PUBLIC-PRIVATE PARTNERSHIPS

Mileage Tax Gets Boost From Peters, Mineta Institute

Secretary of the U.S. Department of Transportation under George W. Bush, Mary Peters recently told the Austin-San Antonio Corridor Growth Summit that the country needs to move toward a vehicle miles traveled (VMT) tax to replace the failing gas tax. At the same time, a new survey conducted by the Mineta Transportation Institute at San Jose State University shows drivers warming to a mileage tax if lower emission vehicles get discounted rates. At issue is how to pay for maintenance and expansion of roads and transit systems after 40 years of vast growth in system use, and looking toward a tricky double-whammy. More population and jobs in coming decades will strain metro-region surface transportation systems, while flattening per-capita miles driven and greater fuel efficiency are curtailing growth in the per-gallon gas tax revenues that have traditionally been the prime source for surface transportation funding.
Broad implementation of the mileage tax is at least 10 years off, maybe 15. In the nearer term, variable-rate, electronically tolled express lanes are needed aside free lanes on major metro region highways, along with expanded opportunities for public private partnerships and other local and regional funding tools. Eventually, the mileage tax could be levied for travel on arterial and feeder roads, plus highways, with discounts for less congested routes, and possibly, lower emission vehicles. Incentives such as pay-per mile car insurance and meter-less, ticket-less parking could help compensate for privacy concerns. With a slew of VMT pilot projects, technical studies and surveys completed and more underway or coming, this bold policy initiative continues to gain momentum. Here’s the San Antonio Express-News on Peter’s remarks:

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LaHood: Mileage Charge, P3s, Expanded Tolling All Possible

In a significant return to a controversial topic – the positive mention of which once earned him a sharp public rebuke from President Barack Obama’s press secretary – U.S. Transportation Sec. Ray LaHood today in Chicago reiterated the possibility of vehicle mileage fees to help pay for mounting U.S. surface transportation needs. His remarks indicate a softening of Obama’s official position against the idea. Underscoring evolving bipartisan support, Republican U.S. Rep. John Mica, the ranking minority member of the House Transportation and Infrastructure Committee, explains to a Florida paper today why the mileage tax makes sense, long-term. No such policy will be enacted anytime very soon, but could begin to move more seriously toward eventual mainstream adoption as part of Read More ›

A Hard Road To Travel In Minnesota

Jarred into action by the tragic I-35W bridge collapse in Minneapolis in 2007, the Minnesota legislature in early 2008 proudly passed a $6.6 billion surface transportation funding bill including the state’s first gas tax hike in 20 years, plus optional sales tax hikes, a major bonding program and other measures. But 18 months later, according to its new transportation policy plan, the North Star State faces a $50 billion gap in paying for surface transportation projects over the next 20 years. Of $65 billion in needed work, only $15 billion is currently expected to be available, with three-quarters of that targeted for preserving existing roads and bridges. Officials say safety won’t be compromised. But mobility and pavement condition will. The executive summary from the report reveals (pp. 14-15) the full battery of envisioned projects are to meet system performance targets as the population grows, mainly by improving mobility in inter-regional corridors and mitigating congestion in the Twin Cities, Rochester and St. Cloud areas.
Chapter 4’s discussion of state trends affecting transportation provides more detail. Population is projected to rise 25 percent from current levels by 2035, which would be 50 percent since 1990. Congestion in the metro regions is expected to grow due to more population, a high rate of solo driving on all trips, greater commuting distances and high use of inter-regional corridors. (State highway map here). Needed projects are detailed in the accompanying statewide highway investment plan (full report here; Twin Cities district here). Given the wide funding gap between needs and resources, leaders want to encourage new ways of maintaining roads, pricing limited peak-hour highway capacity, deploying in-vehicle technology, and funding system improvements. The Minneapolis Star-Tribune reports:

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No Federal Bailout: States, Regions Confront Transpo Funding Woes

When Congress passes a new $450 billion six-year surface transportation reauthorization sometime in the next 18 months or so, it would directly yield $90 billion per annum, split nationwide over its term. That probably sounds like a lot of money, but it’s not. As the House Transportation and Infrastructure Committee’s blueprint for the reauthorization bill notes on p. 7, needed U.S. road and transit projects require $225 billion to $340 billion per year in public and private investment over each of the next 50 years – this according to the National Surface Transportation Policy and Revenue Study Commission. Even scaled-down needs identified by the National Surface Transportation Infrastructure and Finance Commission – also cited in the committee’s reauthorization blueprint – are sizable: $200 billion per year in public investment to maintain and improve the most essential components of the nation’s highway and transit systems.
The expected $48 billion in 2009 ARRA stimulus bill spending on transportation
makes only a minor dent in either amount. Despite the possibility of some additional leveraged funding via an envisioned infrastructure bank that could be rolled into the reauthorization bill, it’s increasingly clear that manna from Washington – though important – isn’t a stand-alone solution.
That’s because of deepening maintenance and construction needs resulting from four decades of robust growth in passenger and freight vehicle miles traveled, plus simultaneous under-investment in infrastructure, and continuing population growth. And so across the U.S., more and more states and regions are grappling with difficult political choices to pay for fixing eroded transportation infrastructure, and for building new capacity and instituting other strategies to ease traffic congestion as the economic recovery unfolds in the next several years.
The first step is realizing you have a problem. There’s a fair amount of that going around.

