On a Roll

Newly elected Gov. Bob McDonnell introduces his new transportation secretary, Sean Connaughton. Photo credit: Times-Dispatch

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.

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7 responses to “On a Roll

  1. The simple truth is in the “read more” part of the post:

    “The gas tax hasn’t been raised in 25 years. The seventeen-and-a-half cent tax [enacted in 1986] has the buying power of 8 cents or less.”

    The other simple truth is implied:

    Tim Kaine was an incompetent governor. He accomplished nothing. He somehow managed to make VDOT even worse than it was. He signed bills which were immediately and unanimously found to be unconstitutional. He went AWOL during the last six months of his term while America and Virginia sank into a recession. Why was he AWOL? Because he wanted to tart his new gig as head of the DNC while still governor. In that capacity, he presided over an absolute meltdown of the Democratic Party in the mid-term elections.

    Now Timmy wants to be our US Senator.

    Dear Lord, really?

  2. Quite an excellent article! Thank you!

    a couple of comments:

    1. GARVEE = fed money … right the Fed trust fund is broke – literally – and general funds are shoring it up.. and more than a couple of congress critters say it needs to get back to whatever the gas tax generates – which if they do this means the end of fed money for construction.

    2. – ” The virtue of the Kaine administration policy is that VDOT didn’t start construction work on projects until it had had all the money buttoned down”

    it was more than Kaine’s policy – it was long-standing VDOT policy that transcended multiple administrations … and you need to give Kaine credit – it was under his administration that VDOT was forced to cut about 1/2 the promised projects…. and get the build list down to a viable level. What he did not finish was getting the stranded money cleaned up.. and this Gov did.

    basically what happened is VDOT promised more projects than it had money for – to please the localities… and keep complaints from going to the GA….

    so they had more project than they could find so they started incrementally funding as many as they could – and in many cases.. their incremental funding barely kept up with inflation.

    the net result is that many projects took 10 or more years to accumulate enough funding and by the time they did – the cost of the project had doubled due to inflation – and the increased land values needed for right-of-way.

    the same thing can happen again… it’s a gradual thing.. over the years.. you add a project here and you add a project there.. hoping that more money will appear and you can then get the rest of the funding.

    the worst thing here is that many, many of these projects are not projects that are roads of state significance but instead roads to suit the development plans of localities – rather than the transportation needs of the state and it’s regions.

    VDOT was doing a high-wire balancing act.. and the chickens came home to roost … what they were doing was unsustainable with the only question being at what point the wheels came off ..

    What McDonnell is doing is NOT fixing VDOT.

    He is scooping out the last bit of funds available from the funding barrel and when he is done – the transportation funding cabinets in Va will be totally bare with no plan to re-fill them… in other words.. the can got kicked down the road.

    All in all… it’s probably a good thing.. because most localities are starting to realize that VDOT is not going to build them any more local roads and they better start thinking about how they want to do development – that includes transportation infrastructure that they’ll have to pay for.

  3. Larryg –

    “VDOT promised more projects than it had money for – to please the localities… and keep complaints from going to the GA….”

    and

    “many of these projects are not projects that are roads of state significance but instead roads to suit the development plans of localities – rather than the transportation needs of the state and it’s regions.”

    Sounds to me like the real culprit would be the Commonwealth Transportation Board (CTB) not VDOT, no?

    I’ve never understood where one organization starts and the other stops in terms of getting roads planned, funded, and built in VA. But VDOT seems to get a lot of the blame while the CTB rolls right along, avoiding the spotlight at all costs, doing their thing.

    Perhaps someone could clarify the process.

  4. Very good point, RBV. As long as I can sustain “sponsored journalism” funding for writing about transportation in Virginia, I will continue to attend the CTB hearings. I hope to get a much better handle on how transportation funding decisions are made.

  5. ” Sounds to me like the real culprit would be the Commonwealth Transportation Board (CTB) not VDOT, no?”

    If you look at who gets appointed to the CTB – AND, more importantly, how much staff they have to actually analyze and explain … you’ll see that the CTB is basically a rubber-stamp group .. that pretty much votes for what VDOT is recommending….and roughly making sure that the localities they represent get their “fair share” of VDOT projects.

    I’ve spent YEARS watching VDOT’s so-called 6-year plans and what a joke they were in terms of them moving forward.

    Usually there would be dozens …. or multiple dozens of projects and each year .. each project would get an “allocation” that would amount to 5 or 10% of the total funding needed… and they’d have a column that said “funds still required” while the actual spent funds were on “engineering”…. and “design”.

    the Feds finally put a major crimp in this approach with the creation of MPOs and the MPO rule that stated simply that the list of projects for a given region had to have identified funds for a 6 and 20 year horizon.

    VDOT and the CTB continued to evade the issue by continuing to have a separate 6year plan from the govt-mandated MPO constrained financial plan.

    But as I said – it was under Kaine administration that the wheels came off and every locality in Va saw it’s “list” cut in half or worse….

    Now Kaine, of course, like McDonnell claimed it was his administration that forced the changes… 🙂

    and that was not the end of it. The 6yr funding of secondary roads has for all intents and purposes ENDED as there is no more money for secondary roads…. and the localities are now – responsible for them.. (new construction, not maintenance and operations).

    CTB in my view is a just a group of appointed citizens who pretty much do what VDOT recommends…

  6. Jim the Baconaut,
    Nicely put together piece. Well reported and written!

    Peter Galuszka

  7. re: ” VDOT mainly responded to unsolicited initiatives from the private sector as opposed to defining the state’s needs and finding private partners to help address them. Connaughton’s goal is to map out the state’s transportation priorities and systematically explore where P3s make sense.”

    unfortunately there is not public process to this new definition of the states needs….. it seems to be a personal initiative of Connaughton which is a shame because folks like Schwartz would likely have good thoughts to go with the states new direction…

    Connaughton, I like his pushy style… so far.. and McDonnell is lucky to have him.. because not just anyone is as skilled and capable as Connaughton seems to be in getting changes and moving forward.

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