We Need Sound Transportation Funding Priorities
COST Comments: The New York Times article below describes the results of unsustainable transportation funding actions and priorities. While roads and bridges critical to the public’s mobility and quality of life are being halted for lack of funds; new, exorbitantly expensive rail transit projects are being pursued in many cases. These rail projects serve an insignificant portion of the travelowrs and require 99% of the citizens to highly subsidize a few rail riders while road transportation serving 99% of our daily trips stagnates in increasing congestion resulting in reduced economic vitality and reduced quality of life.
California, discussed in this article, is embarking on a high speed rail project which is not critical and which many suggest will cost $100 billion dollars serving very few people while major, critical roadway projects are being halted and deferred.
December 23, 2008
In Budget Crises, States Reluctantly Halt Road Projects
By JENNIFER STEINHAUER
LOS ANGELES — With cars whizzing behind him along one of Southern California’s most congested and detested freeways, Gov. Arnold Schwarzenegger warned Monday that the state was “on a track toward disaster” as it ceases highway, school and bridge construction because of budget and credit woes.
California, which has suspended nearly $4 billion in public works projects, is one of a half dozen states delaying or halting projects because of capsizing budgets, an inability to attract investors to the municipal bonds used to bankroll many projects and a reduction in gasoline tax revenues — which underlie a lot of transportation financing.
The American Association of State Highway and Transportation Officials has identified 5,000 transportation projects nationwide that lack the dollars to proceed; many of them, like the $730 million project here to add 10 miles of high-occupancy-vehicle lanes to the 405 Freeway — Mr. Schwarzenegger’s backdrop on Monday — have been stopped midstream.
“They just haven’t been able to find the resources,” Tony Dorsey, the spokesman for the association, said of the halted projects.
More than 40 states are struggling with revenue shortfalls, and lawmakers across the country are cutting, taxing and pleading their way toward solvency. Fixing bridges, expanding highways and other infrastructure projects have faced the same fate as government entitlement programs, state jobs and other items.
Jeffrey Caldwell, a spokesman for the Virginia Department of Transportation, said, “Projects not currently under construction or significantly far in the development process were either delayed or completely removed from plans for future construction.”
In addition to the weak economy and lower gasoline tax revenues, states are “concerned about the market and cost of debt,” said Scott D. Pattison, the executive director of the National Association of State Budget Officers in Washington
In fact, there has been very little interest among institutional investors in municipal bonds since the financial markets began to collapse this fall, and states have had to rely on individual investors — far less plentiful and reliable than institutional investors — to buy bonds.
Right after Washington cobbled together its plan to bail out banks, California, which uses bonds to pay for projects as well as to cover its short-term cash needs, sold $5 billion in notes, and 80 percent of the buyers, rather than the typical 30 percent, were individuals.
Last month, when the state tried to restructure existing debt with an additional $523 million offering, it had to reduce the offering by two-thirds, said Tom Dresslar, the spokesman for Bill Lockyer, the California treasurer.
“The institutional investor interest was nil,” Mr. Dresslar said.
Further, the State Legislature’s inability, with the governor, to figure out a way to deal with the state’s $15 billion budget gap has weakened the market’s confidence in California, something other states could face if the fiscal situation deteriorates.
This month, Standard & Poor’s downgraded the $5 billion in revenue bonds issued by California last month and put more than $50 billion of debt on watch for a downgrade.
“The bottom line is we are not viewed as a quality investment,” Mr. Dresslar said, adding that California is not in position to offer the sort of fat interest rates needed to get offerings off the ground.
California and other states are clearly holding out hope that President-elect Barack Obama will pump some federal money into the stalled infrastructure projects, and some may even be delaying work until they have a chance to make the case for federal spending. Mr. Obama has proposed a stimulus package intended to create or save three million jobs, largely through financing infrastructure improvements.
“It happens to be that the Obama administration wants to rebuild America,” Mr. Schwarzenegger, a Republican, said at a news conference here.
Steve Swartz, a spokesman for the Kansas Department of Transportation, said most projects in that state scheduled for December and January had been suspended because of uncertain financing.
“We’re hopeful, keeping our fingers crossed like every other state, that a stimulus package will come through,” Mr. Swartz said. “If it does, we’ll be in good shape.”
In the meantime, some states might think twice about proclaiming great calamity in the face of crumbling infrastructure, high unemployment and lack of state financing, said Matt Fabian, director of Municipal Market Advisors, an independent consulting firm.
The strategy might attract the attention of the federal government, but it does little to entice investors in municipal bonds.
“We have seen over the last three months that every bridge is about to collapse, every highway is a danger and every hospital is full of anthrax,” Mr. Fabian said. “By putting out a lot of headlines about those issues, local governments are undermining the only base we have left. There is no institutional demand for municipal bonds, so we are relying completely on individuals, and individuals get scared by those headlines.”
Rebecca Cathcart contributed reporting.