Cascadia Prospectus

(This post also ran as an opinion article in Crosscut).

With gas prices still on the north side of four dollars per gallon, more people than ever are riding King County Metro buses in Seattle and some parts of its suburbs. Ridership was up 7 percent last year, and as the Puget Sound Business Journal's Dierdre Gregg reports, continued growth is straining the system. One effect: more riders get bypassed at stops as stuffed buses too often breeze right past. PSBJ:

For riders of King County's jam-packed buses, there's good news and bad news. The good: The Transit Now program, which voters approved in 2006, will add 15 percent to 20 percent more service over the course of 10 years. The bad: That growth pace doesn't come close to matching the growth in ridership. The number of people climbing aboard Metro has gone up by 20 percent in three years. Moreover, the number of full buses that bypassed waiting passengers jumped by 45 percent in just the last year. "Are we meeting the demand for bus services? The answer is no," said King County Executive Ron Sims. Despite the ardent desire of regional leaders like Sims to boost ridership, they have not carved a clear path for meeting the demand. Instead, local politicians are divided over whether to add transit taxes, fees and fares.

Sometimes Metro buses don't show up at all, or arrive far more than five minutes late, which is the system's on-time standard. An anecdote: Last month at 1st Avenue and Jackson Street in downtown Seattle, I waited for a Route #21 bus back to West Seattle that simply never came.

The same afternoon I was stood up by the #21, the #22 that was supposed to arrive 10 minutes later was still nowhere in sight 15 minutes after its scheduled arrival. I left. I learned later from Metro it did actually show up at First and Jackson. Eighteen minutes late. I'd like to say that in my experience these were isolated incidents, but they're not. It's been my impression, as a regular rider with an employer-provided bus pass, that about one in four waits for a Metro bus turns irrevocably fruitless either due to a no-show or excessive tardiness. I've received similar reports from other riders. The Seattle P-I noted earlier this year that on-time performance was down to 74 percent (it had been around 80 percent), and that more passengers getting on and off has added to delays.

To top it all off, lower than anticipated sales tax revenues mean Metro will be short $45 million, or almost that amount, in this and each of the next two years. As a result, Metro is publicly grappling with fare hikes higher than the envisioned 25 cents, or cutting back on new Transit Now service for which voters thought they were paying when approving a 2006 sales tax increase of .1 percent. The new money was supposed to fund more runs on heavily-used routes, and five new quasi-Bus Rapid Transit routes known as Rapid Ride. The triple-whammy of costlier fuel, slackening sales tax revenues and growing ridership is hitting bus transit systems nationwide.

Stiff fare hikes seem a small price to pay, if Metro can figure out a way to winnow its routes and improve consistency. To salve delays, Metro does offer an online, real-time tool so you can check if your bus is running on time before heading to the stop (no information is available for re-routed buses). The service can be helpful, but plenty of people don't have access to the Internet before going to a bus stop. Adherence to the published schedule is crucial, as is adequate capacity on major routes.

Cut the lowest-ridership routes, let's say the lowest one-third, and re-deploy the buses and drivers to the busiest runs, where riders are most often bypassed. Where regulations require that regional sub-areas be apportioned a certain percentage of total Metro bus service, the King County Council should confront those mandates head-on. We can let politics undermine a common-sense re-deployment of limited resources. But let's not.

There's some hope. Metro does indicate that it wants to consider cutting some routes to beef up others. In its 2007-2016 strategic plan, the agency discusses (on p. 1-4) the possibility of expanding, modifying or terminating some routes, based on performance.

Good. Metro also wants to make the published schedule more accurate. On p. 1-5 of the strategic plan, the agency says it aims to "improve on-time performance through routing adjustments, splitting of unreliable through-route pairs, adding of recovery time between trips...and adding time or trips to schedules to account for slower travel speeds or recurring overloads." The ten employees in the county's transit "speed and reliability" division should be able to figure it out. Myself, I'd settle for reliability. Predictability. It's the holy grail of transportation. Another way to cut loading and debarking times and help the buses run on schedule is with a mandatory pre-paid fare system, including scanners for fare compliance at dual, ground-level entrances/exits on each bus.

