Commentary

Bacon's Rebellion
August 7, 2006

The Croesus Trap
Privatization and tolls - not more money - are the key to fixing Virginia's broken transportation system
By Geoffrey Segal

Even though the budget battle is behind us, the hope that we'd be able to shift our energies to making the Commonwealth a better place to live is quickly eroding. With each passing day a "special session" looms over us like an ominous presence — reminding us of just how far apart the Senate and Governor are with the House.

However, the special session gives legislators a unique opportunity to focus on only one issue and drill down into a level of debate and discussion that isn't possible during a regular legislative session. Such an effort can prove to be extremely valuable, especially if some agreement or understanding is reached.

There is little question that the way we finance transportation in this country is shifting. A new financing paradigm is rapidly emerging, and being embraced, around the country — an ever increasing role for the private sector and private capital. This represents a dramatic departure from traditional financing and thinking. The way it's always been done is no longer the model.

Sadly, the Senate and the Governor have not yet fully embraced this new paradigm. Rather, they seem stuck in traditional thinking and traditional approaches. Indeed, the latest budget battle reminded me of the old story about King Croesus. Turns out the king lived in the Valley of Midas, stocked full of gold; Croesus was the richest man in the world. Naturally Croesus could buy anything he wanted — he had the resources to throw as much money at a problem as was warranted.

The traditional financing model falls into the Croesus trap of thinking that spending more money is the answer to our woes. Throwing endless amounts of money at a problem won't solve the problem if the system is broken. Unfortunately, the taxpayers of the worse is that the Commonwealth are not as rich as Croesus. Our families have constraints and competing interests and we must make the same demands that our elected officials abide by those same constraints.

Recent surveys of the public clearly indicate that the voters of Virginia are not ready to accept tax increases as the avenue to improving our transportation/congestion problems.

To cost-effectively improve transportation throughout the Commonwealth, we must seek innovative alternatives to use our limited resources. To that end, progress has been made. VDOT has made great strides to improve efficiency, rooting out waste and enhancing services. Recent legislation that will contract out interstate maintenance will save more dollars and likely improve the overall condition of the roads as well. In addition, amendments to the Public- Private Transportation Act should streamline the process of getting projects completed faster.

With that said, reform needs to be a constant effort at process improvement. We cannot rest on our laurels. Every state employee should be challenged to think of new and innovative solutions — and be empowered to implement them. We've gotten good at asking "why": Why do we do things this way or that. What we need to starting asking is "why not." Why not try this or why not try that.

This rings especially true with transportation financing. Ask your elected official why we finance roads the way we do. The answer, we've always done it that way. And why don't we seek alternatives? Because it's a new model one that we're perhaps not as comfortable with.

We can learn a lot from states like Indiana and Texas, where the new financing paradigm is in full effect. Texas has embarked on a massive construction effort largely financed with private capital. An innovative lease concession in Indiana will fully finance the state's 10-year transportation plan. Both are achieved without new taxes.

This past weekend, the National Governors Association met in South Carolina. We can only hope that Gov. Kaine met with and learned from Gov. Perry of Texas and Daniels of Indiana and brings their vision, their leadership, and their ideas back to the Commonwealth.

It's true that change takes time. Sustainable change requires a shift in management philosophy and leadership. The philosopher Schopenhauer once observed that "all great ideas go through three stages. In the first stage they are ridiculed. In the second stage, they are strongly opposed. And in the third stage they are considered to be self-evident."

I believe that the new transportation financing paradigm in the Commonwealth is somewhere between stages one and two. With some hard work and luck stage three will be right around the corner.

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.