Virginia's Transportation Debate with Oil at $150 Per Barrel

It's amazing how, in just a year or two, energy issues have pushed themselves to the forefront of the Virginia public policy agenda. Electric power... offshore drilling... transportation and gasoline consumption... Climate change and conservation... It's equally astounding how little lawmakers' thinking has actually changed.

Energy policy was quiescent for more than two decades following the collapse of oil, coal and natural gas prices in the early 1980s. Virginia lawmakers were somnambulant, spending billions of dollars yearly on a transportation system designed around the premise of cheap energy. Even as soaring oil costs simultaneously (a) push up the cost of laying asphalt on new roads and highways and (b) depress demand, only a small number of state legislators appear willing to rethink transportation policy in a fundamental way.

The contours of the transportation debate have changed little since petroleum was selling at $20 per barrel in 2002: There's nothing wrong with the system that more revenues and more construction won't fix. What passes for enlightened thinking today is the idea that instead of just throwing money at roads, we now need to throw money at roads and transit -- but without enacting the land use reforms required to make transit work.

It was only last September when I was blogging about the impact of oil at $100 per barrel. (See "Quality of Life, Human Settlement Patterns and $100 Oil.") Not long ago, the price busted through the $150 per barrel level. What will it take to change attitudes? Oil selling at $200 per barrel? $250?

I came across a short piece written by Jeff Rubin with CIBC World Markets. Demand in China and other developing countries continues unabated, often stimulated by subsidies, he writes. Recent Saudi promises to increase oil production by 200,000 barrels per day are meaningless compared to the four million-barrels-per-day decline in oil production expected for the rest of the globe this year. Meanwhile, supplies are restricted in oil-producing regions by under-investment in nationally owned oil companies (Venezuela, Mexico), political instability (Nigeria) or environmental restrictions (the United States).

Rubin projects oil selling at $200 by 2010, only two years hence, which, under prevailing refinery margins, will translate into $7-per-gallon gasoline. He continues:

As gasoline prices climb inexorably, American driving habits are going to have to undergo a massive change, mimicking the driving habits long adopted by Europeans who have faced much higher gas prices. Average miles driven will likely fall by as much as 15%, while the market share of light trucks, SUVs and vans will be literally halved, reversing the trend of the last fifteen years. But the most fundamental, and unprecedented change will be in the number of vehicles on the road.

Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today — a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks. ... Many of those in the exit lane will be low income Americans from households earning less than $25,000 per year. Incredibly, over 10 million of those American households own more than one car.

Soon they won’t own any.

Let me repeat a couple of key phrases: Average miles driven will fall by as much as 15 percent.... We are likely to witness the greatest mass exodus of vehicles off America's highways in history... Soon, some 10 million poor American households might find themselves unable to afford a car...

The debate over transportation funding is based on the same assumptions that underpinned the Warner-era VTrans2025 study, which listed $108 billion in “unmet transportation needs” over the next 20 years based on anticipated population growth and vehicle miles driven. To persist in such a debate in the face of soaring oil prices is breath-taking folly.

The City of Squares... Or, Bring Back the Grid

When James Oglethorpe sketched out a design in 1733 for the settlement of Savannah, Ga., he didn't have "smart growth" in mind. It was some 150 years before the invention of the horseless carriage, and the biggest "green" revolution occurring in his era was the spread of the plantation form of agriculture. Indeed, in laying out the city in the form of identical, easy-to-replicate wards, or squares, he did so with military considerations in mind.

At the center of each ward was a smaller square, which Oglethorpe left as open space to function as a military exercise ground. The four corners of each ward contained a "tything," 10 lots for housing. And on the east and west flanks of each square, he allotted larger parcels designated for public structures such as churches, banks or government buildings.

The original plan called for six contiguous wards. As the city expanded, it replicated the squares repeatedly, eventually creating 24 of them, then re-developing three of them so that 21 remain. The military training grounds were converted into parks, usually focused on a statue to some great American, or a monument to a momentous battle. Wealthy ante-bellum merchants built magnificent mansions facing some of the parks. Most of the historical buildings remain today, although an occasional '60s-era atrocity did manage to creep in. In the early 21st century, historical Savannah is an urban gem -- one of the truly great places of America.

As I explore in "The City of Squares" this week, the city exemplifies all the traits of smart growth: grid streets, small lot sizes, mixed uses, walkability and abundant green space. As a bonus, historic Savannah has adapted to the automobile remarkably well.

So, what does any of this have to do with Virginia? Do we need to visit Savannah to embrace the virtues of grid streets and compact development? Well, that wouldn' t hurt, if you're looking to be inspired. But here's what's really cool about Oglethorpe's replicatable squares: (a) They contain within themselves a balance of houses, jobs, stores and amenities, and (b) they provide a schema for extending the urban grid pattern incrementally as the city expands, while preserving that balance.

Each ward is like an independent cell, containing within itself a balance of elements required for a quality life: 40 residential units (unless lots are combined to create larger dwellings), a central green space within a block or two walking distance from every dwelling, and space to accommodate shops, professional offices and small office buildings. Oglethorpian wards are not totally self-sufficient, of course. Residents cannot possibly meet all of their needs within the square, but they can meet some of them. This is the kind of balance of land uses at the "cluster" level that Ed Risse calls for.