The issue of such costs tends to raise the issue of revenues, and smart financial planning. And there's an elephant on the bus. Metro needs a higher fare-box recovery ratio. One-zone peak hour per-trip fares are currently $1.75. At the same time, operating revenues provide little more than one-fifth of the operating budget, if you do the math on this Metro fact sheet. Users need to pay more freight. To set the tone, double the one-zone peak hour per-trip fare to $3.50. It's just a shade more than 20 minutes worth of wages for the lowest paid workers in King County. Let's raise the cost of monthly passes by a third. Sound extreme? So's the cost of fuel here compared to before; and that's not likely to change much in coming decades. Did we really expect to fully sidestep steep gas costs by riding the bus? If we don't pay more to ride the bus - a good bit more - we still pay a good bit more. Just in other ways (see above).

What's not on the table now, but should be, is a whole new business paradigm. Private bus operators would bid for key Metro routes, with contractor payments pegged to their adherence to on-time, service volume, capacity, cleanliness and other performance goals. It's not as though public-private partnerships for bus service are unheard of hereabouts. Sound Transit will be contracting for between three to five years with a private company to provide operations and maintenance for its Everett to Bellevue express route.

But for starters, Metro needs to brave controversy. First with a hefty fare hike, not an anemic 25 cents. Then by identifying the weakest performing routes and cutting them to help the real workhouse routes. Metro must also use its fairly robust internal performance reporting system to better effect, re-calibrating schedules so they more often comport with reality.

There's a way out of this whole mess, but it will require leadership from the King County Council and Executive.

A major rock slide that last week temporarily closed the lovely but long-treacherous Sea-to-Sky Highway between Whistler, B.C. and the Vancouver metro region has some critics asserting the province should've built a new inland route instead of undertaking the current, $600 million public-private upgrade of the road (pictured below, right). The project is overseen by Partnerships BC, and is to be completed in time for the 2010 Winter Olympics in Whistler. Supporting the inland route concept - a few years and apparently a few billion dollars short - is the inevitable retired engineer attendant to every transportation debate. See "Other Possibilities" at bottom of this Globe and Mail report.

Sea-to-Sky gets a lot of flack, of which the route second-guessing is just the latest bit, and it's all off-base, writes political correspondent Keith Baldry today in the North Shore News.

...the huge slide on the Sea to Sky Highway....revived talk about the wisdom of spending so much money on that treacherous stretch of road or, alternatively, why we weren't spending even more to build an alternative route. I get tired of hearing people who don't use that highway refer to it as the "millionaire's highway" to Whistler, as if improving it only benefits the wealthy landowners in that resort.

What nonsense. First of all, those people conveniently forget that between West Vancouver and Whistler is the more populous town of Squamish, from which many residents actually commute to the Lower Mainland. As well, Whistler is a huge contributor to the B.C. economy, generating about $1 billion a year in economic activity and attracting more foreign visitors (who spend a lot of money here) than any other resort in the province.

So quit whining about spending money on improving that highway. It benefits the entire province. And as for complaining there isn't an alternative route -- forget it. The minimum cost for another inland road is at least $3 billion (more than four times what we're spending on the Sea-to-Sky upgrade).

Baldry puts things properly in context. But going forward toward the 2010 Olympics, there have to be heightened concerns based on history and geology that even after safety improvements from the current roadway project are completed, slides could still occur on the Sea-to-Sky. Despite a perhaps reasonable degree of fatalism about Mother Nature's power and unpredictability, it'd still be wise for the province to evaluate claims now surfacing about new rock slide prevention technology. The Globe and Mail reports:

University of British Columbia geological engineer Erik Eberhardt said researchers are developing new ways to detect when a weakening plane of rock is about to shatter and plunge off a cliff, but they can be expensive. For several thousand dollars, engineers can install global positioning receivers that monitor for tiny physical movements. For tens of thousands, emerging satellite technology would do sweeping scans of large areas such as the Sea-to-Sky highway and identify problematic spots. New microseismic sensors could "hear" the infinitesimal sounds of two rock planes moving against each other - similar to technology used to detect earthquakes, but on a far more minute level.

