During the last decade, state government spending in Virginia has grown by about 70 percent, while incomes have increased by only five percent. The rate of growth in the Commonwealth’s government exceeds the growth in population and the cost of living over the same period.
Why then, does Virginia still have a transportation problem?
The answer is clear. Transportation is not a high priority for many of Virginia’s political leaders. This will certainly be an issue in this year’s elections.
In its editorial endorsing State Senator Creigh Deeds for the Democrat Party’s nomination for Governor, the Washington Post said “Mr. Deeds has made clear that he would make transportation his first priority.” Curiously, however, a look at the candidate’s campaign website fails to reveal a plan, position or even make mention of transportation. The Post editorial cites Deeds’ past support for a gas tax increase and the unconstitutional Kaine transportation plan, and Deeds himself touts his role in passing the Mark Warner tax increase in 2004 (none of which went to transportation).
This begs the question: can Virginia tackle its transportation needs without raising taxes?
The answer is a resounding yes. Here are three ways.
1. Now that Congress has let the ban on offshore oil and gas drilling expire, Virginia can immediately begin to reap the benefits of such development. A study for the General Assembly (House Document 22) finds that $3 billion from offshore royalties can be realized. Delegate Chris Saxman proposed that 50 percent of these royalties be directed to transportation – a proposal opposed by Deeds in the Senate, but endorsed by his Republican opponent, former Delegate and Attorney General Robert McDonnell. A $1.5 billion cash injection into the Commonwealth’s transportation fund is more than 7.5 times the revenue that would have been generated by the Deeds-supported gas tax increase. The Saxman proposal would dedicate one-half of oil and gas royalties, state fees and licenses collected by the state for offshore exploration and development to go to improving Virginia’s transportation infrastructure. The balance of revenues would be used to clean up the Chesapeake Bay and invest in new energy production technologies.
2. Virginia has been a leader in the use of public-private partnerships for transportation. These innovative financing programs are among the few solutions that have enjoyed bipartisan support in the Commonwealth. But the potential for private investment in the Old Dominion’s infrastructure has not even had its surface scratched. Nationwide, there is $180 billion in available private capital that can be used to build infrastructure projects with little or no federal or state funding. In addition to companies that invest in infrastructure, there are over 30 infrastructure funds ready to invest in the US market with a levered purchasing power of $450 billion. The total equity capital available to invest in US infrastructure is likely to substantially grow in the coming years assuming the US taps into the current pool of equity capital. Funds dedicated to infrastructure have tripled from 2006 to 2008 and the market remains strong in 2009, despite Wall Street’s problems, reports Morgan Stanley.
According to an analysis by Kearsarge Global Advisors:
An important and growing source of private capital for transportation investment in the United States comes from quasi-public, tax-exempt institutions such as public pension funds, university endowments and charitable foundations, which are in essence sub-national sovereign wealth funds of the United States. The total equity capital available to invest in US infrastructure is likely to substantially grow in the coming years assuming the US taps into the current pool of equity capital.
Virginia has one of the most advanced public-private transportation laws in the Nation and is well-positioned to tap these resources.
3. As previously reported in this column, Virginia lacks a current, accurate inventory of the land it owns. California Governor Arnold Schwarzenegger has used a land inventory to identify properties the Golden State owns but no longer needs. He is proposing to sell surplus properties to generate as much as $1 billion in revenue. In Virginia, current law requires 50 percent of the revenue from surplus state land sales to be dedicated to the Conservation Resources Fund for further land acquisition. Legislation should be passed to require the Department of General Services to conduct an inventory of all real property owned by the Commonwealth and annually update the catalog. The bill should also provide for the Department to submit an annual report to the Governor and the General Assembly containing the full inventory of real property owned by the Commonwealth and make recommendations regarding property that may be disposed of as surplus. Current law should be amended to dedicate surplus land sales revenue to the Transportation Trust Fund.
Through innovation, Virginia can address its transportation challenges. The Commonwealth’s record on taxes and spending, setting priorities and funding transportation has not been up to the task, but through creative measures such as those aforementioned, can assure an investment in transportation infrastructure to relieve the congested areas of the state without burdening an already stressed economy with higher taxes.