Commentary

Bacon's Rebellion
June 26, 2006

Failure is OK - When It's Cheap
Public-private partnerships - not new taxes - will help Virginia develop a world-class transportation network
By Geoffrey Segal

Now that the General Assembly has completed a budget, we can focus our energies on making the Commonwealth a better place to live. Virginians have come to expect a high quality of life and few will argue that our relative lack of mobility negatively impacts our lives, as would new taxes.

Our biannual budget continues to climb at staggering rates, breaking the $74 billion threshold for the first time in history—a 20 percent increase over the current biennium. We must continue to push for reform, demand results and performance. We cannot afford to do otherwise.

Durk Jager, the former CEO of Procter & Gamble used to say, "failure is okay when it's cheap." Seventy-four billion dollars is not cheap by any measure and a 20 percent increase in spending is nothing to laugh at either.

Few would argue that this growth is sustainable. Further, it has been well documented that many of the policy challenges that face the Commonwealth have only gotten worse, despite huge spending increases. Transportation, the focus of this year's legislative session, will continue to be a major policy issue as long as we can project. Traffic and congestion continues to snarl commuters throughout the state, restricting our mobility and damaging our way of life. Education and health care are also major challenges to the Commonwealth. We've been throwing money at problems for years, with little to show for our efforts.

Despite another record battle over taxes and budgets, Governor Kaine couldn't wait to call for additional taxes to fund transportation. Sadly, this represents old line thinking and reverts back to the "way we've always done it" which involves raising taxes to support government programs. This won't work, especially if we want to develop a world-class transportation network.

Today, it is true that the vast majority of transportation projects around the country are still funded from traditional sources, including state gas and vehicle taxes and federal highway trust fund appropriations. However, politically popular items such as transit, and bike paths are sucking up an ever increasing portion of these funds, with little or no impact on congestion—a very costly failure. Times are changing though. State and local transportation agencies are increasingly looking to supplement traditional sources with private investment that will reflect market demands.

The answer to meeting future transportation needs and reducing congestion is the same answer we have for nearly every other product and service in America — unleashing the power and opportunity of our free market system. There is no shortage of funds to invest in better highways—new funds from investors, not taxpayers. Global capital is already flowing into states like Texas, Georgia, Illinois and Indiana.

Virginia has been able to capture some of that capital, too. Perhaps most identifiable is the Dulles Greenway —a privately financed, built, and operated toll road in Northern Virginia. The Greenway connects the state operated Dulles Toll Road with Loudon County, significantly reducing commute times in that region.

Indeed, we have a long and rich tradition with public-private partnerships. In fact, many other states patterned their public-private partnership legislation after ours. But we need to do better.

For its part, the General Assembly has equipped VDOT with the necessary tools to seek and implement innovative transportation solutions. Generally speaking, VDOT has pursued these partnerships, many of which hold promise to be implemented in the next few years. The challenge is for us, the taxpayer and road user, to accept and embrace this changing paradigm. Our highway network should be no different than other service areas where we pay for added quality and convenience. Harnessing the power of private capital can relieve congestion, reduce the need for road repairs, and improve the safety of our highways.

We're at a crossroads—we can do things the old way or we can innovate and find a better way. We can choose to open the doors to this capital and a new way of doing business, or not. If not, other states will pass us in the fast lane as they reap the benefits.

Geoffrey F. Segal is the director of government reform at Reason Foundation. This column was originally written for the Bacon's Rebellion. An archive of Segal's work is available here and Reason's transportation research and commentary is here.