Governor proposes new funding ideas for transportation

If all goes according to the governor’s plan, Virginia would see an additional $4 billion in transportation dollars over the next three years.

Gov. Bob McDonnell outlined this vision at the recently wrapped Transportation Conference in Roanoke. His suggestions to improve transportation in the state ranged from tapping into the budget surplus to passing a constitutional amendment that would protect the Commonwealth Transportation Fund – a lock box. This lock box supposedly would prevent future governors and General Assembly members from tapping transportation funds for other uses, or moving Transportation Trust Fund dollars to the General Fund.

“It’s time to make prudent investments in transportation,” he said, concluding the three-day conference that included remarks from several high-ranking officials, like Transportation Secretary Sean Connaughton, and the attendance of nearly 1,000.

McDonnell also proposed creating a Virginia Transportation Infrastructure Bank, funded initially by $250 million of “audit-identified funds,” according to the governor, and $150 million of budget surplus dollars. The bank would then provide $400 million immediately for transportation uses, and another $600 million before McDonnell’s term ends.

The bank would work as a revolving loan fund that provides low interest loans and grants to local governments, transportation authorities and private sector partners, the governor said. The idea is that each dollar invested would lead to returns between $3 and $5.

“Through grants, low interest loans and loan guarantees, local governments can use the bank to get their projects that have been not funded or underfunded in the current six-year improvement plan,” according to McDonnell.

Connaughton expressed full support for the idea, which he said capitalizes on the current construction climate – Virginia is “getting deals now that would have been unheard of just a few years earlier,” he said – as well as on historically low interest rates.

“The Virginia Transportation Infrastructure Bank has the potential to revolutionize how projects are funded and moved forward in our state,” Connaughton said in a written statement. “These transportation proposals are designed to speed up projects, and to maximize taxpayer dollars to the greatest extent possible.”

Another funding idea for transportation: GARVEE bonds.

“GARVEE bonds,” the governor said, “allow investors to be repaid through the use of future federal highway funds ... [They] are sold for specific construction projects and use federal revenues for debt service.”

The General Assembly would first have to pass a bill allowing the commonwealth to issue $1.1 billion in direct GARVEE bonds. The idea, once legislated and approved, could lead to immediate work on the Interstate 95/Interstate 395 Hot Lane project in Northern Virginia 

Not all are completely happy with the governor’s transportation reform package.

“While accelerating funding into projects to take advantage of favorable construction pricing is good news for the short-term, absent from [the governor’s] announcement was new sustainable, longer-term maintenance and construction funding that the governor, in the past, has acknowledged as essential to an overall solution,” said the Northern Virginia Transportation Alliance, in a written statement.

The governor’s transportation proposals will be brought forth in legislation for the General Assembly to consider in 2011.

Staff writer Cheryl Chumley can be reached at 703-530-3903.