Citizen Kaine takes the wheel
A new governor says fixing transportation is his top priority, but will the legislature give him the key?

by Garry Kranz
for Virginia Business
January 2006

It is early morning when staffers begin arriving at the transition headquarters of Gov.-elect Timothy M. Kaine. Seeing visitors in the lobby, they flash bright smiles before scurrying to a clutch of cubicles where arrangements are under way for Kaine’s Jan. 14 inauguration in Williamsburg. Kaine has preceded their arrival by a couple of hours, working out of a makeshift office whose wide windows provide a panoramic view of Richmond’s Broad Street. It is fitting that Kaine’s corner office should look out on one of the city’s busiest thoroughfares. For as soon as he is sworn in, people expect Kaine to get Virginia’s gridlocked transportation system moving again.

Kaine made it look easy by comfortably defeating Republican Jerry Kilgore in November. Fixing transportation won’t be a snap, though. Even as he basks in the afterglow of victory, Kaine, 47, suffers no illusion about the job ahead. His first task: ensure that the Republican-controlled General Assembly doesn’t squander an opportunity to finally make inroads, especially now that there is a budget surplus. “I want to make 2006 a year about transportation,” says Kaine.

How he fares may depend largely on the mood of majority lawmakers, especially in the Virginia Senate. Kaine is a Democrat, and Republicans control both the House of Delegates and the Senate. Kaine will have to persuade state senators to cease their recent raids on a special trust fund set up for transportation. In fact, Kaine vows to veto any withdrawals from the trust fund this time around, adding that he won’t entertain requests for new spending on transportation without an “ironclad guarantee” that lawmakers will quitclaim their right to plunder it at will.

The House of Delegates supports the idea, but, as Kaine points out, “the Senate is the challenge. . .I think very highly of the Senate’s financial acumen and fiscal stewardship. But this is an area where we have disagreed,” he says.

Technically, it would take a change in the state’s constitution to lock up the fund, and that would take several years — time Kaine doesn’t want to waste. “I’ve never made the completion of a constitutional amendment a precondition; I’ve never said that. . . I’ve said I’ve got to have a commitment that I can count on.”

An impasse with the Senate is the last thing Kaine wants, especially since he needs to build momentum for new legislative approaches. One idea is to offer financial incentives to localities whose zoning practices complement existing transportation networks. And as he proved in November, Kaine is capable of persuading people with opposing views to come around to his way of thinking. He won by capturing 52 percent of the popular vote, compared to 46 percent for Kilgore. (H. Russell Potts, a Republican state senator from Winchester who waged an independent bid, garnered about 2 percent). The key to Kaine’s victory lies in his force of personality. He managed to keep his Democratic base intact while luring a goodly number of centrists and undecided voters. And he surprised many political pundits by carrying several suburban counties that Republicans usually slam-dunk.

His candidacy was undoubtedly buoyed by the popularity of outgoing Gov. Mark R. Warner, whose name keeps surfacing as a possible Democratic presidential nominee in 2008, and who recently was named one of the top five governors in the nation by Time magazine.

Kaine, elected as Warner’s lieutenant governor in 2001, now must step out of Warner’s shadow. There is an old saw that warns about being careful of what you wish for. Kaine isn’t the first Virginia governor to face the prospect of reconciling two incompatible dynamics: modernizing Virginia’s transportation network, and doing so despite a glaring shortage of available state money. He is, however, the first governor whose legacy could rest on finding a solution to bridge the divide. Says Larry Sabato, a noted political analyst who runs the Center for Politics at the University of Virginia: “Every governor is known primarily for one thing. For Kaine, that one thing is going to be transportation. Fairly or unfairly, he’ll be judged on how well he handles that issue.”

No need is more urgent. More than 3,000 bridges in Virginia are worn out. Billions of dollars in state funding are needed simply to maintain Virginia’s roads during the next couple of decades, not including new construction. Northern Virginia and Hampton Roads, two primary job centers, remain among the most congested traffic corridors in the nation. Then there is the booming Port of Virginia based in Norfolk, which needs better rail connections to ensure its future growth and reduce truck traffic in the area.

Immediately after his victory, Kaine began crisscrossing the state to conduct town hall-style meetings aimed at galvanizing everyday Virginians about the transportation predicament. The informal gatherings serve as part photo op, part fact-finding mission. Kaine uses the forums to discuss his ideas, and then invites those in attendance to voice their opinions. By the time he takes up residence in the Executive Mansion this month, Kaine will have attended between 10 and 15 such meetings.

