May 5, 2004 - From the April, 2003 issue

Poole: Cutbacks In Public Transit Funds Should Compel Acceptance Of User Fees For Transportation

The state budget crisis has left critical transportation and infrastructure projects vulnerable to severe cuts or indefinite deferment, causing many local and regional economies to brace for an extended period of inadequate infrastructure to fuel economic growth. MIR is pleased to present this article by Robert Poole, Director of Transportation Studies at the Reason Foundation, on possible revisions to state laws that would facilitate local and regional infrastructure investment.


Robert Poole

Transportation planning agencies across the state are reeling from

the funding cutbacks stemming from the state's unprecedented fiscal crisis. Nearly all the major transportation projects in the Bay Area have been put at risk of years of delay, including the $3.8 billion extension of BART to San Jose. Here in the Southland, Caltrans expects major delays in the much-needed addition of HOV lanes on the gridlocked 405 in West LA, and OCTA has scaled back plans for adding HOV lanes to the Garden Grove Freeway.

And those are just projects that were already in the pipeline. Major new initiatives-the long-delayed missing link on I-710 through (now beneath) South Pasadena, truck lanes for the overburdened Long Beach Freeway, and a new corridor between Riverside and Orange Counties-all begin to look like wishful thinking in today's fiscal climate.

Yet that doesn't have to be the outcome, if we follow some lessons from California and other states during the 1990s. Ours was the first state to enact a public/private toll roads law, AB 680 (in 1989). Orange County also pioneered self-help transportation financing by creating the Transportation Corridors Agencies to add billions of dollars in otherwise unaffordable highway capacity. More recently, Florida, Texas, and Virginia have enacted second-generation transportation partnership measures, encompassing the best of both Orange County models. It's time we took a closer look at the potential of going this route in 21st-century California.

Former Sen. Quentin Kopp made transportation history several years ago with his SB 45, which decentralized 75% of transportation investment decisions to lower levels of government-the MPOs and RTPAs. But what was not decentralized was the ability to impose user fees for transportation. SCAG and MTA, for example, are exploring the idea of a toll tunnel for the I-710 missing link-but they have no authority to authorize such a toll or to issue toll revenue bonds. Likewise for a proposed Riverside-Orange County tunnel or proposed toll-supported truck lanes on selected LA-area freeways. Or for HOT lanes on any number of freeways where the addition of HOV lanes would be extremely expensive (e.g., the 405 in West LA).

The need for devolving state power to levy transportation user fees and to create public-private partnerships was one of the key themes of a recent conference, "Beyond Crisis: The New Generation of Transportation Financing in California," held March 7 by the new Center for Urban Infrastructure of UC-Irvine. In both plenary sessions and breakout sessions, this theme came up again and again. It was clear to most of the 250 transportation experts that we cannot solve California's major transportation problems without significant new investment, including some multi-billion-dollar projects. But there is no way that such sums can be made available via the existing transportation planning process.

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Several members of the legislature have introduced bills recently to revive 1989's AB 680, which was terminated by the legislation authorizing OCTA to buy up the 91 Express Lanes project. But simply reviving this pioneering but flawed measure would be inadequate. That law authorized private toll roads, not true public-private partnerships. It required 100% private funding, rather than a mix of public and private capital (as encouraged by federal law and exemplified by more recent measures in other states). It authorized only Caltrans to enter into such agreements, rather than regional transportation agencies. So one approach would be to either adapt, say, the Texas or Virginia public-private transportation acts, or to do a wholesale revision of the old AB 680.

But an alternative is to make some strategic changes to a law enacted by our legislature in 1996. This pioneering but little-known statute authorizes local and regional governments to enter into public-private partnerships for a whole array of fee-generating infrastructure projects. Drafted originally with water and wastewater projects in mind, AB 2660 also applies to airports, harbors, waterways, energy supply, rail transit, highways, and tunnels. It authorizes the selection of private-sector project partners by a competitive process, permits a blend of public and private funding, and permits franchise agreements of up to 35 years.

But there's one major problem. The bill's last section-a last-minute amendment-excludes "state projects" from AB 2660's provisions, including "toll roads on state highways." Thus, from a transportation infrastructure standpoint, the statute permits only small, local projects and not the major projects that would become part of the state highway system. This may have reflected the top-down way in which transportation investment decisions were made prior to Sen. Kopp's devolutionary measure, but it's out of touch with today's substantive role for regional transportation agencies, which by law are responsible for allocating 75% of the STIP funds.

In short, either by modifying AB 2660 or by significantly modernizing the old AB 680, California's regional agencies could gain the tools they need to make the transportation investments that are vital to this state's future. Florida, Texas, and Virginia are all making use of decentralized, user-fee-financed infrastructure investment in transportation. It's time California did likewise.

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