Sales Taxes, Infrastructure Banks, Bonding, Tolling All in the Toolbox as States Seek Transportation Funding Solutions

Georgia could learn lessons from Virginia as it asks voters to increase their taxes to fund transportation projects. Virginia meanwhile continues to pin its future on tolling and public-private partnerships. I also have transportation funding news of note from eight other states.

Georgia: The Atlanta Journal-Constitution had a piece recently on whether Virginia’s failed 2002 regional vote on a 0.5 percent sales tax could hold any lessons as Georgia prepares for a July 31st vote in 12 regions on a 1 percent sales tax to fund a different series of projects in each region of the Peach State. Atlanta Regional Commission officials visited Washington, D.C. recently and heard from those involved in the 2002 Virginia campaign including Dave Robertson of the Metropolitan Washington Council of Governments. Robertson cited several reasons for the 2002 failure that sounded immediately familiar to the ARC group: some voters did not trust how the money would be spent, others did not like the mix of roads and transit in the infrastructure package and others opposed tax increases…period. Robertson advised the group that there is a need for specificity in such campaigns. “You’ve got to be crystal clear on what it’s going to fund, almost down to the intersection of First and Main,” he said. “People are going to have to be able to visualize what they are going to get.” ARC Chairman Tad Leithead said he plans to take Robertson’s advice to heart by seeking to shift the referendum campaign away from an esoteric focus on the referendum’s potential for “solving gridlock” and “creating jobs.” “We need to say: ‘Is it hard for you to get through 285 and Georgia 400 at 8 o’clock in the morning? Would you like to be able to take transit to the airport if you live in Gwinnett? Do you ever get frustrated by Spaghetti Junction? Does the Downtown Connector drive you crazy when you are trying to get to the Braves game?’ So people can say: ‘If I vote for this, this will happen to me,’” Leithead said. But members of the Tea Party in Atlanta are opposing the referendum because they contend that too few of the projects selected in the region are actually aimed at reducing congestion. They also fear that the tax increases would continue long past their proposed 10-year sunset. In addition, the Tea Party contends that it was unconstitutional for the Georgia Legislature to create a regional taxing authority. And here again, Virginia could provide precedent. In 2008, a regional taxing authority in Virginia was struck down by the state Supreme Court. 

Atlanta Mayor Kasim Reed said recently one byproduct of the upcoming referendum may be more regional government collaboration in the future. If the Atlanta region’s transportation plan is approved, Reed said “it’s gonna be a stimulant for so much more cooperation,” Governing magazine reported.

Virginia: A lack of agreement on the future of sustained transportation funding in the Commonwealth is being blamed for a recent standoff that nearly derailed the state budget, the Associated Press reported. Gov. Bob McDonnell’s administration has used funds turned up in audits, relied on borrowing and aggressively pursued public-private partnerships and tolling to fund transportation projects. But a backlog of statewide transportation needs totals tens of billions of dollars.

In an interview with Tollroads News last week, Virginia Transportation Secretary Sean Connaughton said—as he has before (see here)—that no new projects will be funded in the state without tolls. He also said reconstruction of I-95 and tolling along that corridor could take the form of a public-private partnership. He lamented the “mixed signals” states get from the federal government on tolling. “On the one hand they talk about tolling for new capacity, but the biggest need is reconstruction which they can’t fund, but on the other hand, they only allow these (limited number of pilot projects),” Connaughton said. In addition, the secretary was asked about the Dulles rail project and preliminary discussions with Maryland officials about a new Potomac River crossing. Tollroads News also reported last week that the I-95 HOT lanes project was one of four toll projects (out of five projects overall) invited to apply for federal loan assistance from the TIFIA program.

As I’ve mentioned previously, Connaughton (who is the Vice Chair of CSG’s Transportation Policy Task Force) will be among the speakers in June at the annual InfraAmericas U.S. P3 Infrastructure Forum. It takes place June 19-20 at the Metropolitan Club in New York City. CSG is a supporting organization for the event again this year. State government officials will want to be on hand to hear from their colleagues from around the country and from representatives of the private sector about the latest developments in the field of public-private partnerships. You can read my coverage from last year’s conference here and here. And you can learn more about this year’s event here.

Other State Transportation Funding News of Note

Arizona: A video up on the state department of transportation website explains for the average citizen how transportation is funded in Arizona. You can view it here.

Florida: Transportation Secretary Ananth Prasad told a group of local business leaders in Manatee, Florida last week that the state needs more toll roads and pay-per-use systems to bridge the widening gap in Florida’s infrastructure budget left by declining gas tax revenues, which are down $1.2 billion this year and $8 billion cumulatively since 2006. “The days of if you build it they will come are gone,” Prasad told the group. “You have to build it when they are coming.” The Bradenton Herald has the story.

Indiana: A Democratic candidate for governor in Indiana has proposed eliminating the state sales tax on gasoline. John Gregg said the state could make up the lost revenue by instituting an annual efficiency audit that other states have used to general funds. Gregg believes the audit will turn up $650 million in waste annually. The move, he said, could save Hoosiers $540 million a year. The (Fort Wayne) Journal Gazette has that story.

New Jersey: The Garden State is one of the nation’s biggest borrowers for transportation, second only in total debt to Texas. For the first time this year, revenues from gas, sales and other taxes earmarked for transportation weren’t enough to cover debt payments, Andrew Duffelmeyer of the Associated Press reported last week. Assemblyman John Wisniewski, chairman of the Transportation, Public Works and Independent Authorities Committee (and a member of CSG’s Transportation Policy Task Force) told Duffelmeyer more revenue is needed to break the cycle of debt but he doesn’t see it on the horizon anytime soon. “It’s a political time bomb,” Wisniewski said. “Nobody wants to touch it. The minute anybody talks about a solution that involves an increase in revenue, they’re immediately branded as wanting to increase taxes and not caring about ordinary people, and the discussion runs off the rails.” New Jersey has the third lowest gas tax in the nation and sixth lowest diesel tax but has the highest property tax rates in the country.

Ohio: A performance audit of the Ohio Department of Transportation has so far come up with nearly $6 million in cost-saving ideas. The audit said the department could save $5.1 million by selling more than 600 under-used vehicles in its fleet and $492,000 by closing two rest stops along Interstate 70. Columbus Business First has more. You can read the report from the State Auditor here.

Oklahoma: The state Senate last week passed legislation (HB 2469) to create an infrastructure bank to receive and distribute federal funds for infrastructure projects. It now goes to Gov. Mary Fallin for her signature. The Associated Press has the story.

Pennsylvania: The House recently passed legislation (HB 3) that would allow the state to lease transportation assets to private firms. The Central Penn Business Journal reported on that and other transportation funding options still under consideration in the Keystone State.

Washington: The state is expected to sell its first ever grant anticipation revenue vehicle (GARVEE) bonds next month to help pay for a replacement floating bridge that’s needed to ease congestion in the Seattle area. The state will sell $432 million in the bonds, which are backed by federal highway grants. The Bond Buyer, the daily newspaper of public finance, has more.