 million, transit PMT increased by just 9.6 million. As they note, “The increase in transit cannot explain the drop in driving, particularly since more than 4 million of the increased transit PMT occurred in New York.”

Despite what all of these numbers show, I continue to read articles and hear presentations by transportation planners who are stuck in the “peak car” frame of reference, implying that their job going forward is to devote more resources to transit, biking, and walking and less to roads and highways. The facts clearly argue against that hypothesis; there are no “alternative facts” that justify making such plans.

» return to top

Truck Automation Making Progress

Truck platooning, as I’ve written previously, is one of the earliest applications of semi-autonomous vehicles to hit the road. The Ohio Turnpike was recently announced as the test highway for two-truck platoons using equipment supplied by Peloton Technology. This is Level 1 automation, in which there is a driver in each cab and the trucks are equipped with forward collision avoidance provided by cooperative adaptive cruise control (CAAC). Drivers are responsible for steering. The trucks will normally be separated by 50 feet, but if a car darts in between, the system will spread the trucks out until the car moves out from in between them, then resume the 50-foot spacing. This kind of “driver-assistive platooning” is limited to multi-lane, limited-access highways and only in benign traffic, weather, and road conditions.

Three-truck platooning using CAAC technology developed at UC Berkeley’s Partners for Advanced Transportation Technology (PATH) was tested last month on I-110, a major truck route serving the Port of Los Angeles. Three Volvo tractors hauled cargo containers along this route at 55 mph, 50 feet apart.

The distance between heavy trucks on highways is typically restricted by state law, often to at least 300 feet, which negates the drag-reduction effects of platooning. Only a handful of states have allowed reduced spacing for driver-assistive platooning to date, but a March article in trucking magazine Land Line noted legislative efforts under way in a number of states this spring, including Arkansas, Iowa, Missouri, Nevada, Oregon, Pennsylvania, South Carolina, and Tennessee.

At a recent meeting of the National Governors Association, a number of governors raised concerns about the impact of autonomous trucking on driver jobs. The emerging truck automation industry has several responses to such concerns. To begin with, according to trucking industry research group ATRI, there is currently a shortage of about 100,000 truck drivers nationwide. In some recent years, annual turnover of long-haul truck drivers was in the 100% range. So many of those in truck automation envision later stages as making trucking considerably more driver-friendly.

One approach, typified by start-up truck automation company Embark, is Level 4 automation that would not require the driver to be in the cab for the long-haul, Interstate portion of the trip. Such a truck would—presumably—be exempt from current driver Hours of Service regulations, so the truck could continue driving for the full duration of the long-haul trip, with the driver sleeping in the cab’s bunk and handling only the first-mile (getting to the Interstate from the trip’s starting point) and last-mile (getting from the Interstate to the destination via local roads).

Even more visionary is a concept from Starsky Robotics, under which drivers would operate trucks the way Air Force drone operators control their craft from thousands of miles away. Those remote drivers’ main (or only) tasks would be the first-mile and last-mile portions of the trip, so each remote driver could be responsible for a number of carefully coordinated trips of a truck fleet. That way, drivers would not be away from home overnight, which should help recruitment and retention. According to an article in Fleet Owner, Starsky is focusing on Florida, Michigan, and Nevada which it judges to have the best regulations on autonomous truck testing.

» return to top

Upcoming Transportation Conferences

Note: We don’t have the time or space to list all transportation events that might be of interest to readers of this newsletter. Listed here are events at which a Reason Foundation transportation researcher is speaking or moderating.

Emerging Infrastructure Initiatives and Potential Roles for P3s, GMU Transportation P3 Policy Center, April 25, 2017, Arlington, VA (Robert Poole speaking). Details from: p3policy@gmu.edu.

2017 California Transportation Planning Conference, Walnut Creek Marriott, May 3-5, 2017, Walnut Creek, CA (Baruch Feigenbaum speaking). Details at: http://www.dot.ca.gov/transplanning/2017ctpc.html.

