WASHINGTON — The Virginia House of Representatives has stripped language creating a statewide tolling authority from legislation proposed by Gov. Bob McDonnell, rejecting a model of road finance that has fallen out of favor in recent years but remains viable for other states, according to transportation experts.
A major highway funding bill got the nod from the Virginia House two weeks ago, but only after lawmakers amended it to remove provisions that would have created a Virginia Toll Road Authority to collect tolls and issue revenue bonds backed by tolls to finance road maintenance.
That means Virginia will continue to stick with alternative models for toll road maintenance, which include public regional authorities and private entities or public-private partnerships.
Joung Lee, an associate director at the American Association of State Highway Transportation Officials, said the unique circumstances and politics of each state determine which model it chooses. While some states, like Florida, have operated statewide tolling authorities within their transportation departments for decades, “a more common, traditional model is an independent public authority, he said.
Such independent regional authorities have tolling jurisdiction over a given area or road, such as the New Jersey Turnpike. Although they are government entities, they do not have statewide authority and might have nothing to do with other toll facilities nearby.
“The trend within the past 10 to 15 years has been regional,” said Neil Gray, a director at the International Bridge, Tunnel and Turnpike Association. The possibility of local tollways being absorbed into newly created statewide agencies could prompt resistance to the statewide model. But, he added, the finances of any type of tolling authority are usually legally walled-off from the state to create a “buffer” of risk for the taxpayer.
“Once you create an authority, the authority can issue bonds,” Gray said. “If it flies, terrific. But if it doesn’t, it failed on its own.”
But toll authorities aren’t always entirely on their own. Moody’s Investors Service said it factors in the amount of help from other government sources when weighing the strength of a toll-backed revenue bond. “While the rated debt of the large majority of U.S. facilities is not directly guaranteed by other units of government, the facilities sometimes benefit from direct government support or subsidization,” Moody’s said.
Instead, said Maria Matesanz, Moody’s senior vice president for infrastructure finance, toll roads earn credit ratings based on how essential a road is and overall economic conditions. Currently, the overall outlook for U.S. toll roads is negative because of rising gas prices and a sluggish economy, according to Matesanz.
Jim Ely, vice chairman of toll services at infrastructure firm HNTB, said there are about 100 mostly regional tolling authorities nationwide, each meeting a local need. HNTB projects that public-private partnerships will increase in popularity as states look outside the regional and statewide authority models for more innovative ways to finance roads. In P3 projects, a private firm enters into an agreement with a state or local government to either construct or improve a road, tunnel or bridge in return for the right to receive toll revenues.
The existence of a statewide tolling authority does not hurt the P3 environment. Some of the states with the most robust P3 activity are also those that embrace the statewide model, including Florida. P3 projects currently can only occur in 27 states that have approved legislation outlining their legal structure, according to the U.S. Department of Transportation.
In rare cases, a project is entirely private. One such example is Virginia’s Dulles Greenway, a tollway near Dulles International Airport built, maintained and tolled by a group of private stakeholders.
Ely said that whatever model states and localities embrace, the system can work fine and deliver a high-quality facility. “From a customer standpoint, I don’t think it makes a difference,” he said. “One size doesn’t fit all.