Like the cells of a living organism, Savannah's wards work together. While the wards are interlaced internally with streets and lanes, providing multiple routes between any two points, the perimeter streets align to create thoroughfares, as can be seen in the aerial photo to the left. (Click on the image for a more detailed picture.) These handsome, tree-lined boulevards enhance the surrounding areas and comfortably accommodate pedestrians.

Compare that to conventional "suburban" development in which a majority of roadway lane miles are contained in dead-end cul de sacs -- private streets, for all intents, with minimal traffic -- that provide no public connectivity whatsoever. All traffic funnels into connector roads and arterials that are easily bottlenecked.

Thus arises the supreme irony: Because all streets contribute to mobility and access, historic Savannah supports a relatively high population density with a minimum of traffic congestion.

These dynamics are are well understood and fully appreciated in the literature of the smart-growth and New Urbanism movements. What I haven't heard discussed is how Oglethorpian squares provide a mechanism for extending the grid pattern outward from the core as the city grows. These squares fit together with Lego-like precision, all streets aligning perfectly for maximum connectivity. Plug and play, baby!

The squares are small enough -- 40 residential lots at most, no more than a modest subdivision -- that they allow for incremental, organic growth. Furthermore, the internal structure of the squares are incredibly flexible. While Oglethorpe designed his squares with 40 single-family dwellings, lots can be combined for larger houses, or merged to create apartments or townhouses. Developers of the squares have the means to be highly responsive to the demands of the marketplace.

Bring back the grid. It worked in Savannah, maybe it can work in Virginia, too!

Show and Tell for Hampton Roads Regional Government

Last year HB 3202 made the Hampton Roads Transit Authority (HRTA) a political sub-division of the Commonwealth. The Virginia Supreme Court ruled unanimously that this new Regional Government was un-constitutional. This year some Republicans want to make the Hampton Roads Metropolitan Planning Organization the new Regional Government.

HB 6055 provides a shell fund and the “Moneys in the Fund shall be used solely for new transportation construction projects in the Counties of Isle of Wight, James City, and York and the Cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg, as required by law; and then as determined by the Hampton Roads Metropolitan Planning Organization.” Some counties along the route of the 460 corridor are MISSING).

Let’s pretend that taxation without representation is no problem, so an HRTA or MPO Regional Government is the solution for transportation. Since almost all the same politicians and bureaucrats are appointed to the HR MPO, HRPDC and HRTA, it’s safe to assume that the planning for the big day to rule has been working since their first failed ballot initiative in 1998.

In the first year of operation (this year), the HRTA was supposed to get about $120 million in new and higher local taxes. Let’s see the Master Plan in a detailed schedule of what was to be done from Day One. Put it up on the web. Show The People the coordinating document – called a ‘horse blanket’ for Army projects. Put it up on the web.

Oh, the HRTA/MPO doesn’t have those details? Okay. How about the plan for just the first year? That would mean now – if they hadn’t been ruled un-Constitutional. Put that plan up on the web.

Let’s see the systems engineering ‘waterfall’ project schedule. Where is the complex work breakdown schedule?

What jobs are created? How much do they pay? What are the job specifications? What is the process to get hired? When is each job to be filled? Surely all of this is planned for the first year. Let’s see it up on the web.

Same for contracts. What contracts, for how much, to do what, when, with what consultants for the first year?

None of this above is a state secret. It’s a good show and tell for the good governance stewardship of public money. It’s establishing the public trust that the Regional Government isn’t the scam for power and money for local pols that it smells like.

I’ve worked on government contracts for almost 20 years. Whether the project is in the $10s of thousands or billions of dollars, contractors do a show and tell to account for every hour of labor and penny spent. Why do we expect less from a Regional Government spending even more money? (2002 estimate was $18b, but it is more like $30-35b with the HRBT and inflation).

Why is it okay for the politicians on the Regional Government to just make it all up as they go along? The challenge of building transportation projects is engineering and management – not representation or politicking.

The HRTA/MPO should show The People how much executive, management and engineering skill they possess – now. They’ve been planning since 1997. Put it up on the web.

Show us how many trucks a day will go from the Port of Virginia to I-64 in the middle of Hampton.

Show us how the MPO doesn't cover the full 460 corridor to connect with I-95.

Show us the estimate, again, on how many MORE miles of congestion we have with all your projects.

Show us your plan for the HRBT (the biggest congestion problem) – since you never had one before – and where it is in the priority to build.

Some Republicans in the General Assembly are betting the future of their Party on your readiness for good governance. Show and tell now. Put it all up on the web.

Lots of Talk, But Little Dialog

We can all agree that the recent, unlamented passing of the special General Assembly session on transportation was an exercise in futility. We might see a few minor bills coming out of the session, but nothing resembling a grand compromise that would ensure adequate transportation funding for years to come.

Clearly, there was no consensus on how to approach the problem. And one reason there was no consensus, reports the Washington Post, is that the feuding parties weren't talking to one another. No one, it appears, was even trying to build a consensus. Here's my favorite anecdote from the article by Tim Craig and Anita Kumar:

Kaine and Howell talk, but rarely in detail about transportation.

Last month, when Kaine was asked about transportation, he told reporters he had just met with the speaker.

But when Howell was asked about the meeting, he said the two sat next to each other at a dinner. "We have had very cordial talks," Howell said. "He is a nice guy to talk to, but I don't think we talked about transportation. I asked him about" presidential candidate Barack Obama.