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Funding Conundrum Persists For U.S. Transpo Overhaul

Congress has adjourned for the summer recess with neither house taking action to extend the federal surface transportation program. Hope for a timely enactment of a long term transportation bill this year all but vanished when Rep. James Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee, acknowledged that he does not favor raising the gas tax at this time to pay for the $500 billion transportation authorization ($450 billion for highways and transit, $50 billion for high-speed rail). He made this admission in testimony before a hearing of a House Ways and Means Subcommittee on July 23. “Although increasing and indexing the gasoline and diesel user fee is a viable financing mechanism,…I do not believe that the user fee should be increased during the current recession,” Oberstar stated, echoing the posture previously taken by the White House.
Instead, the T&I Committee chairman and Peter DeFazio (D-OR), chairman of the Highways and Transit Subcommittee, suggested several  potential  sources of additional revenue to supplement the gas tax and close the funding gap.

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House Transportation Bill: Where’s The Money, & Can It Pass In ’09?

Rep. James Oberstar (D-MN), Chairman of the House Transportation and Infrastructure Committee unveiled a blueprint for the next surface transportation authorization bill on June 18 to generally positive reviews (long version of blueprint here). However he left two key questions unanswered: Can the bill be enacted this year? and, Where will the money to fund the ambitious $500 billion program come from?
The first question has been pushed to the forefront by the Obama Administration. Last Thursday, Transportation Secretary LaHood surprised the transportation community and members of Congress with an unexpected announcement:  the Administration will seek an 18-month extension of the current surface transportation authorization. An estimated $13-$17 billion will be needed to fund the program extension.

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Transportation Public-Private Partnerships Will Weather The Storm

But Lessons Learned Will Bring Changes
Andrew Bary’s recent piece “The Long and Binding Road,” in Barron’s  has been widely noticed. “The credit market collapse and political opposition have all but killed the U.S. highway privatization trend,” the respected commentator opined in his article.  What is more, Bary wrote, the Indiana Toll Road deal “was one of the most illogical prices paid for any major piece of transportation infrastructure during the bubble period of 2005 to 2007,”  suggesting that Macquarie made a huge miscalculation.  Gov. Mitch Daniel’s comment  (“It was the best deal since Manhattan was sold for beads…”) did not help, implying that the State got the better of the naive Macquarie. The article concluded, “for toll road investors, what had promised to be a pleasant ride has turned into a painful trip,” citing Macquarie’s shares tumbling 50% in the past year.

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Team Obama Rejects Gas Tax Hike; Boosting User Fee Prospects

Reuters reports that U.S. Transportation Secretary Ray LaHood told a senate committee the administration of President Barack Obama will not sign off on any hike in the increasingly ineffective federal gas tax, though Congress may propose that. LaHood’s declaration signaled that the Obama administration will take the same stance as former President George W. Bush. Revenue generated by the tax of 18.4 cents on each gallon of gas sold in the country goes into the Highway Trust Fund to fix U.S. roads and public transit. That fund has already been depleted once and Congress had to pass emergency measures last summer to replenish it. The tax has not been raised since the early 1990s… The Bush administration also opposed a Read More ›

Steve Heminger, Robert Poole: Context Trumps Ideology On Transportation Public-Private Partnerships

The National Journal’s transportation blog asks what’s the proper role, if any, for public-private partnerships? Among the replies from their expert panel, two stand out. Steve Heminger, executive director of the nine-county (Bay Area) Metropolitan Transportation Commission, writes: The debate about the wisdom of greater private investment in our surface transportation system is almost always contested on theoretical or ideological grounds, and that may be enjoyable for the debaters but it is completely unenlightening for the rest of us. I suggest instead that we try to answer the following practical question: what part of our investment shortfall are PPPs most likely to address? It is probably not deferred maintenance (about 50% of our total shortfall), because there’s not much money Read More ›

More Public-Private Partnerships Needed For U.S. Transport Finance

(Article as published at Crosscut) When California recently resolved its mammoth budget deficit, it presciently moved to ease restrictions on transportation public-private partnerships, which over the long run could help control costs to taxpayers of improving overloaded roads, rails and freight facilities. P3s, as the arrangements are called, draw from among construction, engineering, highway management firms – plus infrastructure investment groups often funded partly by public employee and building trades union pension funds – to form consortiums that get important transportation projects built more efficiently, and sooner versus later or never. A P3 consortium may provide consolidated services such as designing and building a toll bridge or highway section, and can also provide upfront capital if public funds are constricted, Read More ›