The McDonnell administration soon will unleash $8 billion in new transportation spending on Virginia. But not everyone is convinced that borrowing billions for highway mega-projects is a wise use of the commonwealth’s money.
By James A. Bacon
When Gov. Bob McDonnell took office in January 2010 with the promise to “get Virginia moving again,” his grand plans for addressing Virginia’s chronic transportation woes got off to a wobbly start. The General Assembly shot down his idea to raise money by privatizing the state’s ABC stores. After the Gulf spill, the Obama administration roped off Virginia’s offshore oil and gas resources, which McDonnell had counted on to generate royalties for transportation funding. And no one warmed to his proposal to erect tolls on the North Carolina border of Interstates 85 and 95.
Making matters worse, the new governor uncovered a mess at the Virginia Department of Transportation (VDOT) that took months to sort through. As the McDonnell team dug into VDOT finances, it found that maintenance work on state roads had fallen way behind schedule and money for construction was piling up unused in scattered project accounts.
“We were dealing with a whole organization and structure and funding that were in crisis,” said Secretary of Transportation Sean Connaughton in an interview with Bacon’s Rebellion. “They had lost control of their cash flow. We were trying to understand why we were putting dollars into one side of the machine and projects weren’t coming out the other end.”
The administration has since sorted out VDOT’s accounting, putting hundreds of millions of idle dollars to work, and now is focused on raising billions of new dollars through a combination of debt and private-sector investment. The state has accelerated the sale of previously authorized Capital Project Revenue (CPR) bonds — $2.3 billion will be issued during McDonnell’s four-year tenure – authorized another $1.1 billion in GARVEE bonds backed by future federal transportation grants, scrounged up nearly $300 million for an “infrastructure bank,” and created an office dedicated to forging public-private partnerships. The potential exists to leverage the $3.4 billion in bond proceeds into as much as $4 billion in private investment. Add the idle funds uncovered in the VDOT audit and the total could approach $8 billion.
Despite the early setbacks, McDonnell’s transportation strategy is finally yielding tangible results. In recent months, Connaughton has put several long-delayed mega-projects on the fast track, such as a $2 billion expansion of the Mid-Town Tunnel linking Norfolk and Portsmouth, $1.8 billion to rebuild U.S. 460 between Petersburg and Suffolk, and the $200 million Charlottesville Bypass.
Some in the business community love it. The McDonnell team has “put VDOT’s house in order” and injected considerable capital into the system, says Jeff Southerd, executive vice president of the Virginia Transportation Construction Alliance. Virginia’s large-scale borrowing does not worry him. “You’ve got a triple A rating. When you’ve got low interest rates and projects ready to go, it’s a proper alignment of the planets to raise money.” Read more.There are currently no comments highlighted.