by James A. Bacon
If the Metropolitan Washington Airports Authority (MWAA) restructured the way it plans to finance the Rail-to-Dulles project, it could reduce tolls on the Dulles Toll Road by $.90 per driver in the early stages, Transportation Secretary Sean Connaughton told the Commonwealth Transportation Board today.
“We’ve been going through their finances. We can show them very easily how they can … dramatically reduce the toll rates by changing how they sell bonds and [utilize] fund balances,” Connaughton said.
“These changes would be more beneficial than the $300 million being tossed around” in the General Assembly, added Virginia Highway Commissioner Gregory Whirley.
Northern Virginia toll rates emerged as the deal-killer issue in the budget showdown between Republicans and Democrats this year. Senate Democrats blocked approval of the 2013-2014 budget on the grounds that it did not contain $300 million to help offset the fare increases that would be needed to finance Phase 2 of the Metro extension to Dulles airport.
Connaughton expressed frustration that the VDOT analysis had gotten no traction in the Senate. “We are attempting to get them to understand. … This could have a dramatic impact.”
Phase 2 of Rail-to-Dulles, currently estimated to cost about $2.8 billion, does not meet the cost-benefit prerequisites to qualify for federal funding. Therefore, Fairfax County, Loudoun County, MWAA and the state of Virginia must finance the entire cost themselves. Under the original financing agreement negotiated by the Kaine administration, the state’s share would come from revenues from the Dulles Toll Road. It has recently dawned upon Northern Virginia politicians that the financing requirements of the rail project could push tolls to $10.75 by 2028.
Earlier this year the McDonnell administration said it could contribute an additional $150 million in undesignated transportation funds to help buy down the toll increases for the first two years. But Senate Democrats, locked in a power struggle with Republicans, insisted upon $300 million more from unidentified sources.
Connaughton said it’s not easy to come up with $300 million on the spot. Transportation funding is bound by rules and restrictions. Funds allocated for roads and highways, for instance, can’t be willy nilly transferred to mass transit. Moreover, most state construction funds are committed already as matching dollars on federal projects, and yanking the money could lead to the loss of the federal dollars. And there are practical limits to how much more the state can borrow.
It would be easier to find the money next year. The irony, says Connaughton, is that the money for Rail-to-Dulles isn’t even needed until next year. He thinks the issue is a “power play.” First the Senate Dems, whose 20 votes are sufficient to block the budget, said they wanted more power sharing. Then they wanted money for K-12 schools in Northern Virginia. Now it’s money for Dulles rail. “Every time we address their concerns, it’s something else.”
Even if the General Assembly coughed up the $300 million from some as-yet-unidentified source, there is no assurance that the CTB, whose approval is required by state law, would allocate it to Dulles rail. Several CTB members expressed reservations yesterday.
Most outspoken was Cord Sterling, the Fredericksburg district representative. Giving an extra $300 million to Dulles rail, he said, would be “draining the rest of the commonwealth of resources.”
“Somebody made an irrational decision to do a phase of the project that was not feasible,” Sterling said. The project could not be funded without sky-high tolls, and the prospect of high tolls raised an outcry. Now Northern Virginians want taxpayers from across the state to bail them out. “Northern Virginia is not hurting” in terms of transportation expenditures, he said referring to an earlier statement by Thelma Drake, director of the Department of Rail and Public Transit (DRPT) that Northern Virginia already consumes 89% of departmental funds allocated to transit capital spending and 72% allocated to transit operations.
Whirley contended that there was no need for added funds, at least not right now. VDOT has not conducted an “exhaustive” review but he’s seen enough to suggest that MWAA should go back to the table. By his calculation, MWAA could avoid issuing $400 million in bonds by 2016, enough to eliminate the need for two planned toll increases.
What makes VDOT, a highway agency, an expert in financing heavy rail projects? Said Connaughton: VDOT has developed considerable experience with mega-projects involving large fund balances.
Update: This just in… Governor Bob McDonnell has issued a press release hailing Senate passage of the state budget. Apparently, the final budget version does not contain the earmark for Dulles rail. Regardless, the McDonnell administration should push MWAA to take another look at its bond financing plans to see if the savings postulated by Whirley are achievable.
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