Still unfolding is what these meetings will yield in terms of Kaine’s strategy for addressing transportation. As a long-range goal, Kaine says he wants to change the state’s practice of planning roadways without getting input from local governments about development projects. Part of this means clarifying — possibly through legislation — “vague and ambiguous” zoning statutes to help localities understand their legal grounds for denying development deals that don’t adequately address traffic concerns. He also advocates placing conditions on the state subsidies localities receive. For example, jurisdictions that give transportation a high priority in their land-use planning could receive higher payments than localities that don’t take those steps. “I think we ought to structure the subsidies in a way to encourage the most productive behavior and growth strategy,” Kaine says of his carrot-and-stick approach.

This isn’t a new idea, but Kaine is the first Virginia politician to get so much mileage from it. Several business organizations already endorse the concept as a way to reduce urban sprawl. At present, transportation planning is spearheaded by 14 metropolitan planning organizations, or MPOs, that represent distinct regions of the state. Each MPO consists of local elected officials — often the same people who vote to approve pet projects such as shopping malls or office parks “We need to make sure that [new] roadways and land-use plans progress hand in hand,” says Jeff Southard, executive vice president of the Virginia Transportation Construction Alliance (VCTA), a road-construction trade group.

Steve Haner, a lobbyist for the Virginia Chamber of Commerce, says Kaine is better suited to deal with the different interest groups coalescing around transportation, including environmentalists and big-business types. “He has credibility with the smart-growth crowd and also with the ‘we-don’t-want-to-build-anything’ crowd. I think he may be able to bring all sides to the table to hash out a solution, in a way I’m not sure Kilgore would have been able to do,” says Haner, also a spokesman for the advocacy group Virginians for Better Transportation.

Spending the surplus
When lawmakers convene this month, much of the debate will focus on how to spend a state surplus. Budget planners are forecasting about $1.1 billion in extra money for the next two-year spending cycle (2006-08), or about $550 million a year. Kaine has to be somewhat careful how he implements his land-use policy to avoid dampening enthusiasm in the housing market, which continues to be a strong economic driver. New-home sales and mortgage refinancing accounted for the lion’s share of the surplus collected in 2004 and 2005, according to House budget planners. A robust stock market and strong growth in corporate income taxes also contributed to better-than-expected revenue collections.

Numerous budget items, however, already lay claim to the stash of new cash. Warner’s proposed 2006-08 budget, for example, includes $400 million to replenish Virginia’s Revenue Stabilization Fund (better known as the “rainy day fund’), $500 million to maintain current service levels in the state’s Medicaid program and $1.5 billion for public schools. Much of the money for this spending is expected to come from the surplus.

Still, Warner carved out $625 million in general funds for transportation. The money would advance or complete some major projects over the next two years. Yet, the amount is small when compared with estimated needs. It will take $203 billion for Virginia to maintain, operate and fund critical transportation projects of all modes through 2025, with revenue during that time projected to fall well short at about $95 billion. That is according to VTrans2025, a Warner-appointed committee of state transportation agency heads charged with developing a long-range blueprint for transportation.

No matter how small, however, the surplus at least provides a starting point for making critical investments. Plus, it would provide the state with leverage to attract a greater share of federal matching dollars. Consensus appears to be building for accelerating progress on a statewide high-speed rail network. A senate committee examining various options is mulling possible legislation to make it easier for Virginia to use rail lines near the rights-of-way of interstate highways. Details would need to be worked out, but the idea would be to use a state-owned rail network to move commuter traffic, making sure not to compete with private rail freight haulers, says state Sen. Charles R. Hawkins, a Pittsylvania Republican who chaired the committee. “The state needs to look at building its own rail system, especially between population centers, to enable dependable transportation from one point to another,” says Hawkins.

In fact, this could be the year when long-neglected transit projects finally get attention. Kaine supports the speedy construction of the Dulles Corridor Metrorail project. “I think [Washington Dulles International Airport] is one of the two most critical connection points between Virginia and the world economy. Dulles can’t be what it needs to without rail, in terms of projected passenger demand,” says Kaine.

Envisioned for nearly 50 years, the $1.8 billion project is finally on track. A full funding agreement for the federal government’s share of the costs (50 percent) is expected in October 2006 with construction of phase 1 slated for December. Virginia would pay 25 percent of the costs (with money coming from increased tolls along the Dulles Toll Road), and the rest of the revenue will come from special tax districts. The 23-mile rail line extension would run from East Falls Church though Tysons Corner to eastern Reston and eventually all the way to eastern Loudoun County. It’s being built by the Virginia Department of Rail and Public Transportation along with several private partners.

