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Reason Foundation

Bacon's Rebellion

A New Transportation Equation

Virginia has a chance to burnish its tarnished capitalistic credentials

Geoffrey Segal
September 25, 2006

Next week the General Assembly returns to Richmond for yet another Special Session. With the budget already put to bed, legislators will be discussing and debating how our transportation network should look. Specifically, they'll be addressing how infrastructure should be funded and what types of projects should be built.

The solution for many remains new taxes for transportation despite a surplus that continues to expand, and state budgets experiencing tremendous growth in recent years. In fact, several Chambers of Commerce have signed letters urging lawmakers to generate upwards of $1 billion annually in new transportation investment.

For these groups the solution to the Commonwealth's transportation "crisis" is a simple equation: Spend more money�a lot more�than now.

The assumption is that the Commonwealth has made effective investment decisions. Further, it suggests that VDOT is operating efficiently, that there is no need to root out waste or find additional efficiencies through privatization. In short, this position suggests that the current funding, governance, and operational models have worked and will continue to work.

This view, however, is short sighted. Better management is required.

First, the business-as-usual model fails to account for the changing nature of how infrastructure is funded. While the vast majority of transportation projects around the country continue to be funded from traditional sources—gas and vehicle taxes—a new funding paradigm is rapidly emerging. State and local transportation agencies are increasingly looking to supplement tax revenues with private investment. Indeed, Virginia has already seen some capital flow into transportation. The Dulles Greenway, is a privately owned and operated toll facility serving thousands of commuters in Northern Virginia.

Second, investment decisions have not always relieved congestion. Worse, we continue to make choices based on dreams that public transit will solve our problems. Let's face it. Public transit serves less than 10 percent of Virginia's population, yet it receives the lion's share of funding.

A recent Reason Foundation study ("Building Roads to Reduce Traffic Congestion in America's Cities") found that the cost to relieve congestion in Virginia is more affordable than it might seem. In fact, the study estimates that the cost to relieve severe congestion is less than 15 percent of the total expenditures already on the books in our long-range plans of major urban transportation and planning agencies. How? We need to reevaluate how we spend our money. We know that the vast majority of Americans drive cars, and that truckers haul 80 to 90 percent of our economy's goods. Take the Washington metropolitan area, for example, transit spending constitutes 60 percent of the budget for only 10 percent of D.C.-area commuters, at the expense of road users. Outside of the DC metro area, the study estimates that Virginia need only to spend $3.1 billion over the next 25 years to relieve serious congestion.

Third, while VDOT has seen significant improvement with its on-time and on-budget record, we should not settle for less than the best. VDOT's long history ought to be evidence enough for the need for significant reforms.

In recent years, VDOT and the General Assembly have identified several areas for privatization. Earlier this year legislation was passed requiring the privatization of interstate highway maintenance functions � less than two percent of our total roads controlled by VDOT. More can and should be done. Other functional areas including design and engineering have been privatized in numerous states achieving significant savings.

We must address these realities before we raise taxes again. If not, we'll all have less money in our pockets, likely without much to show for it. The way it's always been done, got us to where we are. Why would we be foolish to think that it's the model to get us where we want to be?

We must be willing to accept the changing nature of infrastructure financing and create the conditions for additional private investment, maintenance and operation of our highways. Virginia once was considered a leader in this effort, yet other states like Texas and Indiana have leapfrogged over us. Let's get the Commonwealth back in front of the pack.

Further, we must be willing to accept what data tells us, that transit (especially rail transit) is not the answer. While it serves an important function in the overall transportation scheme, we have to be smarter about our investment choices. Metro expansion through Tyson's Corner and on to Dulles, to serve a tiny fraction of commuters, will take over $4 billion away from potential road and highway projects. Too much of our limited resources will serve too few of our commuters. We need an adjustment of priorities where road and highway expansion takes top priority.

VDOT should utilize benefit-vs-cost assessments, based on prudent forecasts of project impacts for project selection. It should put more weight on critical transportation factors such as safety, travel time reduction and operating cost reduction. That is the path to relieving congestion.

Finally, VDOT must become more efficient. Privatization opportunities are numerous. Savings from efficiency efforts, including privatization, can be shifted into road and highway maintenance and building projects.

The answer to Virginia's transportation needs is not more of the same. Rather each of these efforts should be undertaken before we accept to higher taxes and less money in our pockets. They are the key to improving our mobility and maintaining a high quality of life.

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



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