There have been few substantive discussions since the different sides staked out their positions four months ago. Kaine did call at least two meetings between House and Senate leaders of both parties shortly after the Supreme Court ruling that invalidated the regional transportation authorities but could not broker a compromise. A handful of legislators have met behind closed doors or chatted on the phone over the past several weeks, Craig and Kumar report, but they have not found common ground.

The failure to start a dialog doesn't apply to the politicians only. The environmentalist/ conservation community and significant elements of the fiscal conservative/free market camp offer very similar critiques of the contribution of transportation policy to Virginia's dysfunctional human settlement patterns. Other than stray personal encounters, however, there is virtually no conversation between the two groups -- or, seemingly, any interest in even starting such a conversation.

Jim Noland and Olympia Meola with the Times-Dispatch suggested today that a comprehensive transportation solution may have to wait until the next gubernatorial administration. Their article explores the transportation remedies proposed by the three leading contenders to succeed Kaine -- Attorney General Bob McDonnell, a Republican; Sen. R. Creigh Deeds, D-Bath; and Del. Brian J. Moran, D-Alexandria.

But none of the three candidates have proposed anything more than microwaved leftovers from the past failed session. Unless someone, somewhere, somehow, starts a sustained dialog between the diverse and warring constituencies in search of some common ground, Virginia will be no closer to a transportation solution two years from now than it is today.

Son of Frankenstein: HB 3202 Part Deux (Duh)

Here is the Republican con in the special Transportation Session. HB 32o2 is back like the son of Frankenstein, or any other horror film remake unto ridiculousness, as the Republican transportation 'answer'. But like the original HB 3202 it is just a con game for the Commonwealth. It is more about political corruption of politicians and the corruption of the political process for good governance - two separate but connected issues, than transportation.

Much to my dismay, Del. Phil Hamilton, R-Newport News, who knows much about medicine and government policy, is the co-author from The Peninsula.

Here is a Hampton Roads/Tidewater perspective on the bad bill before the House.


HOUSE BILL NO. 6055 Offered June 25, 2008 ----------Patrons-- Hamilton and Albo ----------

The General Assembly declares it to be in the public interest that the economic development needs and economic growth potential of Hampton Roads and Northern Virginia be addressed by special transportation revenues to provide for the costs of providing an adequate, modern, safe, and efficient transportation network in Hampton Roads and Northern Virginia and hereby enacts the following legislation to provide for the same.

First fallacy: existing revenues - raising taxes - are needed.

The newest Regional Government for Hampton Roads isn't the HRTA, but the MPO. Google and check out to see how many of the same people are in the MPO/HRPDC/HRTA. The MPO is an appointed body - not elected.

§ 33.1-391.17. Hampton Roads Transportation Revenue Fund established.

There is hereby created in the state treasury a special nonreverting fund to be known as the Hampton Roads Transportation Revenue Fund, hereafter referred to as “the Fund.” The Fund shall be established on the books of the Comptroller. The Fund shall consist of fees and taxes imposed pursuant to §§ 46.2-755.1, 46.2-1167.1, and 58.1-2402.1 in the Counties of Isle of Wight, James City, and York and the Cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg, and any other funds that may be deposited into the Fund. Interest earned on moneys in the Fund shall remain in the Fund and be credited to it. Any moneys remaining in the Fund, including interest thereon, at the end of each fiscal year shall not revert to the general fund but shall remain in the Fund. Moneys in the Fund shall be used solely for new transportation construction projects in the Counties of Isle of Wight, James City, and York and the Cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg, as required by law; and then as determined by the Hampton Roads Metropolitan Planning Organization.

Our MPO has been cited for violating Federal Law in its functioning. It is one of the worst performing MPOs in the Nation.

Some money will come from the Port.

(Editor's note: Follow this link to the full text of Jim Bowden's post. The original post was so long that it visually disrupted the display of previous posts. Readers are invited to comment on the legislation or Jim's commentary by clicking on the "comments" link immediately below.)

All I'm Asking for Is a Little Consistency

Two of the more notable proposals that General Assembly Republicans have advanced during this year's transportation special session involve constitutional lockboxes and tolling franchises.

The Rs have backed a constitutional lockbox for regional transportation levies to ensure that state politicians can't raid regional piggybanks. At the same time, a number of prominent Rs have floated the idea of selling toll franchises to the private sector as a way of raising up-front capital to pay for other transportation priorities. (See "One Good Idea, One Bad.")

Can anyone see the inconsistency between those two positions? Both represent an unwarranted transfer of wealth from tax/toll payers to a different set of beneficiaries.

The reason a lockbox is needed for regional transportation levies is that politicians can't be trusted not to divert the funds to some other use. Why would such diversions be bad? Because they would constitute a transfer of wealth from those who pay the levies to some other beneficiary who doesn't pay the taxes. The Rs are rightfully distressed that the Ds who control the state Senate shot this idea down.

But... How's the pilfering of regional levies any different from selling a tolling franchise to a private-sector operator who slaps tolls on a road that didn't have them before? Under such an arrangement, the state would pick the pockets of those who pay the tolls and redistribute the funds to benefit someone who wasn't paying the levy. A lot of Rs seem to understand the principle at stake when it comes to swiping Dulles Toll Road revenues to support the Rail-to-Dulles rail project. But their objections seem to disappear when they think that they may be the ones redistributing the funds.

Bottom line: If levies warrant a constitutional lockbox, which they do, so do bridge and highway tolls? Anything else is legalized theft. Let's have a little consistency, please.