Rail projects also could alleviate another chokepoint: access in South Hampton Roads. Traffic snarls are legendary as tractor-trailers move in and out of the busy maritime port, another significant nexus that connects Virginia to the global economy. Optimism is building that progress will be made on the Heartland Corridor, a proposed rail system that would allow double-stacked trains to move goods from the port to distribution markets in the Midwest, thereby cutting down on truck traffic. The route would originate in Hampton Roads and end in Columbus, Ohio. President Bush signed a transportation bill last year that earmarks about $90 million for the corridor, whose total price tag when finished is pegged around $266 million. The federal money would pay for linking existing rail systems, laying new rail lines and raising tunnels and bridges. Once started, it should take about five years to complete.

The cost of congestion
Still, the surplus doesn’t begin to address a larger problem. More pressing is the need for finding new revenue to keep traffic moving. A recent study by The Road Information Program, a Washington, D.C., nonprofit, estimates that traffic congestion costs Virginia motorists about $1.5 billion a year in delays and wasted fuel. “Our needs can’t be met by one-time infusions of cash from a surplus,” says Southard of the VCTA. “What’s needed is a long-term source of sustainable revenue.”

To that end, it’s almost certain that some old ideas will be reprised in the upcoming session. They include discussions about imposing tolls on state roads, increased use of public-private partnerships to build roads, and boosting state fees for registering motor vehicles. It also could reignite debate about hiking Virginia’s motor fuels tax, which stands at 17.5 cents a gallon. The tax generates more than $700 million per year and provides much of the funding for the Virginia Department of Transportation (VDOT). Virginia last adjusted the fuels tax in 1986.

Since then, inflation has eaten away about 43 percent of its value, with most of the money going for required highway maintenance. Last year, engineering starts on new projects (in the early planning stages) were only $21 million. Under the department’s current six-year plan, they’re up to $50 million, still far behind the $75 million VDOT likes to have for projects in the pipeline. If current conditions persist, the state will run out of matching dollars needed to attract federal highway funds by 2021. Haner, the chamber lobbyist, already is whispering in lawmakers’ ears that 2006 is the best time to tack on an additional penny to the price consumers pay at the gas pump, especially with prices inching back down to pre-hurricane levels. That would bring in an estimated $50 million of new money.

Yet, one has to wonder how keen the appetite is among lawmakers for forcing Virginians to pay more for fuel, especially in light of last summer’s hurricane-inflated prices. Also still fresh in people’s minds is the $1.4 billion tax package, championed by Warner and Kaine and enacted by the legislature in 2004. Although those taxes generated new funds for education, public health and law enforcement, they produced nothing for transportation.

Aside from those concerns, other questions make higher gas taxes a murky issue. Some lawmakers contend that the advent of more fuel-efficient hybrid vehicles makes gas taxes an unreliable source of long-term revenue. Not only that, but the increase would need to be significant to have an impact. “To generate a half a billion dollars, we’d need to increase the gas tax by about 10 or 12 cents,” which is unrealistic, says Del. Vince Callahan (R-34th), chairman of the House Appropriations Committee.

Any discussion of tax increases may be moot if Kaine follows through on his vow to thwart legislators from raiding the transportation trust fund. Past budget amendments have been used to trump the Virginia code, a practice that Kaine calls “an outrage” and one he is determined to end. “I will not support new revenue sources unless the legislature indicates once and for all that they’re going to give up the practice of taking money out of the transportation trust fund and use it for non-transportation purposes. For as important as transportation investments are to our economic future, credibility and honesty with people is more important,” says Kaine.

“I’m not going to be part of a bait and switch,” he adds. “Unless it’s rock solid that these revenues are going to be used for transportation, I’m not going to look people in the eye and tell them we’ve gotta have more [money for transportation.]”

Resistance to the lockbox idea already is being marshaled by some senators. Hawkins says putting trust funds off limits, even for emergency purposes, “limits the General Assembly’s ability to govern.” A showdown might force Kaine to blink, or risk losing the chance to make his mark in 2006. All lawmakers are up for re-election in 2007, followed by the 2008 presidential election, with Kaine’s old boss Warner possibly stealing the spotlight. That would bring Kaine to his final year in office in 2009, at which point he may be considered a lame duck. As he did during his campaign, Kaine will have to be persuasive. It shouldn’t take long to see if he can move the issue forward, or if the new governor is going to get stuck, grinding his gears.