Finding funding solutions

February 2013 » Departments » COMMENT
Bob Drake

Warnings about the dire state of our nation's infrastructure continue to be sounded, but like blaring car alarms in a mall parking lot or constantly beeping back-up alarms at a construction site, one wonders whether anyone is listening anymore. Especially when discussion about hundreds of billions or trillions of dollars in deficits and budget cuts have been part of our daily news fare for so long– desensitizing many to the immensity of our budget crisis – it's difficult to place into meaningful perspective the impact of the nation's urgent need for infrastructure repair.

The American Society of Civil Engineers' (ASCE) latest report, "Failure to Act: The Impact of Current Infrastructure Investment on America's Economic Future," states that if we do not address an estimated $1.1 trillion gap between projected needs and likely investment in critical infrastructure, the U.S. economy is expected to lose almost $1 trillion in business sales and 3.5 million jobs by 2020. "Moreover, if current trends are not reversed," the report says, "the cumulative cost to the U.S. economy from 2012-2020 will be more than $3.1 trillion in GDP and $1.1 trillion in total trade." (ASCE's projections include both the cost of building new infrastructure to service increasing populations and the cost of expanded economic activity and for maintaining or rebuilding existing infrastructure that needs repair or replacement.)

Against this bleak backdrop, it is encouraging to see efforts to find new funding solutions – or expand the use of existing solutions – to support infrastructure investment. The International Bridge, Tunnel and Turnpike Association (IBTTA) recently launched a public awareness campaign to highlight the benefits of tolling. "We're launching this campaign to ensure that tolling is a key part of the discussions in Congress and elsewhere around the country on how to fund America's transportation system," said Patrick D. Jones, IBTTA executive director and CEO.

According to IBTTA, tolling annually generates more than $10 billion in revenues from 5,431 miles of tolled highways, bridges, and tunnels and "is already a big part of the solution to the challenge of creating new, dedicated revenue streams to support our country's transportation infrastructure needs."

Advancements in and growing acceptance of all electronic tolling are changing the game. "In the last two decades we have embraced cutting-edge technologies and business practices that have transformed the tolling industry into one of the most effective and efficient providers of mobility in the world," said 2013 IBTTA President Rob Horr.

In another effort to find a funding solution, Virginia Governor Bob McDonnell recently proposed a plan to raise more than $3.1 billion in transportation funding during the next five years by eliminating the state's 17.5 cents-per-gallon motor fuels tax on gasoline and replacing it with a 0.8-cent (per dollar) increase in the state's sales tax.

"Declining funds for infrastructure maintenance, stagnant motor fuels tax revenues, increased demand for transit and passenger rail, and the growing cost of major infrastructure projects necessitate enhancing and restructuring the Commonwealth's transportation program and the way it is funded," McDonnell said. "No changes to [the gas tax] will provide a reliable growth mechanism for transportation in the state. In short, if we stick to the same old means of funding transportation, we will find ourselves having the same debates and facing the same revenue shortfalls over and over again as inflation slowly eats away at the gas tax, cars get better mileage to meet CAFE standards, and more alternative fuel vehicles hit the streets. Market forces clearly dictate that we have to change how we fund transportation. This is a math problem."

McDonnell's full proposal (read the press release at www.governor.virginia.gov/News/viewRelease.cfm?id=1588) raises some tax-equity issues in such a diverse state – rural versus urban regions – but it at least moves the funding discussion in a new direction, seeking a long-term solution.

Bob Drake
bdrake@zweigwhite.com

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