They Did What?

Here's the latest salvo from the General Assembly battlefield: Senate Democrats this afternoon killed a measure that would ensure that funds raised by regional levies would be spent exclusively in the regions that paid the taxes.

According to an email missive from the Virginia Senate Republican Caucus, Sen. Creigh Deeds, D-Bath, led Democrats on the Privileges and Elections Committee to defeat the measure proposed by Senator Ken Stolle, R-Virginia Beach. It failed by a single vote, despite unanimous Republican support.

Stolle's measure would have initiated the process of adopting a constitutional amendment that would establish a "lock box" for regional transportation funds. Without a constitutional guarantee, future legislatures could divert the funds for any other purpose. Said Stolle: "Without this constitutional protection, taxpayers have no assurance that the measures we pass will do what we say they will do. This vote today does a great disservice to those who want to find solutions to our transportation challenges."

I have to agree. I'm sure the Dems offered some fig leaf of a reason for blocking the measure, desperately needed to retain trust, and I'll report it when I come across it. Until then, I find this action unfathomable.

Update: OK, here's the story (as I understand it). Deeds blocked the Republican version of the lockbox measure in order to submit a substitute bill. That bill added some clarifying language regarding regional authorities but otherwise preserved the intent of the original. States Peter Jackson, with the Deeds campaign: "I think it's worth noting that the same day Stolle expressed such outrage at Senator Deeds in that missive from the Senate GOP, he voted to advance the McEachin/Norment bill to the floor."

If that's the case, I have to ask, what was the purpose of the email salvo?

Speaking of Deeds, he's offered a couple of interesting bills: one an income tax credit to employers whose employees enter into flextime scheduling agreements that allow them to avoid rush hour commutes, and a tax credit for employers to conduct a telecommuting assessment. Encouraging flextime and telecommuting are good things. But there must be another way to spread those practices. The state tax code is riddled with too many tax credits already.

Northern Virginia’s Transportation Quandry: Dozens of Cooks Spoiling the Broth

The following was submitted by Ron Utt of the Heritage Foundation and the Virginia Institute for Public Policy:

As the state legislature convenes in Richmond this June in a special session to revise Virginia’s recently enacted surface transportation program, a number of elected officials – ranging from the legislature’s Republican caucus to the Attorney General - have recommended that the state conduct an independent, comprehensive performance audit of the state’s transportation operation to determine areas of deficiency, improve program management, set clear goals and measures of accountability, and develop a plan to reduce traffic congestion. Such a performance audit was completed in Washington state in 2007, and the Idaho legislature is contracting with private consulting firms to conduct a similar audit in 2008.

Among the many findings from Washington’s independent performance audit were problems related to the large number of overlapping government bodies that had some responsibility – and some portion of the resources -- for some facet of the state’s (or region’s) transportation policy. This balkanized system of responsibility, in turn, made it difficult to devote the combined resources of government to solving transportation problems, coordinate responses, or – most importantly -- to hold any of these many public entities accountable for successes and failures.

In the event that Virginia agrees to conduct its own independent performance audit of the state’s transportation system, the auditors will quickly discover a mother lode of more than a dozen overlapping, costly, and redundant government transportation bureaucracies spending vast sums of taxpayer money in pursuit of contradictory – and often counterproductive -- transportation policies and projects. Indeed, Northern Virginia may very well have the most confusing and redundant collection of transportation bureaucracies in the Nation.

A good place to start is with the Metropolitan Washington Council of Governments and the region’s metropolitan planning organization – the National Capital Regional Transportation Planning Board (TPB). Members of the Board (and overseers) include five northern Virginia counties and five incorporated cities, as well as the District of Columbia, three Maryland Counties, and six Maryland pseudo-cities. In addition to these two region-wide bureaucracies, each of the five Virgina counties and five cities may embark upon some of their own transportation policies and initiatives.

Serving as ex-officio member on the TPB are three Federal agencies -- the National Park Service, the Federal Transit Administration, and the Federal Highway Administration – and also the Metropolitan Washington Airports Authority (MWAA). Although MWAA has no experience in surface transportation issues, it recently became a major player in NoVA transportation policy when it assumed responsibility for building the Dulles Rail project.

Recently added to this mix is the state government created and empowered (and then Supreme Court disempowered) Northern Virginia Transportation Authority (NVTA), whose member jurisdictions are the same as those Virginia entities serving on the TPB. This new transit-oriented focus will be supplemented by the ongoing work of three other Virginia government entities with some responsibility for transit: the Northern Virginia Transportation Commission, the Potomac and Rappahannock Transportation Commission and the Virginia Department of Rail and Public Transportation. The first two are responsible for operating and funding the Virginia Railway Express (VRE).

I know that this is getting confusing, but, unfortunately, there are still a few more costly bureaucracies floundering around the state and the region, and operating their own competing transportation fiefdoms. Among them is one of the biggest, the Washington Metropolitan Area Transit Authority (WMATA), which operates the Metro and the companion bus system. In the original H 3202, spending priority on taxes raised is to satisfy any debt service obligations incurred by the new NVTA, while each year the VRE and WMATA would have had first claim on the next $75 million raised through H 3202’s unconstitutional tax scheme. Added to this steaming bureaucratic brew is the Northern Virginia Regional Commission, and the biggest player of all – the Virginia Department of Transportation (VDOT).

