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Tolling Points

Senate Testimony This Week Gives IBTTA Members a Seat at the Table

Bill Cramer

Three IBTTA members took their seats at the table at the Dirksen Office Building on Tuesday, when a subcommittee of the Senate Environment and Public Works Committee held a hearing on innovative solutions to leverage federal infrastructure funding.

Appropriately enough for the second day of Infrastructure Week, the three panelists delivered a common message: Infrastructure investment must involve all levels of government, there’s a menu of solutions at their disposal, but a successful rollout will require close attention to the design of public-private partnerships (P3s) and other funding mechanisms.

“As local, state and federal governments work together to improve transportation we should not assume there is a single solution to these issues, nor should we close doors on options available to assist in this effort,” said Virginia Transportation Secretary Aubrey Layne. “Financing alone cannot solve this problem, nor can funding. Similarly, states cannot do this alone—we must have a strong and reliable federal partner.”

Home State Advantage

When Oklahoma Turnpike Authority Executive Director Tim Gatz addressed the subcommittee, he had home state advantage—with one of his two U.S. senators, James Inhofe, in the chair. Gatz stressed that “the conditional deficiencies of a long underfunded national transportation system cannot be resolved by the states alone,” and that federal dollars “should in no way be restricted from use as leverage for financing opportunities and private sector partnerships.”

Moreover, with technology improving and national interoperability advancing, “tolling should be clearly recognized as a viable, long-term, and sustainable transportation revenue mechanism to address critical national transportation system needs,” he advised. “The deployment of toll-supported infrastructure investments should be included in any national transportation system investment strategy.”

Gatz underscored the role of innovation and private investment in addressing the nation’s transportation challenges, pointing to his state’s proposed Gilcrease Expressway in the Tulsa region as an example of a “uniquely leveraged” partnership. “While many variables with the Gilcrease project are yet to be completely solved, it is evident that a variety of funding and financing methodologies can be combined, leveraged, and utilized to successfully and quickly deliver transportation improvements that might not be financially viable otherwise.”

More Bang for the Discretionary Buck

Geoffrey Yarema, a partner in Nossaman LLP’s Infrastructure Practice Group, urged senators to ensure that new discretionary funds are spent to deliver the greatest impact. He suggested four criteria for doing that in a way that “achieves a more lasting impact than can be reached either through arbitrary federal selection of ‘shovel-ready’ projects, or by providing a marginal increase to existing transportation programs”:

·       Use of infrastructure owners’ own revenue measures to create financial leverage beyond traditional federal-state funding splits

·       Assuring long-term infrastructure performance by creating incentives for owners to capture life cycle efficiencies and avoid future deferred maintenance

·       Updating “outmoded procurement practices and project delivery approaches” to reflect 21st century business models

·       Creating incentives for capital programs that incorporate the latest surface transportation technologies.

Getting the Details Right

While all the panelists called for a wider, more creative approach to infrastructure investment, Layne traced Virginia’s recent experience with P3s to emphasize the importance of getting the model right.

After directing $2.5 billion in private equity to highway improvements over the last decade, the state can attest that “there are not significant financial barriers to attracting private capital to invest in transportation projects,” he said. But he urged Congress “not to create unintended consequences through new incentives for public-private partnerships. I have concerns with several of the proposals I have heard being floated for consideration. Many of these concepts would provide an incentive that is only available if a project is financed privately. This creates distortions in procurements that will undercut the public’s negotiating position.”

In the end, Layne said the path to a financially sustainable transportation system requires a whole toolbox of business models.

“Public-private partnerships offer real promise to help address certain transportation needs across the United States. However, they are not for all places or all projects,” he said. “As local, state and federal governments work together to improve transportation, we should not assume there is a single solution to these issues, nor should we close doors on options available to assist in this effort.”

Find out what you can do to promote a more strategic approach to infrastructure investment. Check out IBTTA’s Grassroots Toll Kit today.