One Vancouver-based company thinks it has the microseismic technology the Sea-to-Sky highway needs. Tex Enemark is communications director for Weir-Jones Group, which manufactures sensory devices to monitor sites such as rail beds for geological activity. He said the company's sensitive "geophones" can detect a shift between planes of rock a month before a slide occurs. "There is noise emitted as the seal [between two planes] breaks, and once it starts ... it becomes more detectable and noisier, for want of a better phrase, so by monitoring this through a sophisticated electrical filter, you can tell when something is about to happen." The system is pricey, however: Mr. Enemark said a sensor covering a 300-metre span of rock face would cost upward of $300,000.

If the technology really is feasible, a better advance-warning system of rock slide possibilities on the Sea-to-Sky - and other mountainous highways in the Northwest - would be helpful. And that's putting it mildly.

This just in, from the Seattle Post-Intelligencer.

Seattle is in violation of the Clean Air Act for the first time since the 1990s. Going over the legal limit for smog over the weekend means officials here will have to start hammering out a plan to improve air quality. That could feature a number of measures to put the brakes on pollution, including requiring reformulated, more expensive gasoline for the region.

The final violation of the smog standard needed to push the Emerald City and the Puget Sound region into official violation of the act occurred Saturday afternoon, when a monitor at Enumclaw in south King County went over the official limit.

It's thanks to ozone emissions, which at ground level are a public health hazard. The official designation of the city and region as a "non-attainment area" won't be until 2010, due to reporting regulations. But if one more wake-up call were needed, this might be it. There are plenty of other reasons to move beyond oil in transportation - anthropogenic greenhouse gas emissions and national security to name two - but if that's not quite enough, how about having to devise "reformulated, more expensive gas for the region."

As it happens, Cascadia Center, with Microsoft, Idaho National Laboratory and other event sponsors, is holding a two-day conference in Redmond Sept. 4 and 5th, titled "Beyond Oil: Transforming Transportation." Top international, national and regional experts will present solutions involving electrifying transportation, plug-in hybrid electric vehicles, renewable energy sources, and much more. Our event page with updated agenda and registration information is here.

Speakers include Washington Governor Chris Gregoire, former CIA chief R. James Woolsey, Project Better Place founder Shai Agassi, and Chelsea Sexton (above at right), star of "Who Killed The Electric Car" and now head of Plug In America.

UPDATE, 8/18/08, 3:56 p.m.: Additional coverage of the Clean Air Act violation from The Seattle Times.

RESOURCES

Our 2007 Cascadia-Microsoft PHEV/alternative energy conference page: Jump Start To A Secure, Clean Energy Future (links to speaker PowerPoints, more)

Cascadia's "Beyond Oil" page (including our op-eds - from '07 to 7/31/08 - on plug-in hybrid electric vehicles, moving beyond oil in transportation, more)

RECENT NEWS ARTICLES & COMMENTARY

"Trucks - From Delivery Vans To Big Rigs - Need To Get Efficient, Too," Steve Marshall & Bruce Agnew, Puget Sound Business Journal, 8/18/08

"Turbulence In Air Travel: What High Fuel Costs Mean To Boeing," Steve Marshall & Bruce Agnew, (Cascadia Center), Puget Sound Business Journal, 8/4/08

"PGE Installs Filling Station Of The Future," Daily Journal Of Commerce, 7/31/08

"Kulongoski 'Plugs In' To Transportation Solutions," Daily Journal Of Commerce, 7/31/08

"Paccar's Fuel-saving Hybrid Trucks Aimed At Nation's Distribution Industry," Seattle Times, 7/29/08

"Plug-in Cars Zoom Forward," Forbes, 7/29/08

"Texas To Tel Aviv," Thomas L. Friedman, NY Times, 7/26/08

"Electric Industry Plugged In For Move To Rechargeable Cars," Oregonian, 7/24/08

"PHEVs In The Spotlight," Green Biz, 7/23/08

"Can Plug-in Hybrids Ride To America's Rescue?" Christian Science Monitor/ABC News, 7/19/08

"Electric Ride Powering A Transportation Revolution," Globe & Mail, 7/7/08

"Ensuring America's Growth," Peter Morici, Forbes, 5/28/08

Funding infrastructure with private capital, a practice widely used abroad, has had its tentative beginnings here at home, but its domestic long-term future is still clouded. We interviewed a diverse group of individuals of varying political persuasion, on public-private partnerships in U.S. surface transportation. They included state legislators, congressional staffers, senior U.S. DOT officials, state and local transportation officials, members of the two congressionally-chartered transportation commissions,  executives of trade and professional associations, and analysts on Wall Street, in think tanks, academia and private consulting firms.
 