Maybe this regional broth of bureaucrats makes sense, but I doubt it, and a perfect project for the state’s Joint Legislative Audit and Review Committee (JLARC) and/0r the Auditor of Public Accounts (APA) would be to conduct a comprehensive financial audit to identify what it is that each of these taxpayer funded entities does, determine how much in administrative costs is required to keep them in operation, and provide an inventory of all personnel, as well as their salary and benefit packages. Such information would be a valuable supplement and assist to the independent performance audit that Virginia should conduct, and would also serve to inform taxpayers of the service tradeoffs incurred by big bureaucracies. For example, if the average Virginia pot hole costs $200 to fix, and if the average bureaucrat in any of the above named entities earns $80,000 per annum, then the public cost of each redundant bureaucrat represents 400 unfilled pot holes on Virginia roads. Think about it.

(Cross-posted at Tertium Quids)

A Waste of Time

Today's newspaper accounts of the transportation special session are pretty pessimistic. After the first day, some have concluded, the whole exercise is shaping up a waste of time.

Assuming the session collapses in a frazzled heap, it will be followed by the inevitable assignation of blame. Regarding the doling out of responsibility, Sen. Jill Holtzman Vogel, R-Fauquier, made a good point yesterday following Gov. Timothy M. Kaine's address to the legislature.

Unlike the special sessions called by Governor Baliles to address transportation, or by Governor Allen to abolish parole, or by Governor Gilmore to reduce the car tax, Governor Kaine has failed to build consensus or support for his plan before calling legislators back to Richmond.

During the six weeks since Governor Kaine unveiled the tax increase plan he detailed for you moments ago, he has held town meetings across Virginia to gain support for his approach. That strategy has not met with success, and there is no indication that the people of Virginia support his proposal.

Good point. Kaine called the special session. He called it knowing that he didn't even have buy-in either from the Republicans or from key players in his own party. Then he traveled around the state and tried to sell it to the public in the hope, presumably, of pressuring legislators to adopt his plan. But the public, it appears, is as fractured as the readers who leave comments on the Bacon's Rebellion blog. Kaine's gambit failed. Now everyone who has convened in Richmond is simply going through the motions of getting something done.

Not that I blame Kaine for failing to forge a consensus. Given the level of public sentiment right now, a consensus is unforgeable. The Republicans came close with HB 3202 last year, but it turns out that key measures were... oops... unconstitutional.

Ultimately, the problem boils down to this: Everybody wants more roads and rail, but everyone wants someone else to pay for it. Trouble is, if people want someone else to pay for their transportation improvements, they sure as hell won't go along with paying for someone else's! The only way this political gridlock can be solved is to convince people they're getting something tangible for what they pay (either in taxes or tolls). Politically, nothing else will sell.

No Surprise, More Gridlock

Cut through the rhetorical miasma of the General Assembly, and here's what's going on: Del. Ward Armstrong, D-Henry, has introduced Gov. Timothy M. Kaine's transportation package in the House of Delegates. So far, the governor hasn't found anyone to introduce the same plan in the state Senate, where Majority Leader Richard L. Saslaw, R-Fairfax, has his own ideas.

House Speaker William J. Howell, R-Stafford, says the House won't vote on Kaine's bill until it passes the Democratic-controlled Senate. "It is obvious to everyone that, since a Democrat governor called this special session, the body controlled by his party should act first on his legislation," he said. "When the governor's allies in the Senate send us a bill that they have passed and that he will sign, then we will give it full and fair consideration."

Kaine spokesman Gordon Hickey called that a "delaying tactic."

Bacon's bottom line: Nobody can agree on anything. And everybody's trying to set up somebody else to take the fall for failing to come up with a transportation "solution."

Transurban's Low Cost of Capital

There's a very interesting story lurking within Len Gilroy's column, "Another One Bites the Dust." Gilroy tackles the idea that privately financed public-private partnerships are a bad deal for motorists because the private sector can't avail itself of tax-free bond financing like state and municipal governments can.

In the last few weeks, the Pennsylvania Turnpike Commission issued $177 million in tax-exempt bonds at a 4.89 percent interest rate. Transurban, the major investor in the Interstate 495 HOT lane project, went to financial close earlier this month on $589 million of 40-year, tax-exempt bonds with an average interest of 4.97 percent, and $587 million in TIFIA loans at 4.45 percent for 40 years.

Bottom line: Transurban has a lower cost of capital than the Pennsylvania Turnpike Commission.

How did Transurban get such low financing? Writes Gilroy: "Because private investor-operators can tap into both federal tax-exempt financing vehicles and robust global capital markets, they can structure sophisticated financial arrangements at highly competitive rates that can neutralize the public financing’s supposed advantages."

Wagner Plays the Offshore Drilling Wildcard

So far, the special General Assembly session on transportation has been shaping up as a flounderfest: no one agreeing on anything, everyone just flopping around. But Sen. Frank Wagner, R-Virginia Beach, has thrown a wild card into the game.

In a news conference today, Wagner linked offshore drilling for natural gas with Virginia transportation. He called for Gov. Timothy M. Kaine to use his "considerable influence in national Democratic politics" to urge his fellow party members to lift the federal ban on off-shore drilling. And he promised to introduce legislation next week that would devote much of the state royalties from such drilling to transportation, Chesapeake Bay clean up and energy-related uses.

