VACostCutting

Monday, March 06, 2006

Reason Asks: “For Whom the Road Tolls”

In the comments section of Delegate Saxman’s previous post, he notes that significant private investment is needed in order for Virginia to truly be able to address her transportation needs.

The question is, is the money there?

Bob Poole says yes.

In his commentary for the February Edition of American City & County, Poole notes that in 2005 “… privately proposed toll projects worth $20 billion were under review.”

Here in Virginia, he points out that:

Last year, several proposals were made to add toll lanes to congested freeways and to develop new toll roads using the concession model. In the two winning bids in Virginia - High Occupancy Toll (HOT) lanes on the Washington Beltway and on 1-95 - the vendor offered 100 percent toll-supported financing, rather than relying on the state to partially fund the project. There, the investors were willing to put in a significant amount of their own equity, in addition to the borrowed amount, because at 50 years each, those were long-term concession projects.


The innovative ideas (and the funding) are available. Virginia’s leaders must be willing to think outside the box and not limit themselves to the mentality of “But we’ve always done it this way.”

That way didn’t work. We need to try to find something that does.
~whitney

13 Comments:

  • I find the private road concept to be interesting...

    it appears to me if the commonwealth proposed to construct a road, and finance it with 100 % toll revenue it woldn't go over to well...maybe?

    anyhow, now an ingenious idea is floated: a private company now wants to construct a road...after all, if they (a private company) is doing it, then they are just tryint to make some money, so how can you blame them?

    My general observation is that this appears to be a fairly easy way out for our eleted officials. hand the roads over to private companies, and , if the public becomes outraded - then they can complain to X company, and not an elected official..

    what do you think?

    By Anonymous Anonymous, at 3/07/2006 10:57 PM  

  • I agree. This really doesn't make any sense. So a private company can come in and make tons of cash? And who can the people complain to then?

    I hope the our elected officials see through this, and stand up and make some decisions. This just seems to be an easy way out.

    I'll gladly pay higher taxes than sell out my money for a few private investors to get rich off of.

    By Anonymous Anonymous, at 3/08/2006 4:49 PM  

  • oh wait, you really trust Richmond to spend your money more wisely? that's a joke. vdot is a bottomless pit when it comes to money.

    at least with tolls i can decide whether or not i want to use that road.

    when i pay more in taxes, there's no telling how it will be spent.

    By Anonymous voice of reason, at 3/08/2006 5:38 PM  

  • I'm just saying handing road over to private "companies" could be dangerous..really, be careful what you ask for..think about it

    By Anonymous Anonymous, at 3/08/2006 7:32 PM  

  • Anon,
    This is not the easy way out, but rather the way we have to start thinking about transportation for the future. The truth of the matter is the costs are just going to keep going up, and we cannot keep turning to the taxpayers for more and more money-- esp. as "voice of reason" pointed out, there is little accountability in how that money will be spent. We have to think outside the box and use innovative approaches to addressing our needs.

    Tolling is the most free market based approach. Drivers have choices of which roads they use and when. This can help with congestion issues as well as funding issues.

    Certainly there has to be oversight for road projects— the House this year has been pushing for greater accountability and oversight in this area. Unfortunately it seems that some would rather just give more money to VDOT without ensuring greater accountability, and that does not seem very responsible either. While VDOT has made some improvements in operations, they have a long way to go, and we should be very cautious about handing over more money without greater accountability, oversight and specific plans of action.

    By Anonymous whitney, at 3/08/2006 8:23 PM  

  • Anon does make a good point. If private companies are able to take on the roads, charge a toll and be able to make a profit, doesn't it seem likely that the Commonwealth could do the same thing? It would seem reasonable that the State could even charge slightly less tolls since they really aren't looking for the pocket profit that a private company would be looking for. I guess I always just assumed there was some legal reason the Commonwealth couldn't charge tolls on roads that were basically already built. Why can't this be done by the Commonwealth and cut out the middle man's extra expenses?