TRB Automated Vehicles Symposium, Hilton San Francisco Union Square, July 11-13, 2017, San Francisco, CA (Baruch Feigenbaum speaking). Details at: http://www.automatedvehiclessymposium.org/home.

» return to top

News Notes

Virginia Begins I-64 Bridge & Tunnel Expansion. The Virginia DOT has issued a Request for Information on its proposed $4 billion expansion of the I-64 Hampton Roads bridge and tunnel. Responses from interested parties are due April 20th. One of the options under consideration is a revenue-risk toll concession (DBFOM). VDOT anticipates a contract award in summer 2019 and project completion in 2024.

Construction Labor Shortage vs. “Infrastructure Jobs” A Wall Street Journal editorial (March 30th) pointed out that, according to the Bureau of Labor Statistics, there are 150,000 unfilled construction jobs nationwide, about double the total of five years ago. These numbers conflict with the “jobs” rationale being put forward in support of massive new infrastructure spending. The justification for transportation investment is not construction jobs but faster and more efficient travel for people and goods.

Texas Grand Parkway Exceeding Toll Forecasts. The $2.9 billion tolled ring road called the Grand Parkway (segments D through G) is exceeding its traffic and revenue forecasts by 42%, according to Fitch Ratings. The most recent segment (G) opened to traffic in April 2016. Other recent toll roads that are at or close to original projections include the Triangle Expressway in North Carolina and the Central Texas Turnpike System in Austin.

Tunnel Breakthrough in Seattle. Bertha, the giant tunnel boring machine, achieved break-through on April 4th, completing the boring of the 9,270-foot tunnel that will replace the aging, elevated Alaskan Way viaduct. Still to come is construction of the double-deck interior and safety testing; opening of the tolled tunnel is expected in early 2019.

New Interstate Under Construction in Nevada. The first segment of the new I-11 linking Las Vegas with Phoenix is under way in Nevada. The relatively short first phase is being built under an $83 million contract in Clark County. Phoenix and Las Vegas are the largest two U.S. metro areas not connected by an Interstate highway.

Georgia House Sticks with 20th Century Tolls. At a time when fuel tax revenues are in a long-term decline, the Georgia Senate approved a bill that would allow 21st century tolls to be a permanent funding source for highways in the state. But on March 16th, a House committee removed that provision, on last-century’s premise that tolls should be removed once the original bonds have been paid off. That, of course, ignores the need for ongoing maintenance, potential lane additions and interchange improvements, and eventual reconstruction.

Rhode Island Gets Six Bids for Truck Tolling Equipment. Nearly all the major electronic tolling suppliers submitted proposals to the Rhode Island DOT in March to provide electronic tolling gantries and equipment at 14 locations in the state. RIDOT’s schedule calls for the new system to be operational by the end of 2018.

Advice on Transportation Infrastructure for Maryland. Former Heritage Foundation transportation researcher Ronald Utt has written a report offering sensible ideas on how Maryland could invest wisely in transportation infrastructure. After critiquing several recent proposals at the national level, Utt suggests that Maryland emulate the quantitative evaluation framework implemented in 2016 in neighboring Virginia. (www.mdpolicy.org/research/detail/how-to-spend-a-trillion-dollars-on-infrastructure)

Disguised Border Toll Proposed in Pennsylvania. A state legislator has proposed giving Pennsylvania residents and businesses a tax credit on their state income tax bill for 50% of the amount they paid in tolls each year, up to $500 per filer. The measure is one response to the very high tolls now being charged, due to the legislature failing to repeal Act 44 which forces the Turnpike Authority to divert $500 million per year to the state DOT for non-Turnpike highway and transit uses. Granting the rebate only to PA residents is the equivalent of charging tolls only at the border, and is likely unconstitutional as a violation of the interstate commerce clause.

New Offerings for Truck Toll Administration. Both services that assist trucking companies by offering a single transponder that works nationwide plus consolidated billing have added new services. Bestpass in March announced its new Leased Equipment Toll Solution (LETS), which offers to those that provide leased tractors and trailers the same benefits already available to truck fleet operators. And the National Association of Small Trucking Companies (NASTC) has reached an agreement with HELP Inc. to offer the rival PrePass tolling service to its members.