Wagner, who reminds readers in his press release that he was the chief patron of the bill calling for the Virginia Energy Plan, would establish the Offshore Energy Revenue Fund. Proceeds would be distributed as follows:

40% to the Transportation Trust Fund
40% for Chesapeake Bay cleanup efforts
10% to the Renewable Electricity Production Grant Fund
10% to the Virginia Coastal Energy Research Consortium

Now, some might accuse Wagner of cheap political grandstanding. After all, what can Gov. Kaine really do to influence the federal ban on offshire drilling? Further, what are the chances that a Democratic Congress, which looks forward to aligning itself within half a year with a Democratic president, will make a move that would anger its environmentalist base? Pretty low, I'd say.

Moreover, there is absolutely no logical nexus between offshore drilling and transportation. I can see a tangential connection to the Chesapeake Bay: If people are worried about the environmental impact of drilling, it sorta makes sense to dedicate some of the royalties to environmental clean-up. Drilling offshore would take place in the water... The Chesapeake Bay has lots of water... What more could you ask for?

Other than the fact that the Business As Usual interests are desperate for a new source of revenues to perpetuate Virginia's failed transportation model, however, why should the revenues be dedicated to transportation as opposed to any other need? None that I can think of.

But the gambit is sure to generate a lot of headlines and absorb a lot of discussion. A special session that was shaping up as snooza-palooza just might be fun to follow after all.

A Virginia Dem on Transportation: One Good Idea

Virginia Senator John Miller (D-1SD) will introduce a bill to abolish the Hampton Roads Transportation Authority (HRTA).

This unelected, unaccountable, unseparated powers Regional Government - ruled un-Constitutional (by unanimous decision of the Virginia Supreme Court) -has already spent $200k.

Let's see which Hampton Roads legislators sign up to be co-patrons of this bill - and how many Republicans make it bi-partisan for good governance.

Virginia GOP on Transportation: One Good Idea, One Bad

As the special transportation session of the General Assembly draws nigh, the House Republican leadership has thrown out some new ideas regarding transportation funding. One of them deserves serious consideration. The other one is dangerous: a potential blank check for the political class.

Del. G. Glenn Oder, R-Newport News, announced Friday that he had introduced legislation to create a "constitutional lock-box" for the Transportation Trust Fund. This idea, backed by Gov. Timothy M. Kaine early in his administration, would protect dedicated transportation from revenue razzias to fund other programs. Politically, a constitutional lockbox is mandatory to induce voters to support tax increases for transportation construction. Without such a guarantee, only the most naive would trust the politicians to honor a commitment to leave the funds alone.

Said Oder in a press release: "It is time to put 'trust' back into the Transportation Trust Fund. This constitutional amendment provides a guarantee to the citizens of Virginia that money dedicated to transportation will be spent on transportation. To prevent similar diversions and raids, we approved a constitutional amendment to protect funds for education raised through the State Lottery. We should protect transportation dollars as well."

Oder's legislation is backed by the House Republican leadership, including Speaker William J. Howell, R-Stafford. Said Howell: "The people of Virginia have every right to expect that moneys dedicated for transportation will, in fact, go to transportation."

Right on!

While Howell's logic is impeccable in that instance, he floated a stinker last week when discussing how to address the transportation needs of Hampton Roads. In an interview with the Daily Press, Howell suggested leasing the long-term tolling rights for Hampton Roads bridges and tunnels in return for up-front payments in cash.

"You can't raise taxes enough to build all of those things," Howell said of the region's list of seven major transportation projects, which includes expanding the Hampton Roads Bridge-Tunnel, reports the Daily Press' Kimball Payne. "Looking at tolls and concessions is the only way you're going to solve Hampton Roads' problems."

The problem with the transportation projects favored by the political class of Hampton Roads is they are largely for the benefit of the port and maritime interests, and to some extent development interests. By leasing off bridge and tunnel concessions and hiking tolls to pay for those projects, Howell's proposal would represent a multibillion-dollar transfer of wealth from the general citizenry to the port/maritime/development sectors of the business community.

I'm all in favor of finding creative ways to build the new transportation capacity needed to expand the ports -- as long as the projects can pay their own way, and as long as private interests shoulder the risk that revenue projections might not materialize. Toll the trucks. Tax the containers. Create Community Development Authorities to develop industrial real estate along the expanded highways and use the proceeds to issue bonds. Privatize the Virginia Port Authority. But don't tax or toll already overtaxed citizens for something that benefits them only indirectly if at all.

300 MPG. Could This Be the Coolest Car Ever?

Let me say up front that the Aptera totally rocks. The super fuel-efficient vehicle is so awesomely cool -- the hybrid gas-electric vehicle gets up to 300 miles per gallon -- that it makes me proud to be an American. (Detroit, watch out, the company that designed the vehicle is based... where else... in Carlsbad, Calif.)

The designers are pricing the all-electric vehicle at $26,900 and the plug-in hybrid at $29,000. That's more expensive than a Prius, but with gasoline selling at $4 a gallon, you can save some serious coin with this bad boy. I would be amazed if this vehicle doesn't make big inroads into the marketplace.

I first saw the vehicle profiled last night on NBC News. Then this morning the blogger "Not Ed Risse" posted a comment linking to the Aptera website, along with a triumphal note aimed at the real Ed Risse: "300 miles to the gallon! Autonomobility is here to stay. Deal with it."