    Also, why do we keep hearing that VDOT is a bottomless pit and mismanaged, etc? Outsourcing isn't going to solve that problem. The top brass don't usually get bounced in these deals. Like VITA, they get left in their jobs to keep making the same decisions that they always have. If there's a problem at the top, why not just eliminate the problem instead of getting rid of the little guys at the middle and bottom that are just doing what they're told?

    By Blogger Lucy Jones, at 3/08/2006 9:52 PM  

  • First, there is a legal reason why the Commonwealth can't just slap tolls on roads. The federal government won't allow it unless they invest a ton of money upfront and make a big expansion.

    Second, "why can't the Commonwealth just do it?" Its this kind of thinking that got us here in the first place. The absence of a profit motive or a bottom line leads to high costs and poor performance. I can't believe this is an honest question -- seriously, the Commonwealth has seen staggering cost increases across the board...remember the tax increase two years ago? If government were efficient and could turn a profit, they would. Perhaps, Government is the middle man? In addition, aren't we talking about the development of roads at no cost to the state? Or the maintenance and operation of them where the company actually pays the state for that privledge?

    Since we're talking about needing more money for transportation, shouldn't we be looking for every opportunity out there? I would hope so, before we raise taxes again.

    Third, the roll of an elected official is to see to it sure that infrastructure gets built, in the most effective and efficient manner possible. Opening the doors to more private sector participation is not shieking responsibility, rather, it is fulfilling their duty.

    Fourth, Dangerous? How is this anymore dangerous than any other private venture? Why don't we just socialize everything? So the Dulles Greenway is dangerous? Seems to be working just fine...at no cost to the taxpayer.

    Frankly any private operator will agree to standards set by the government -- both in terms of performance, and quality, and safety. In Indiana the private contractor is agreeing to robust performance standards. They start with a 400 page standards and procedures document issued by the Indiana DOT. Then add on a 200 page concession agreement that outlines performance standards including how fast road kill needs to be removed...and they guarantee it. When was the last time government guaranteed anything? Citizens will be able to complain to the state just like they do now, only difference is that something will change. In addition, if its a new private road you have the choice to use it...and you only pay for it when you do.

    And why are "companies" in quotes? I don't understand.


    Fifth, the toll concept -- all risk is transferred to the private contractor...the state is entirely protected. They don't need to worry about financing etc.

    By Blogger gfsegal, at 3/08/2006 11:45 PM  

  • Once again, privatizing everything is not the solution. Sure, maybe there is potential to find solutions based on this "free market" approach - but let's be honest, private companies are in the business of making money, and giving investors a return on their investments.

    The "VDOT is a black whole" comment has some truth, but I think that we can all agree that over the pass few years - say since Gilmore left office - their performance has signifcantly improved, and in general less poltical in their approach. Can it be better? Sure.

    As a taxpayer, I tend to look at things like roads, schools, and so forth as strickly the governments business, with scrutiny and oversight provided by us the citizens. This doesn't mean there is not room for inovation, and private "free market" soultions. It's just that for the amount of money that I pay in taxes, I fully expect for the elected officials to figure out a way to provide these services to me. period.

    Think about it, if I pay taxes (which I do), and then I have to pay a multiple tolls to get to work, am I not being "doubled taxed" in a sense. Can I get a refund for the Commonwealth, since they are not providing me with the services that I need and expect to be provided through my taxes?


    If the author of this piece thinks that by simply privatizing transportation to the "free market" will solve Virginia's transportation woes, who are sadly mistaken, and living in a fantasy world. As a resident of NOVA, I fully expect for my elected offcials to find a way to put MY taxs dollars to work and find solutions to future transportation challenges, and I hope these solutions are more comprehensive than just building more roads.

    Personally, I hope that our elected officials - regardless of silly party affliations and loyalties - have the depth of thought to realize that turning over what should be a public function to private investors could be a major mistake.

    No one said Governing was easy...

    By Anonymous Anonymous, at 3/09/2006 9:46 AM  

  • i can only assume you meant vdot is a black hole, not a black "whole"??