Support for Public-Private Partnerships is Growing

Total reliance on public resources and the fuel tax to fund future investments in transportation infrastructure is no longer a realistic option. Such, in essence, is the considered judgment of a great majority of participants in our survey.

State officials tell us they are embracing private sector financing and tolling not because of any ideological commitment to "privatization" or a philosophic attachment to market-driven solutions but out of sheer fiscal necessity. Increasingly, state departments of transportation are obliged to commit a major part of their tax-supported transportation budgets to preserving, modernizing and replacing existing infrastructure, leaving little money for new construction.

"We are struggling to have enough money to hold together what we have, let alone be able to think about the level of investment that would be needed to provide new infrastructure," Allen Biehler, Secretary of PennDOT told state legislators recently.  

Influential political leaders on Capitol Hill, in state capitals and in the Bush Administration have taken note of the growing need for private investment in infrastructure.  House  Speaker Nancy Pelosi (D-CA) (below, left) stated approvingly in an address to the American Public Transportation  Association that  "Private investment is playing an increasingly larger role in public infrastructure. Innovative public-private partnerships are appearing around the country, bringing much-needed capital to the table."

Texas Governor Rick Perry (above, right), in a keynote speech at the annual meeting of the Texas Transportation Forum, observed  "I am convinced that private dollars, administered through public-private partnerships, are a significant part of the answer to our transportation infrastructure challenge."

As another high-ranking state official told us, "since Congress is not likely to come up with adequate resources to help us meet our future infrastructure needs, we have no option but to move on our own and find new ways of funding our capital needs." The  official in question reflected a widespread sense among state officials and lawmakers we have talked to that  there is little prospect for a substantial increase in federal aid. This judgment  was also shared by Sen. Chuck Hagel (R-NE) at a recent congressional hearing. "The Federal Government," he said, "does not and will not have the resources to meet our future national infrastructure needs."

USDOT and a range of blue-chip advocacy groups have been contributing to the dialogue on infrastructure and PPP. So are many states. In Colorado, Iowa, Massachusetts, Michigan, Minnesota, Oregon, South Carolina, and Texas, governors and local authorities have convened special commissions to identify new revenue sources for infrastructure investments. In other states, such as Arizona, Nevada, North Carolina, Oklahoma, Washington and Wyoming, special legislative committees are studying "revenue enhancements"  to supplement existing transportation funds. 

"A Coalition Of Change Agents"

"A coalition of change agents at state level will bring about a fundamental reorientation in the way we approach transportation funding," one senior state financial official told us, adding that tolling and private investment will play an increasingly prominent role.

By our count, a total of 22 states are contemplating the use of tolls to support road capacity expansion.  Some of them, such as Florida, Pennsylvania and Texas may resort to long-term concession-based PPPs, while others will choose the more traditional approach of using  tax-exempt debt, design-build contracts, and operation through state departments of transportation or regional public toll authorities. 

Municipal Bond Market Has Limited Potential

However, survey participants pointed out that many state and local governments will be precluded from using  the municipal bond market as a financing mechanism because they have reached their statutory debt ceiling or because voters have refused to approve further bond issues.  Moreover, pension funds, a potentially major source of investment capital for infrastructure,  do not participate in the municipal bond market because they do not benefit from the munis'  tax-exempt status.

Is Private Capital Really Necessary?

Not all of our survey participants were convinced that future infrastructure investments will require private capital. Some of those we consulted suggested that the nation's future transportation needs could be met by raising the federal fuel tax or through new federal financing initiatives. The former option, they said, has never been taken off  the table and will most likely figure in the transportation reauthorization proposal shepherded by Rep. Jim Oberstar (D-MN). The latter option includes the National Infrastructure Bank (S. 1926 and HR 3401) championed by Sens. Christopher Dodd (D-CT) and Hagel, and the "Build America Bonds" program (S. 2021) proposed by Sens. John Thune (R-SD) and  Ron Wyden (D-OR, below at left). Both initiatives  would create a de facto national capital budget  that could be used  to fund "qualified public works projects of  regional or national significance." 

