by Matt Rosenberg December 11th, 2013
A Toll Division Operational Review by the Washington State Department of Transportation released recently raises the idea of a state-regulated but privately funded and managed public utility that in theory could replace WSDOT so road projects can be financed more easily through means including bond sales not subject to legislatively-imposed limits on state government. Yet the notion is clearly less about action soon on any sort of deep structural change. It seems more intended to subtly prod a legislature slow to address systemic barriers to the current and quite arguably failing per-gallon gas-tax-based transportation funding model.
The report from a Washington State agency headed by a firmly established Northwest Green Progressive, former Oregon DOT head Lynn Peterson, somewhat remarkably cites key findings of a January 2013 report from the long established free market, conservative leaning Libertarian think tank, the Reason Foundation, by transportation policy scholar David Levinson, titled “Enterprising Roads: Improving the Governance of America’s Highways.”
Drawing on Levinson’s paper, WSDOT says, “the theory…is that roads should be managed by independent enterprises that are charged with a mission of providing service to customers” like other “network utilities” which may be privately run but government-regulated, such as water, electric, pipeline, natural gas “and virtually all telecom and cable” systems.
In its report WSDOT stops far short of endorsing a private state transportation utility but does accent Levinson’s view that “the organizations that manage roads should be able to finance road construction and maintenance through the sale of bonds, without requiring direct consent from higher political authorities.” A variety of related alternatives are mentioned by WSDOT including “a public-private partnership contract involving toll rates where the contract holds the regulatory provisions including items such as a toll structure and associated performance criteria.”
Reaching into Levinson’s paper, the WSDOT report cites the New Zealand Transport Agency as one of the most full-fledged actual working examples of a publicly regulated, privately managed road utility – and says that data show its approach “has delivered large efficiency gains without compromising service levels.”
WSDOT’s public-private partnership program has for several years quietly inched the ball downfield on the idea of transportation public-private partnerships but not gotten far with that approach on major road projects due to legislative opposition.
The new WSDOT musings about a privately owned state road utility, regulated by the state, come as the Washington legislature continues to bog down on what is seen by key stakeholders as a much-needed state transportation funding package. If passed in the next few months a statewide transportation funding deal would probably be to the tune of $10 billion or $12 billion. Business, labor, local and regional governments in Washington state are vocally and energetically lobbying for it. Yet the package by all accounts will almost certainly feature at its core an increase in something that WSDOT correctly says in its new report “has been on a deep downward slide from some time” in terms of effectiveness. That’s the state gas tax.
The agency tolling division report states, “The purchasing power of the state fuel tax is declining. The fuel tax is a flat tax on each gallon sold. It is not indexed to inflation, and does not rise as the price of fuel goes up. In addition, Washington residents are driving fewer miles per capita, vehicles are becoming more fuel efficient, and new federal fuel efficiency requirements and the emergence of electric vehicles will accelerate this trend.”
Only eight of every 37.5 cents collected in state gas taxes per gallon of gas sold in Washington is allowed to go to state highways and ferries “including maintenance, preservation, safety improvements and congestion relief.” Adjusted for inflation based on a 77 percent hike in the construction cost index since 2001, state gas tax revenues have actually dropped by nearly half since then and related revenue projections for 2007-2020 revised downward by $3.7 billion as a result, WSDOT reports.
Thus, argues WSDOT in the toll division report, not only is more consideration due to the fairly bracing idea of a transportation utility or at least more extensive public private partnerships around tolling, but Washington as well should consider the controversial vehicle mileage tax. The recent WSDOT report states that the VMT approach “brings us much closer to a user-pay system, by charging drivers directly for the miles they travel and the resulting wear and tear on the roads. It also addresses the declining revenue yield from the gas tax.”
Additional options to replace the failing gas tax, says WSDOT, might include a look at Virginia where “the state fuel tax will be replaced by a 3.5% wholesale tax on gasoline, a 6% tax on diesel fuel, an increase in title registrations, a $100 fee on hybrid and electric cars, and an additional 0.3% general sales tax.” However the right choices will vary from state to state, the agency adds.
In the meantime, the tolling division reveals in the recent report, it is completing a study on how to meld carpool or HOV lanes into express toll lanes including a conceptual treatment of how that would look on I-5. A special report on that is likely to be released before year’s end, the agency says.
As well, WSDOT states that the federal government has granted conditional approval of $1.6 million in funding, from the Federal Highway Administration, for a study on better coordinating regional highway tolling options in Central Puget Sound. The study had been requested by the City of Mercer Island, other Eastside cities, plus Seattle and King County. It would as envisioned by those cities include an examination of using some portion of tolling revenues to help fund transit. Scoping, or determination of exact study specifications, is yet to come. The study would be conducted by the Puget Sound Regional Council. Findings would be conveyed in an interim report to the legislature before the 2015 session and would also help inform the planned update of the PSRC’s “Transportation 2040″ plan.