Capital Ideas II

State transportation funding lessons from 2015 – challenges for 2016

Policy: Pairing new funding with improved transparency & accountability


As part of the work of our START network, T4America tracked and reviewed all state legislation proposed this year to raise new revenue to fund transportation, along with a wide array of legislation to reform the way these funds are spent. In this report we evaluate and highlight three specific bills that show how states can find success by building legislative packages and campaigns that stick to proven keys to success.



Following the 2013 bipartisan legislative effort that scrapped the state’s gas tax and replaced it with a wholesale fuel tax and sales tax hike to raise billions in new transportation funding, Virginia has taken notable policy-focused steps in 2014 and now in 2015 to improve the process for selecting projects and awarding funds, all in an effort to direct the new money to the best, most cost-effective projects with the greatest bang for the buck.

This year’s policy-oriented bill (HB1887) reforms the confusing, outdated and complicated funding formulas that determined how money is distributed, and supports the state’s move to award more funds competitively.

Virginia’s changes show a smart path forward for other states still relying on old formulas directing percentages of the state’s funds to primary, secondary and urban highways, with other amounts reserved for priority projects, Interstate highway and bridge repair and paving rural roads. Those formulas are difficult to understand and make it challenging to track where and how funds are being spent — let alone if the projects receiving funds make fiscal sense.

Under the new formula, 45 percent of all funds will be reserved for maintenance and repair. The remaining 55 percent will be split evenly between priority state projects picked through the new, objective, performance-based ranking process established by 2014’s HB2; and priority local projects selected through regional competitions. Additionally, HB1887 shifts $40 million annually to transit projects from highway, aviation and ports, upping the commonwealth’s commitment to the growing demand for transit in metro areas.

HB1887 is the latest step for Virginia’s process of transforming its program to match the goals and results demanded by the public, directing a greater share of transportation dollars to the top-ranking projects, while still setting aside adequate resources to maintain existing roads, bridges and rail.

Evaluating the bill


Reminder: this section is a comparison of each bill against a combination of T4America’s guiding policy principles and T4America’s overall recommendations for successful state funding or policy legislation identified in our first Capital Ideas reportClick any one of the nine titles below to expand or contract that section.

Virginia raised new funding via legislation in 2013. This bill does not raise any new funding, but redirects existing funds to projects that deliver the greatest return through a transparent and accountable process.

The bill sets aside a portion of transportation funds for regional competitive grants accessible to local governments, funding only the projects that are proposed by locals.

HB 1887 improves accountability by removing overt political influence and building a transparent, merit-based process for directing funds and choosing transportation projects that best achieve the public’s goals.

Competition at the regional and state level will right-size project scopes, leverage multiple funding sources and invest in projects that are able to achieve multiple goals.

HB2, enacted in 2014, objectively ranks a project’s ability to improve accessibility to jobs for all income levels and provides funding for all transportation options. This year’s HB1887 redirects $40 million annually from highways, ports and aviation to transit investments, upping the state’s commitment to transit.

The bill directs funds to each region of the state, but rather than ending the process there, they are awarded to the best projects in each region, proposed by local governments, through regional competitions.

Gov. Terry McAuliffe’s (D) administration championed the reform.

The legislative effort was led by a bipartisan coalition of state elected officials and the administration.

With HB 2, the administration and state legislators focused on how the new objective process would build accountability, take politics out of the selection process (and improve public confidence and trust in the process). This year’s bill puts a stronger focus on equitable distribution of the state’s funding, which won near unanimous bipartisan support in both House and Senate.

Pairing new funding


Attempting to take politics out of project selection through new reforms

HB1887 follows dedicated efforts over two administrations (a Republican and a Democrat) and two legislative sessions.

Former Governor Bob McDonnell (R) led a bipartisan legislative effort in 2013 to scrap the state’s gas tax and replace it with a percentage tax on wholesale fuel sales and a hike in the state general sales tax. To address the needs of the two largest metropolitan regions, higher sales, fuel and property taxes are now levied in the Northern Virginia and Hampton Roads regions, with revenues controlled by regional bodies for local and regional projects. (This scheme still denies the Hampton Roads region true local control, however: the legislature specifically restricted all of Hampton Roads’ funds to road, bridge and tunnel projects, leaving out priority transit, rail or freight projects.)

With new money flowing into the state’s coffers for transportation, legislators knew they would have to prove results. To direct these public dollars to the strongest investments, the legislature followed up the 2013 funding bill by adopting HB2 in 2014, with unanimous votes in each chamber. That new law requires the Virginia DOT to screen and rank projects based on five priority outcomes important to Virginians, including reducing congestion, improving access to jobs and delivering economic benefits. Projects expected to produce the outcomes desired would score well and receive funding, and those that don’t would be sent back to the drawing board to improve or get scrapped altogether.

This year’s bill (HB1887) passed overwhelmingly (34-4 in the Senate and 94-1 in the House), shifting highway funds to a new, simple formula.

Additional reforms in this law aim to limit the role that politics plays in project selection and further ensure that funds go to the projects that will deliver real benefits. Specifically, the law will prevent the governor from removing members of the Commonwealth Transportation Board (CTB), the body with authority over selecting projects and establishing administrative policies for the state.

The transparent and objective project ranking and selection processes instituted by HB 2 and the simpler formulas and political independence offered by HB 1887 should result in the state’s transportation funds — including the new funds raised through the 2013 funding package — going to the projects that best meet local needs.

The legislation was backed by the state department of transportation, whose secretary sought the rankings and local competitions as a way to meet local needs and steer funds to projects that were truly state priorities.

“We always had more projects and needs than we had money. It became very political,” Secretary of Transportation Aubrey Layne told the Roanoke Times. “You don’t get the best results doing it that way.”

Virginia legislators and other decision makers could have simply stood pat after raising new transportation funding in 2013. Yet they worked year after year to prioritize those funds to the most critical state and local projects and ensure those funds get spent as wisely as possible. Other legislatures should take note of Virginia’s focus not just on a sudden budget gap, but on smart, often overdue policy reforms to allow the system to meet the needs of these constituents.