D.C. Beltway Opens HOT Lanes to Breeze Past Traffic for a Price, but Strapped Gov't Won't Get Revenue

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(Washington, D.C. -- WAMU) Heralded as the Beltway’s largest expansion that will provide drivers in Northern Virginia congestion relief for a price, the 495 Express Lanes ceremoniously opened Tuesday morning as Governor Bob McDonnell (R-Va.) cut the ribbon on the $2 billion project.

“So many said that expanding the Beltway was just not a possible task given the multiple challenges. It would consume VDOT’s entire budget, some would say at the time. It would take an immense amount of property. And yet the private sector came up with this concept of a high occupancy toll lane,” the governor said at a ceremony in Tysons Corner.

The high-occupancy toll (HOT) lanes will actually open to traffic November 17. Two new lanes will run in each direction for fourteen miles between the Dulles Toll Road and I-95 interchange in Fairfax County, Virginia.

If all goes according to plan, there will never be traffic slower than 45 miles per hour in the HOT lanes.

HOV-3 vehicles and buses may use the 495 Express Lanes for free. All other motorists must pay electronic tolls through EZ Pass that will be dynamically priced: the higher the traffic volume on the Express Lanes, the higher the toll. The highway’s operators are required to keep traffic moving at least 45 miles per hour.

The project was made possible through a public-private partnership with Fluor-Transurban, an engineer and construction conglomerate. Virginia gets a $2 billion dollar road; Transurban receives the toll revenues for 75 years as per its contract with the state. Virginia funded roughly one-fifth of the cost ($409 million); Transurban provided $1.5 billion with considerable help from a $589 million federal loan through the TIFIA program.

The use of public-private partnerships to complete massive transportation projects is raising questions about Virginia’s lack of tax revenue and conservative debt capacity to build needed infrastructure. The state’s gasoline tax of $.17 per gallon hasn’t been raised in 25 years; 85 percent of gas tax revenues are used for maintenance of existing roadways, according to Secretary of Transportation Sean Connaughton.

“When you look at projects that are growing in cost and complexity it is becoming more difficult for the public sector to be able to design, build, and finance them,” Connaughton said. When pressed on whether the Republican administration of Governor Bob McDonnell would ask the state legislature to raise the gas tax, Connaughton would not commit to a position.

“The governor is working with his team right now as well as leadership in the general assembly to develop a consensus package to address our transportation funding challenges,” said Connaughton, who said gas tax revenues have been depleted by inflation and improved vehicle fuel efficiencies.

“People are buying more fuel efficient vehicles. They are buying alternative vehicles and hybrids, and we are actually seeing an impact on our gas tax revenues for vehicle miles traveled,” he said.

The gasoline tax’s diminishing returns are not a reason to avoid raising it, according to Virginia Congressman Gerry Connolly (D-Va.).

“So long as the current administration in Richmond is unwilling to deal straightforwardly with the issue of declining revenue, we are going to starve the Commonwealth of any new infrastructure except for projects like this which are uniquely funded with massive amounts of federal aid,” Connolly said, referring to the large federal loan secured by Fluor-Transurban.

Connolly said both Virginia and the federal government should raise their gas taxes and index them to inflation. The federal gas tax has remained at $.18 per gallon since 1993.

If an attempt were made to finance such a project by floating bonds without leveraging private equity, Connaughton said the state’s debt capacity would not allow it.

“Almost all the debt capacity for the state is spoken for today and out into the future. If you want to get projects done, given the cost involved, you have to look for ways to bring in the private sector,” said Connaughton, who acknowledged public-private partnerships only work in cases where the private sector investor would have a dedicated revenue stream. In the instance of the 495 Express Lanes, that would be tolls.

“There are a limited number of projects that actually can generate the types of revenues that help offset the costs of the infrastructure. Public-private partnerships are a tool in the tool chest. We want to use them where they make sense… but at the end of the day we still have to look at the broader package of funding sources,” Connaughton said.

In Connolly's view, public-private partnerships have another limitation. "There is a limit to the public tolerance for new toll facilities," he said.