Government Issues

New Rail Projects Continue in Climate of Fiscal Restraint

Posted on September 23, 2013 by Cliff Henke and Ivan Gonzalez

Page 2 of 3



Toll road concessions, public-private partnerships, and state infrastructure banks were some of the innovative financing tools and credit instruments identified at a recent Brookings Institute forum.
Toll road concessions, public-private partnerships, and state infrastructure banks were some of the innovative financing tools and credit instruments identified at a recent Brookings Institute forum.
A post-MAP 21 world
While the two tax writing committees in Congress wrestle with how to make the Highway Trust Fund and Mass Transit Accounts sufficiently solvent both to write a successor bill to MAP-21 and provide stable long-term funding for the surface transportation programs, a growing number of states and regions are increasing their responsibilities in their infrastructure agendas.   

The AASHTO Center for Excellence in Project Finance lists at least 30 states  currently debating or having already passed measures aimed at increasing funding for transportation. For example, Virginia completely revised its transportation financing by converting its 17.5-cents-per-gallon gas tax into a state sales tax increase of 5.3%. Maryland has also passed several gas tax increases, totaling an additional 12.5 cents per gallon over several years to fund major transportation projects, and is looking at public-private partnerships (PPP) to help fund and deliver some of its major projects, such as the Purple Line light rail, and possibly, the bus rapid transit (BRT) network being planned for Montgomery County.

Oregon has adopted a voluntary pilot vehicle miles traveled fee, allowing up to 5,000 registered car owners to pay 1.5 cents per mile instead of paying the state gas tax at the pump. The pilot may be the first step toward the nation’s first VMT program. And of course, for more than a decade now, the average annual win rate for local and statewide ballot initiatives for surface transportation, including those with tax increases attached to them, continues to be more than 70%, even in more challenging economic times.

A July 12 Brookings Institution-sponsored forum, entitled “Can-Do States: A New Era for Infrastructure Investment,” shined a spotlight on another revenue-raising approach states are using to fund infrastructure. This includes a variety of innovative financing tools and credit instruments, such as PPPs, state infrastructure banks, toll road concessions, and availability payments to private consortia based on tax and debt sources of funding.  

Although most of these new approaches have been in new highway programs, several public transportation programs are worth mentioning, including the Eagle P3 commuter rail project in Denver and the use of Transportation Infrastructure Finance Investment Act (TIFIA) loans for the Crenshaw light rail in Los Angeles, among others. This program was expanded roughly six-fold in MAP-21; so many more such awards are expected. In addition, at press time a PPP tender was underway for the Washington, D.C., streetcar program using availability payments to incentivize a private consortium.

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