McDonnell speeds up borrowing to invest $4 billion in transportation
Gov. Bob McDonnell just revealed plans to invest an additional $4 billion in transportation over the next three years. I’ll have more on this coming up on NBC12 News at 5 & 6.
**UPDATE** My full story on the new transportation proposal is posted on NBC12.com.
Democrats are already calling the plan “irresponsible”.
Read what Democratic House Minority Leader Ward Armstrong had to say here.
The new Democratic Party of Virginia Chairman Brian Moran issued this statement as well.
The full release from the Governor’s office can be found below:
Governor McDonnell in Roanoke: $4 Billion for Transportation
Will Announce Full Transportation Plan Next Month
$400 Million for New Virginia Transportation Infrastructure Bank; Calls for Allowing Commonwealth to Issue $1.1 Billion in direct GARVEE Bonds; Issue up to $1.8 Billion in Additional Transportation Bonds by End of Administration
Governor: “Right Now is the Best Opportunity to Get Roads Built in Modern Virginia History.”
ROANOKE– Governor Bob McDonnell previewed components of his transportation agenda for the 2011 General Assembly session today in a wide-ranging speech delivered at his Governor’s Transportation Conference in Roanoke. The Governor’s overall transportation vision focuses on maximizing all available resources and programs to get projects initiated during one of the most favorable road building periods in Virginia history. The Governor’s proposals, when fully implemented, would pump $4 billion into road, transit and rail projects in the Commonwealth over the next three years, dramatically speeding up congestion-reducing efforts and increasing job-creation and economic development efforts statewide.
Highlights of the Governor’s transportation proposals:
- Direct $150 Million to transportation from budget surplus. These one-time funds will go to the Virginia Transportation Infrastructure Bank.
- Pass a constitutional amendment to permanently protect the Commonwealth Transportation Fund from transfers to the General Fund.
- Create “Virginia Transportation Infrastructure Bank” (VTIB) to multiply transportation dollars.
- Capitalize Bank with $150 million from surplus and $250 million from audit-identified funds; Goal is to provide an initial $400 million and $1 billion total during administration.
- Modify Virginia Code to authorize Direct GARVEE bonds. This would allow the Commonwealth to issue at least $1.1 billion in direct GARVEE bonds and utilize toll credits for state match.
- Accelerate the sales of bonds from 2007 transportation legislation to max of $600 million per year, providing ability to issue up to $1.8 billion in bonds during remainder of the Administration. For every $100 million spent on highway maintenance, it is estimated 3,000 jobs are created or supported.
- Increase the availability of Revenue Sharing, specifically eliminating the $1 million cap per project and $50 million program maximum.
Speaking about these proposals at the Transportation Conference the Governor noted, “I want to make clear, right now is the best time in modern Virginia history to get new roads and bridges built. First, construction prices have fallen dramatically due to competition and the state of the economy. Second, interest rates are at historic lows for our AAA bond rated state. Third, our citizens need the good jobs that will come with these projects. Fourth, we need to reduce congestion and build transportation infrastructure today. We need to get dollars out the door quickly, and road, transit and rail projects underway now. Leveraging our scarce transportation resources to make them go further is smart management.”
The Governor continued, “Over the past two decades state support for transportation has not kept up with our growth as a Commonwealth. This has led to more congestion, longer commutes and missed economic opportunities. That trend must be reversed, and this is the time to do it. We have already, in just the first six months of this fiscal year, advertised almost double the amount of road work as during this same time period last year. By putting $4 billion into transportation over the next three years we will continue that progress, and get more Virginians back to work in the process. There is nothing partisan about road building. There are not Republican or Democratic roads. I hope that Republicans and Democrats will come together to back these responsible, and necessary, portions of our transportation plan. We can’t solve all of our transportation challenges all at once, but we can take significant steps forward over time. These portions of our plan are one of those steps, and implementing them will create good new jobs for our citizens today.”
Secretary of Transportation Sean Connaughton added, “In this kind of construction climate there is no acceptable reason to not get every possible resource deployed to transportation projects. We are getting deals now that would have been unheard of just a few years earlier, and the interest rates are at historic lows. This package will get projects underway, and Virginians will see the results all across the Commonwealth. In particular, the Virginia Transportation Infrastructure Bank has the potential to revolutionize how projects are funded and moved forward in our state. Now, public and private sector entities will have a resource they can utilize to build projects that have previously not been funded, or underfunded. These transportation proposals are designed to speed up projects, and to maximize taxpayer dollars to the greatest extent possible. It will play a major role in driving the economic vitality of Virginia and getting our citizens back to work.”
Facts about the: “Virginia Transportation Infrastructure Bank”
- Initially, the Bank would be capitalized with $250 million of audit-identified funds, and $150 million from the budget surplus.