On the philosophical spectrum, I reside somewhere between Not Ed Risse and the real Ed Risse. I have confidence in America's creative genius. Now that energy prices have risen to a new, higher plateau, we will find ways to both conserve and produce energy in ways that were unimaginable a few years ago. While I do perceive a risk of civilizational collapse due to the unsustainable consumption of energy, I'm pretty confident that our market-based economy will be able to muddle through.

But it's premature to high-five each other over the end of the automobility crisis. Permit me to touch upon a couple of issues:

• The Aptera doesn't touch the problem of traffic congestion. Take ten million SUVs off the road and replace them with Apteras, and you still have ten millions vehicles on the road, jockeying for scarce roadway capacity and requiring parking spaces.


• Widespread adoption of the Aptera and comparable vehicles will accelerate the collapse of our highway funding system based on the gasoline tax. Let's estimate the impact on tax revenues... 300 miles to the gallon vs. 15 miles to the gallon. You do the math. If we don't pay for roads with a gasoline tax, how will we pay for them?
  


• Dysfunctional human settlement patterns are not rendered miraculously functional by low fuel costs. The Aptera will cut down the gasoline bill and reduce pollution -- two very good things -- but it won't reduce time spent commuting or reduce the cost of providing public services to inefficient patterns of development.

So, let us salute the creators of the Aptera and praise American ingenuity. Let us hope that Aptera goes mainstream, inspires imitators and weens millions of Americans from their big cars. But let's not forget the many other costs -- few of them so easily addressed -- associated with automobility.

Transportation? Ho, Hum. People Are Just As Riled by Illegal Immigration.

The disconnect between the general public and the special interests pressing for taxes for transportation (the Axis of Taxes) seems to widen with each passing day. As the General Assembly gears up for a special session to address transportation funding, according to the latest Commonwealth Poll, transportation ranks only fourth among the topics that the state should make "a top priority."

Here's how the issues compared:

Public schools (67 percent of respondents listed as "a top priority")
Job situation (54 percent)
Environment (49 percent)
Transportation (46 percent)
Illegal immigration (45 percent)
Mental health services (37 percent)

The breakdown did vary by geography. Fifty-nine percent of Northern Virginians rated transportation a top priority, but the figure in Hampton Roads -- where the Axis of Taxes is determined to raise billions in regional revenues for regional bridge and highway projects -- rated only 43 percent.

Implications of Shrinking Trade Deficit Hitting Home in Hampton Roads

I hate to say I told you so, but... I told you so. Back in February, I took note of major shifts in global trading patterns resulting from the declining value of the U.S. dollar. In "The Inscrutable Meaning of the Shrinking Trade Deficit," I noted that a weaker dollar would translate into greater U.S. exports and lower imports. That's Economics 101 -- not exactly a leap of genius. But I went a step further, writing:

[Virginia] lawmakers are being urged to make massive infrastructure investments based on those global trading patterns. Hampton Roads is undergoing a massive expansion of port capacity predicated on the view that the volume of imported containers, mostly from China, will continue basically forever.

Rising imports implies the need for more trucks -- and highway capacity. But a leveling off of imports suggests that the anticipated surge in truck traffic may not materialize. What worries me is that the business-political establishment of Hampton Roads will plunge ahead blindly with its monumental road improvement projects, saddling the region with a massive extra tax burden in order to handle an increase in imports that never materializes.

Now comes this news from the Daily Press:

For the first time since before 2003, annual revenue for the authority's terminals is projected to fall by nearly 7 percent in 2009, a decline officials attributed to a continuing economic downturn and the specter of losing two major customers to Portsmouth competitor APM Terminals Inc." ...

"If you look at the trend in the last few months, I think our volumes have been down three of the four months," said Joseph A. Dorto, president and chief executive of VIT. "We look out there, read the newspaper and see what the economy looks like, and we think the rising cost of fuel, energy and food are going to cause people to cut back and not spend as much and buy as much."

In other words, the shift in global trading patterns is now being felt in Hampton Roads. What's not clear from the Daily Press story is how much of the anticipated 7 percent decline in container traffic represents a loss of state port business to private terminals in Portsmouth, and how much will manifest itself in a smaller number of trucks running up and down Interstate 64 and U.S. 460. Clearly, though, truck traffic, whether it originates from Norfolk or Portsmouth, is expected to decline.

Combine the port trend with yesterday's post, "Vehicle Miles Traveled - Down 4.3 Percent." Folks, we are experiencing a significant shift in the demand curve for transportation capacity. That's a fancy way of saying that we won't need as much new transportation infrastructure as we thought we did. Whether any of this will penetrate the consciousness of lawmakers before they convene this June to address transportation funding, however, remains to be seen.

Vehicle Miles Traveled -- Down 4.3 Percent

As the General Assembly gears up for a special session to hammer out a transportation-funding "solution," you'll hear a lot about the catastrophic decline in gasoline tax revenues. Because maintenance projects get first crack at all state gas-tax dollars, the plunge in revenues translates into a dollar-for-dollar reduction in construction spending. You'll hear a lot of panicky talk about the cancellation of all sorts of highway projects, and dire predictions of how Virginians will be consigned to traffic-congestion hell.

But there's a flip to the declining gasoline consumption and gas-tax revenues: People are driving less. Fewer people driving translates into less traffic congestion. In an economically rational world, a decline in traffic congestion would be reflected in scaled-back construction plans. This is not an economically rational world, of course. It's a world in which a massive share of the economy is directed not by market forces but political forces. And it's not in the interest of those who benefit from massive construction programs to tell the whole story. So, there's a good chance you won't see this information anywhere else.

Estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent compared to March 2007, according to a Federal Highway Administration press release. The decline of 11 billion miles traveled that month was the sharpest year-to-year drop since the FHWA started tracking the numbers in 1942.

As a side benefit, fewer VMT means less air pollution. "Fewer cars on the road has translated into a 9 million metric ton decline in greenhouse emissions for the first quarter of 2008 alone," writes Acting FHW administrator Jim Ray in the Department of Transportation's Fast Lane blog.

In his blog post, Ray focuses on the fiscal downside. "The less revenue in the Highway Trust Fund, the less funding is available for states to keep roads healthy and efficient – resulting in more traffic tie-ups, more inefficiency, reduced driving and even less funding," he writes. "This latest trend is yet another reason that we need to overhaul the highway financing system."

We do need to overhaul the highway financing system to replace the gasoline tax, which will become increasingly obsolete over time. But here in Virginia we also need to re-examine assumptions on how much travel, and traffic congestion, are forecast to increase, and how much money we need to spend to address our need for mobility and access.

It would be farcical to pass a tax increase to compensate for declining Vehicle Miles Traveled and ensuing gas tax receipts without simultaneously taking a fresh look at the lower Vehicle-Miles-Traveled assumptions upon which Virginia's highway-spending wish lists are based. But don't expect it to happen. Politics is nothing if it is not a farce.

Update: What's happening nationally may not be happening in Virginia. In the comments section of a previous post, "Bob" the blogger points to the March 2008 Commonwealth Transportation Fund Revenue Report , which indicates that the Motor Fuels tax in Virginia increased 4.4 percent in March. Something seems out of sync. Perhaps the difference between U.S. and Virginia trends can be attributed to differences in what is being counted or in methodology.

Pennsylvania Goes Over to the Dark Side in Transportation Deal

The movement to privatize large sections of state-owned highways is gaining momentum. Citigroup Inc. and Abertis Infraestructuras SA have won an auction -- paying $12.8 billion -- to lease the Pennsylvania Turnpike from the state of Pennsylvania for 75 years. Money from a turnpike lease would help the state close a $1.7 billion gap in transportation funding.

Terms of the lease agreement, if it gets final approval, would allow the operator of the turnpike to raise tolls by 25 percent Jan. 1. Tolls then would increase 2.5 percent annually or match the rise in the consumer price index if it is higher, according to Bloomberg.com.

The Bloomberg article makes no mention of improvements to the turnpike or the use of congestion pricing to maximize throughput. Based on the details published in the article -- I reserve the right to retract my analysis if the reporting is incomplete -- this looks like the wrong way to go about privatizing a state highway. Basically, the privatization here is a back-door way to jack up rates on one set of drivers (those who use the Pennsylvania Turnpike) in order to underwrite transportation improvements to other parts of the state. In this instance, privatization is a tool used to perpetuate Business As Usual transportation policies.

This deal does not take Pennsylvania toward a user-pays system. It looks like an old-fashioned money grab by the political elites in Pennsylvania. There are no discernible signs of added value for turnpike drivers. There are no indications that the tolls would be fine-tuned to encourage drivers to seek transportation alternatives during periods of peak demand. Tolls are hiked willy nilly to meet the needs of investors and the state of Pennsylvania.

By comparison, the deals that the Kaine administration has struck with private sector entities to build HOT lanes on Interstates 495 and 95/395 look vastly superior. In those deals, congestion pricing will maximize throughput and incentivize drivers to find alternatives during periods of peak demand. Money raised from tolls will be plowed back into major upgrades of the Interstates, including Bus Rapid Transit, thus expanding the alternatives to one-man-one-car. People paying the tolls in Virginia will receive tangible benefits for their money. History will show the HOT lane deals to be the signature transportation achievement of the Kaine administration.

(Hat tip to Neil Haner.)

Creative Thinking on Hampton Roads Transportation

It's amazing what happens when you deprive a region like Hampton Roads of the easy solution -- raising taxes -- for reducing transportation congestion. People come up with some pretty creative ideas. Not all of them will prove viable, but some of them will. And none of them would have surfaced if the General Assembly and local politicos had been allowed to continue unchallenged their tax-and-spendthrift ways.

The latest case in point: New Kent County, which lies between Richmond and Hampton Roads, is studying the feasibility of building a cargo-transfer facility to take trucks off Interstate 64 and spur business development, reports the Daily Press.

The idea under study is to ferry cargo containers from the ports in Norfolk and Portsmouth through the Chesapeake Bay, under the Coleman Bridge and then up the Pamunkey River to the proposed port property. The enterprise would take trucks off the most congested and costly-to-expand stretches of Interstate 64 in Hampton Roads.

The privately owned site, called Parham Landing, is a largely vacant parcel on the south bank of the Pamunkey, about four miles from Interstate 64. The cost of the transfer facility is estimated to be $36 million to $53 million. It's not clear at this stage whether private investors or a public entity would pay to build it. But one thing for sure would undermine the project: Opening up the spigots of taxpayer funding for Business As Usual transportation remedies.

Remember, traffic congestion creates business opportunities. The lure of profit calls forth creative ideas.

(Map credit: Jon Baliles. Blue marker shows location of Parham Landing. Click on image for larger, more legible version.)