    By Anonymous Anonymous, at 3/09/2006 10:00 AM  

  • Given the amount of capital needed to meet the plans of VDOT by 2025, we must have a mixture of private and public investment. Does the public really want to pay for 200 billion by 2025 knowing that Virginia is a donor state on the federal gas tax? Why should we not look at some private capital investment? The private sector has the ability to look at return on investments in a much longer time frame. 75 year and 99 year concessions on SOME of our road facilities could yield significant investments, cost saving and congestion relief.

    There is no silver bullet. There is no switch we just have not flipped. This is part of the tool box.

    Congestion pricing, outsourcing maintenance, tolling and concession sales, revenue sharing with localities in addition to our traditional funding mechanisms are all a part of the solution.

    Those who blindly suggest that the private sector is not to be trusted and cannot solve our problems are using the tired excuses for just send more tax money. Well, we have tried that over and over and over again. Now we are in crisis.

    In speaking with employers and real estate agents, i have learned that cash is becoming tighter and inventories are building. If we continue to tax our citizens more through property tax assessments and state levied taxes, we will run a serious risk of slowing down our economy which will result in reduced revenues to the treasury.

    We have been working to not repeat the mistakes of the past so that the next recession will not hurt our core services. Asking the private sector to see if they can deliver those services as a part of the solution seems reasonable.

    By Anonymous Chris Saxman, at 3/09/2006 10:28 AM  

  • Anon, first, this is not meant to be the only component of addressing Virginia's transportation needs. It is merely one of a number of changes that need to be implemented in order to create an effective transportation system for the 21st century. It is foolish to outright write it off.

    As Geoff noted, we cannot slap up tolls on every road. So, as I noted before, you will have the option to make choices about which roads you use. Most tolling applications are set up to catch pass-through vehicles using our interstates, rather than local commuters.

    If transportation is a core function of government, as you note, then why is there such opposition to utilizing existing general fund dollars to fund it? I think Geoff had a good point on this—that thinking that we should only rely on the state government to fix the problem is part of the old mentality that had created this situation.

    Part of the problem with the old way of thinking is that there is little incentive for the Commonwealth to perform better. Sure, VDOT has made some improvements, but still there is a long way to go. This year, VDOT and the Governor have officially opposed reform initiatives to give more legislative oversight and accountability. From VDOT’s own reports, last year, 1 in 4 construction projects was NOT completed on time. 1 in 4 maintenance projects was NOT completed on time. 1 in 5 construction and maintenance projects were over budget.

    VDOT’s own goals for this year are to only complete 65% of construction and 75% of maintenance projects on time! Their goal is to just complete 80% of construction projects within budget!

    We would not accept these kind of results in other areas, and we should not accept them from government.

    By Anonymous whitney, at 3/09/2006 10:33 AM  

  • Chris and Whitney - thanks for your responses, and both are your points are excellent.

    Ok, regardless, it appears that we all agree that future road improvments are inevitable and going to be expensive..

    There the How we do this seems to be the quesiton..

    Regarless, the 200 billion (that you stated Chris) will come from somewhere, and I am willing to bet (just a hunch) it will come from us the citizens. Whether it be in tolls to private companies, or taxes..

    I think we all can agree on this issue.

    By Anonymous Anonymous, at 3/09/2006 10:53 AM  

  • If there's a fed law that says we can't charge the tolls then I see the point of having to go private if tolling is the way to go.

    I'm certainly not saying that privatizing is a bad idea. I like the idea since there is some evidence that it is already being done and being done well. I'm just saying that if we leave those upper brass in charge at VDOT, how is anything going to change from the current status quo? I am entirely NOT happy with the way things are shaping up with the VITA outsourcing. The same people that were in charge are still in charge and they're adding more and more management on top. I don't want to see the same thing happen here because we are in "crisis" mode.

    Saying "the absence of a profit motive or a bottom line leads to high costs and poor performance" is not true in my agency (yes, I'm a state employee) and it doesn't have to be true of VDOT if the people who are not doing the job they should be doing are relieved of their duties. Why is no one looking at the decision makers that have gotten us in this shape?

    What kind of accountability are you looking for if not in management itself?

    By Blogger Lucy Jones, at 3/09/2006 8:46 PM  

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