By Chick Krautler
A recent fact-finding mission to Texas, led by Georgia Governor Sonny Perdue, was an excellent opportunity for Georgia’s state and regional transportation policy-makers to learn from folks who have made progress in attacking their congestion and mobility challenges through tolling, alternative funding and alternative project delivery.
Georgia’s Department of Transportation (DOT) is tackling a funding and project delivery crisis and the Governor is developing a statewide transportation strategy through the IT3 (Investing in Tomorrow’s Transportation Today) program.
Texas faces many of the problems that Georgia does. A fast growing state with significant congestion in its urban centers, it has an estimated transportation funding shortfall of $66 billion and limited opportunities for new taxes. Its aggressive approach to both alternative funding opportunities and alternative project delivery mechanisms appears to be having a positive impact on developing new transportation infrastructure. Texas transportation officials repeatedly told their Georgia visitors that Texas has declared itself “open for business” in seeking private sector participation.
The Texas Legislature enacted public/private partnership (PPP) legislation in 2003, allowing private investment in the transportation system and providing for innovative project delivery and management that results in reduced costs and faster project delivery. That same year, Georgia Legislature enacted SB 257, our version of PPP legislation. Since enacting its legislation, Texas has generated about $6 billion in private investment. Georgia has yet to approve its first proposal.
Essentially, all of Texas’ investment is associated with toll projects that provide alternative routes to already-congested corridors or open new areas for development. Excess revenue generated from those projects can then be reinvested in new transportation projects, which may or may not be tolled. Like Georgia, Texas has a policy against converting existing general purpose lanes to toll lanes. High occupancy toll (HOT) lane systems developed in Dallas and Houston are generally intended to manage congestion rather than generate revenue. (HOT lanes generally provide free access to transit vehicles and carpools, but charge single occupant vehicles to avoid congestion on the general purpose lanes.)
Georgia is considering a network of HOT lanes on the interstates and Georgia 400. Georgia 400, currently the state’s only toll road, is the only project that seems to be moving through the approval process and likely to generate any significant private sector investment.
Texas has taken other steps that provide lessons for Georgia. It makes aggressive use of alternative project delivery strategies, both design/build and design/build/operate. Allowing the private sector to assume responsibility for designing, building and, in some cases, operating transportation facilities transfers much of the risk onto the private sector and allows projects to be delivered faster and at lower cost to the taxpayers.
Texas has also learned that the state can’t do everything itself. The Legislature has provided a mechanism for the creation of local and regional authorities – tollway, transit and regional mobility authorities – empowered to design, build, finance and operate various transportation facilities. Projects must be approved by the state, but the responsibility and authority is largely transferred to the local or regional body. These authorities are largely responsible for generating much of the state’s $6 billion in private investment.
The trip provided several lessons, most importantly that there is no single, easy fix to transportation financing problems. States must utilize an array of approaches – and still, they may not be able to meet all their needs. Private investment is available, but states need to be strategic and specific in setting out goals, expectations and performance standards. States must also establish a process allowing timely and transparent review of private proposals.
States must deliver projects on time and on budget, using numerous delivery systems, including taking advantage of private sector expertise. Design/build, design/build/operate and various concession models are more efficient and less costly than the old model of doing it all in-house.
Toll roads are an effective tool for dealing with congestion, for delivering transportation projects and opening areas to economic development. New toll roads not only can pay for themselves, but produce additional revenue to support other transportation projects. HOT lanes on existing roadways can manage congestion, but only in rare circumstances will they pay for themselves.
State DOTs can no longer do it all. They need partners to plan, finance and implement projects. Metropolitan planning organizations, local governments, community improvement districts, private partners or new regional authorities can all share in the responsibility.
Finally, despite the best efforts being made to develop transportation infrastructure, the federal government and state governments still must generate new revenues to meet the demands of a growing population.
Chick Krautler, director of the Atlanta Regional Commission, the metropolitan planning organization (MPO) for metro Atlanta, wrote this commentary for the Georgia Public Policy Foundation. The Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (October 24, 2008). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.