As part of their November 8 meeting, the Joint Legislative Audit and Review Commission (JLARC) presented an oversight report, Transportation Infrastructure and Funding in the Commonwealth, which included recommendations to improve systems and funding structures. The report was conducted at the request of Delegate Terry Austin. VACo supports continued study and action to address the causes for declining growth in transportation revenues and to develop recommendations to grow revenue over time to meet increasing demands for new construction and maintenance for existing transportation infrastructure.
The report found that from FY 2019 to FY 2021, annual state transportation revenues increased by $578 million (16 percent). These increases came about through a combination of tax rate increases, new revenue sources, and general growth in retail and motor vehicle sales. The 2020 changes further diversified the state transportation revenue base, which receives dedicated revenue from motor fuel taxes, retail sales taxes, vehicle sales taxes, and a variety of fees. The legislature also added regional taxes, increasing revenues from regions by about $300 million.
The report also found that Virginia’s transportation infrastructure is in better condition than most other states. Virginia ranks 13th among states for pavement condition and 17th for bridge condition. Funding increases over the last decade and policy changes have resulted in substantial improvements in pavement condition and the condition of other assets, such as bridges. However, more than one-quarter of the bridges are very close to being rated structurally deficient. Structurally deficient bridges typically need to be fully replaced, while bridges in slightly better condition can often be rehabilitated at a much lower cost.
In 2020, as part of a larger emergency response to the pandemic, the Commonwealth Transportation Board (CTB) took several actions to address revenue shortfalls in the state’s transportation budget. Some of these actions affected the revenue sharing program, which provides smaller-scale grants to localities for transportation projects. No new grants were issued under the program for FY21–24, and the window between when grant applications are submitted and funds are received was extended from one-to-two years to five-to-six years. These actions allowed VDOT to continue maintenance activities and avoid disrupting ongoing improvement projects.
However, now that the temporary reduction in revenues due to the pandemic appears to have passed, the extended five-to-six year window may be unnecessary. The General Assembly could restore some or all funding for new projects in the FY23–24 grant cycle, if there is an FY 2022 revenue surplus or if new projections show FY 2023–2024 revenues could be higher than previously predicted. VACo supports restoration of this funding.
Regarding Rail and Transit, the report found that more than 90 percent of facilities and fleet vehicles are in a state of good repair, as are 70 percent of non-fleet vehicles. All major rail asset types (vehicles, track, and facilities) in Virginia are, on average, in better condition than transit agencies nationally. However, challenges lurk on the horizon stemming from the pandemic, which includes a $226 million gap in state capital assistance to transit agencies over the next five years, as well as substantial reductions in ridership, and as a whole, fare losses of 57 percent. These challenges could be met if transportation revenues continue to rebound and ridership levels return to pre-pandemic levels.
VACo Contact: Jeremy R. Bennett