Maine’s Governor Proposes Ending Most Tolls. Populist Gov. Paul LePage proposed that Maine DOT take over the Maine Turnpike Authority, forbid the agency from issuing any new bonds, and aim to charge tolls only at state borders during the summer tourism months. To make sure that this border toll would affect only non-residents, he would offer residents who commute to jobs in New Hampshire a tax credit to offset their tolls. Besides being directly contrary to the need to replace per-gallon taxes with per-mile charging, the border-toll idea is almost certainly unconstitutional.

External Review of I-77 P3 Concession. The new administration elected last November in North Carolina has selected an outside firm to review the long-term P3 concession under which express toll lanes are being added to a stretch of I-77 in the Charlotte area. Mercator Advisors LLC, a respected transportation finance advisory firm, won the contract. Construction of the express toll lanes has been under way since late 2015.

Uber Expands Carpool Effort; Lyft Gives Up. Uber has announced a pilot program in northern Virginia to test “digital slug lines” for commuters. The region is known for slug lines, in which single-occupant vehicle drivers pick up two or more commuters heading to roughly the same destination, which makes the vehicle qualify to use HOV or HOT lanes. But instead of being free, like regular slugging, Uber’s pre-arranged rides will cost $5 to $10 per trip. The pilot is separate from the existing uberPOOL ride-sharing service. Rival Lyft discontinued its LyftCarpool service last year, due to insufficient customer interest.

» return to top

Quotable Quotes

“The claim is [the Trump tax credits] will be offset by greater revenue that comes into the federal treasury from income tax, because there’s workers now who are working on it who otherwise wouldn’t have been. And that’s a bit disingenuous in a full-employment economy, because . . . the workers would be working on something. If they weren’t working on this road, they’d be working on a different road. There would be profits and there would be income taxes coming into the federal treasury anyway . . . . Now if they were otherwise unemployed, say if we were in the depths of a recession, and you’re employing them and otherwise they’d be idle, then something like this would make a bit more sense. But doing a stimulus when the unemployment rate is 4.9% is very different than doing a stimulus when the unemployment rate is 11%.”
—Prof. David Levinson, University of Minnesota, “The Economics for and Against Trump’s Infrastructure Plan,” NPR Here and Now, late November 2017 (transcript posted on Transportist.org, March 5, 2017)

“States, localities, and the private sector understand local needs better than Washington bureaucrats. Local policymakers should have the flexibility to manage projects reflecting local priorities and manage their funding. Federal policymakers can get out of the way by removing existing federal barriers to state-based funding and financing. One possible change would be lifting the prohibition on charging tolls on the Interstate highways, so that states and the private sector can get on with the business of improving these vital economic pipelines.”
—Christine Harbin, Americans for Prosperity, “A Conservative Approach that Trump and Congress Should Take to Transportation and Infrastructure Spending,” Washington Examiner, March 20, 2017

“They will be all private. In 10 to 15 years’ time, government will not be in the provision of transport services. It will all be demand-driven, private-sector-driven, underpinned by innovation in technology. Already, every new train that we are bringing online now, whether it is the Metro train or light rail, are all private-sector partnerships.”
—Andrew Constance, NSW Transport & Infrastructure Minister, “Tech Will End Government-Supplied Transport,” Australian Financial Review, March 20, 2017

“Take, for instance, Beijing Infrastructure Co. Ltd., which operates the city’s urban rail system. With a hefty debt load, its initial credit rating would be BB-, and a risky junk bond, according to S&P. But thanks to government support, S&P gives it a final rating of A+, eight notches higher, a solid investment-grade bond. By contrast, JD.com, a leading e-commerce company, earns a BBB- rating from S&P, just one notch above junk status. As a private company, it receives no ratings uplift.”
—”State of Grace: China’s Corporate Debt,” The Economist, Nov. 19, 2016

» return to top

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.