Project Funding Options
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A hundred years ago, there wasn't much discussion about how best to finance the nation's surface transportation system. Most roads back then were local, and intercity roads, which were primarily the domain of private toll operators, couldn't keep up with the demand that vehicles were placing on them. States eventually took up the transportation issue with a little urging from the federal government, and helped build a system that better accommodated longer distance travel. But congestion found a home on these roadways as well, and states found themselves spending great sums of money on systems that couldn't keep pace with demand.
Motor fuel taxes eventually became the primary source of funding state transportation systems – Texas levied its first gas tax, at a penny a gallon, in 1923. For many years, state motor fuel taxes, bolstered by federal fuel taxes, supported the costs of building and maintaining the transportation system.
But states are discovering that this once proven method of financing is falling short of meeting the transportation mission, and they are forced to find other ways of making up the shortfall. Texas has a plan to do that. It involves seeking innovative solutions, private partners and empowering local communities to fill the gap.
Texas Ready for Federal Economic Stimulus Funding
The Texas Transportation Commission is ready to get Texans to work by approving construction and maintenance projects to be funded by the American Recovery and Reinvestment Act (ARRA), often referred to as the Economic Stimulus Bill.
The Texas Department of Transportation (TxDOT) has been working for months with its local and regional transportation planning officials to identify projects eligible for this funding. After the bill was signed into law by President Obama, TxDOT staff made its recommendation to the commission. This gave elected officials and the public time to comment on the project list.
The commission then approved allocating $1.2 billion in stimulus funds for 29 construction projects across the state. Most of these projects will be built with financial support from other agencies and resources. As a result, the stimulus-related construction will build more than $2.6 billion in new transportation projects. In addition to these mobility projects, the commission selected approximately $500 million in road and bridge maintenance projects.
Track the progress of each stimulus project. Use key word: Project Tracker.
Approved Stimulus Projects- Maintenance and Mobility - April Contracts
- Aviation (Federal Aviation Administration selected)
- Enhancements
- Maintenance
- Mobility
- Public Transit
- Public Transit - Intercity Bus
Open for Business
While you might not readily associate the phrase "Open for Business" with the Texas Department of Transportation, it is now part of who we are. Transportation solutions will have to be developed cooperatively between TxDOT, local officials who know their areas' transportation wants and needs, and private investors who can provide much needed infrastructure capital.
In fact, TxDOT has already taken the first steps in seeking private investment. TxDOT is open for business and the private sector is vying to participate in TxDOT’s move to solve the transportation challenge.
Outside participation is crucial. With no significant federal or state funding set aside for the future interstate’s construction, a public-private partnership will allow the multi-billion-dollar project to be developed as needed, as private sector resources are available and after environmental clearance has been obtained.
Funding Options
Comprehensive Development Agreements
In Texas we call the Comprehensive Development Agreement a “partnership.” With 80,000 centerline miles and 49,000 bridges, and more miles of roadway needed to accommodate future Texans, partnerships between TxDOT, local areas and the private sector will be key to moving Texas into the next century.
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While the term may sound complicated, the concept isn't. CDAs are simply project delivery tools that TxDOT or a Regional Mobility Authority can use to design, finance, construct, rehabilitate, expand, improve, maintain or operate a needed transportation facility. It can take various forms, but the underlying theme is that private sector partners assist the state in getting needed transportation on the ground sooner, with less financial risk to Texans.
Regional Mobility Authorities
A Regional Mobility Authority, or RMA, is formed by one or more counties to manage and finance local transportation projects. An RMA can finance, design, construct, operate, maintain, acquire, expand or extend a project. By taking control of local transportation needs, an RMA can help a community loosen gridlock usually sooner than the state can.
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Pass-Through Financing
Pass-through financing is actually a new financing tool the state created to allow local communities to fund upfront costs for building a state highway project. The state then partially reimburses the community over time by paying a fee for each vehicle that drives on the new highway.
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Tolling
Toll roads provide new funding opportunities for each community. The dollars collected from drivers using the toll roads will go toward paying for the project. After that, the community can then choose to lower the toll and put the money toward maintaining the highway, or it can leave the toll the same and use the revenue for maintenance and construction of other needed transportation projects in the area.
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All this is done without raising taxes or sending locally generated funds out of a region to the state or federal governments.
Financial Incentives
When TxDOT needed to replace an outdated interchange that was struggling to handle the demands of half a million drivers, traditional methods would not fit the bill. Under conventional construction, a project of this size would have taken at least a decade to finance and build, while traffic in the busy commercial area steadily increased. The problem was how to stretch scarce state funding and keep traffic disruptions to a minimum. The answer was found in the proverbial financial carrot that prompted the contractor to build the project faster, within budget, and with as few interruptions for the traveling public aspossible. The Dallas High Five, a five-level interchange at the juncture of U.S. 75 and Interstate 635, was a TxDOT test case for a large-scale project. Using financial incentives that rewarded the contractor for early completion, and financial repercussions for closing needed travel lanes, the 12-story high interchange was built a year ahead of schedule, on budget, and without any major traffic headaches. Learn more (wmv 32.4 mg) about how TxDOT is moving motorists in the Metroplex.