- Additional deposits will come from other sources, including future budget surpluses.
- The Bank will provide an initial $400 million now and $1 billion total during this administration.
- It will have a revolving loan fund for low interest rate loans and grants to localities, transportation and transit authorities, and private sector partners.
- It would be able to leverage three to five times the amount of funds deposited into it.
- 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 6 year improvement plan.
- Examples of local projects that would be candidates for funding from the Bank are Dominion Boulevard in Chesapeake, and I-95/I-395 Hot Lanes in Northern Virginia. They would be candidates because of several factors:
o Toll revenues could repay loan
o Strong local support
o Right-size project
o Locality top priority
Facts about Direct GARVEE Bonds
- A GARVEE bond is a debt financed instrument that allows investors to be repaid through the use of future federal highway funds.
- The legislative proposal will also include a recommendation to modify Virginia Code to authorize Direct GARVEE bonds.
- Direct GARVEE bonds are sold for specific construction projects and use federal revenues for debt service.
- This would allow the Commonwealth to issue at least $1.1 billion in direct GARVEE bonds and utilize toll credits for state match, freeing up cash for statewide and regional projects.
- Several projects that may immediately benefit from the combination of the Direct GARVEE bonds and toll credits include the Midtown Tunnel in Norfolk, the Broad Street Corridor in Richmond, 460 PPTA projects, I-95/I-395 Hot Lanes in Northern Virginia, and the Coalfields Expressway, as well as others.
The McDonnell Administration Transportation Record
- In April, the last of the Commonwealth’s previously closed rest areas were re-opened within 90 days as promised during the campaign, signaling that Virginia is Open for Business.
- The Commonwealth obligated $694 million in stimulus projects on time by September 30th, 2010, after being ranked last in the country in disbursement of funds in the fall of 2009.
- In April, the Commonwealth submitted a proposal to the Federal Highway Administration to allow Virginia to toll Interstate 95 at the North Carolina border. This proposal is supported by North Carolina Governor Bev Perdue.
- The Interstate 95 tolls will generate a minimum of $30 million annually, with likely revenues closer to $60 million.
- Governor authorized issuance of $492 million in Capital Project Revenue Bonds in the summer of 2010. The bonds were authorized by the 2007 Transportation Act, but had not yet been authorized.
- Yesterday, the Administration issued a multimodal strategic plan for Virginia’s transportation programs. This will create a road map for the future of transportation.
- Governor directed four audits of Virginia’s transportation agencies and as a result a number of significant structural, policy and procedural changes to create new efficiencies and lessen the cost of doing business are being made.
- One audit examined the PPTA program.
- A new PPTA office has been created and new procedural guidelines implemented to streamline our process based on recommendations in KPMG’s audit of the Commonwealth’s PPTA program.
- Comprehensive VDOT performance audit made over 50 recommendations to improve VDOT operations and identified $1.4 billion that can be invested in transportation projects.
- Secretary Connaughton outlined comprehensive audit implementation plan last month.
- The Governor announced Monday that VDOT will advertise more than 350 projects totaling $1.1 billion in construction and maintenance contracts by year’s end. This is almost double the work advertised in the first six months of last year.
- The Commonwealth has also increased advertisements for paving work by $250 million compared to last year.
- This paving work will result in 50% more interstate lane miles, 15% more primary lane miles, and 65% more secondary lane miles scheduled for paving.
- Virginia also obtained verbal approval to use our $450 million in federal toll credits, freeing up cash for other projects, as recommended by the audit.
- The Commonwealth Transportation Board has been authorized to program over $500 million in federal revenue reserves to projects in the next six year improvement program.
- Administration is taking a number of steps to move forward with critical projects throughout the state.
- Working with private sector partners and localities to immediately move forward on the I-95/395 HOT Lanes project.
- Over $71 million worth of spot improvements have been authorized by the CTB and are underway on I-66.
- 495 Hot Lanes work is progressing.
- Cooperating with public and private partners on Rail to Dulles; Phase 1 on Schedule for 2013.
- Administration canceled the previously dormant Route 460 PPTA project, and is evaluating 3 new proposals for the critical congestion reducing and emergency and military preparedness project.
- We expect to reach a comprehensive agreement with private sector partners on the Downtown Midtown Tunnel/MLK Extension project next year.
- PPTA – Hampton Roads Bridge Tunnel is in beginning stages.
- Just last week, along with Maryland Governor O’Malley and DC Mayor-elect Gray, in response to the Moving Metro Forward reports, the Governor requested a plan be put in place to optimize Metro’s safety, governance and efficiency. That plan should be done in the coming weeks.