RD6 - Equity and Efficiency of Highway Construction and Transit Funding


Executive Summary:
Transportation funding in Virginia is distributed based on multiple formulas used to allocate State and federal highway construction funds. In FY 2002, the formulas were used to allocate State and federal revenues totaling $3.3 billion. The existing formulas used to allocate most State highway construction funds are almost 20 years old and are based in part on a study conducted by the staff of the Joint Legislative Audit and Review Commission (JLARC) between 1982 and 1984.

In November 2000, JLARC directed staff to assess the equity and efficiency of funding for highway construction. The Commission directed staff to address whether the allocation of funding among highway systems and among Virginia’s localities and regions was equitable and consistent with current and anticipated needs on Virginia’s highway system. In May 2001, the Commission directed staff to expand the scope of the review to include an examination of public transit needs and funding. This report addresses the issues raised by the Commission directive.

The study found that the current system for allocating construction funding is outdated and needs to be revised to ensure that construction funds are equitably and efficiently allocated. The existing administrative system needs to be replaced with a road classification system based on the functional purpose of the roads, and the VDOT districts need to be replaced with new funding regions for purposes of allocating regional construction funds.

A needs-based system should continue to be used to allocate construction funds. However, VDOT should improve the needs assessment process and produce one that is accurate and objective. Highway construction funds should be allocated proportionally among the statewide, regional, and local road systems based on need, and within systems the construction funds should be allocated based on factors that serve as good proxies for need, such as registered vehicles and highway mileage. These changes will result in more construction funds for major roads. In addition, a bridge fund should be established to ensure that funding of needed bridge replacements is adequately prioritized.

Based on the projected available construction funds and the estimated cost of constructing the projects that have been identified as legislative priorities, there will not be sufficient funds to pay for the projects in the near term. The projected shortfall between Virginia Transportation Act project costs and estimated revenues available for the interstate, primary, and Priority Transportation Fund projects over the next ten years is about $6.5 billion. This is almost half the estimated project costs. Therefore, under current conditions, it appears unlikely that these projects can be funded in less than a 20-year time frame.

As a result of frustration with the lack of funding for projects and the perceived lack of responsiveness by VDOT, the General Assembly has recently assumed a more active role in the funding process. While the General Assembly’s increased involvement has had some important benefits in the near term, the General Assembly may wish to re-examine its long-term role in the process.

This review also examined public transit, which serves as an alternative to automobiles under many circumstances. Transit systems in Virginia are regional or local operations and rely on local government as well as federal and State financial assistance. While transit is growing in Virginia, it is proposed that the State make organizational changes to ensure that the full range of transportation options are being considered to meet growing transportation challenges, especially in the urbanized regions of the Commonwealth.