The NIB  proposal has gained political traction by receiving the support of presidential candidate Barack Obama and House Majority Leader Pelosi.  
 
But many survey participants pointed out that the extra revenue generated by a gas tax increase - even assuming that such a tax increase would pass muster with the tax-writing congressional committees and obtain a filibuster-proof majority support in the Senate - would be largely consumed by demands for preservation and reconstruction of the existing highway network and by escalating construction costs, leaving little  capital for new construction. 

Besides, the federal program contributes only about 40 percent of the capital cost of transportation infrastructure. The remaining 60 percent comes from state and local budgets, and there is no guarantee that local jurisdictions would be able to meet their part of the bargain. 

As for the new federal financing  initiatives, their revenue - $60 billion over 10 years in the case of the National Infrastructure Bank and  $50 billion in the case of the Build America Bonds program - would hardly suffice to make up for decades of underinvestment.

These bills could only fund a small fraction of the infrastructure deficit - a deficit that the American Society of Civil Engineers  estimates at  $1.6 trillion.  "A federal-centric approach does not offer an adequate long- term solution to closing the huge infrastructure funding gap,"  summed up one respected think tank analyst.  

Overall Verdict For PPPs Is Positive

Overall, our survey participants thought that  tolling, private equity capital and long-term concession-based public-private partnerships will play a significant role in  the nation's efforts to expand infrastructure capacity. The circumstances which they believe are driving states to partner with the private sector are largely fiscal in nature. They include declining tax revenues flowing into the Highway Trust Fund due to  improvements in vehicle fuel economy and a possible slowdown in the growth of vehicle-miles traveled (VMTs); public opposition to higher fuel taxes; and the sheer magnitude of the infrastructure deficit which overwhelmes the bonding capacity of state and local governments. But motivation to partner with the private sector also includes recognition of some positive benefits of private sector involvement, such as willingness of private concessionaires  to contribute equity capital, do the job faster, introduce innovation and assume operating and financial risks.  

As several elected officials have pointed out to us, engaging  the private sector in the task of modernizing the nation's infrastructure may be the best way to ensure the continued growth of the nation's transportation capacity without imposing an unacceptable fiscal burden on American taxpayers or burdening future generations with further debt.

The viability of the partnership model depends, of course, on the willingness of the private sector to invest in public infrastructure assets. On that score there appears to be little doubt. Our inquiry has revealed an impressive number of private equity funds (72 by one count) dedicated to investments in infrastructure. In the aggregate, they are estimated to have raised in excess of $120 billion. After leveraging the estimated equity capital pool through bank loans and the capital markets, the infrastructure funds could support investments in the range of $340 to $600 billion.

Skepticism About PPPs Persists

Skepticism about PPPs and questions about the proper role of the private sector in infrastructure development persist. The two-year moratorium on PPPs in Texas and strong opposition to the "monetization" of the  New Jersy Turnpike  have been vivid reminders of the continued opposition to tolling and private sector involvement.  A more recent example has been the failure of two bills in the California legislature to establish an Office of Public-Private Partnerships to promote PPPs among local agencies (AB 2278), and to authorize state agencies to enter into public private partnerships to support infrastructure development (AB 2600).

Further evidence of anti-PPP sentiments comes from public employee unions.  The Service Employees International Union (SEIU) has been particularly aggressive in its campaign to police  the authority of states' employee pension funds to invest in private equity companies - a major  source of  investment capital for public-private partnerships. Having failed in this effort in California, the union has switched its attention to the state of Washington. Among the union's demands is that  the State Investment Board (SIB) which manages public pension money, weigh the private equity companies' "corporate behavior" before it could invest in them. By prevailing in its demands, the union would, for all practical purposes, deprive public-private infrastructure partnerships of a major source of investment capital.   

Opposition to PPPs Has Many Faces

Much of the opposition to public-private partnerships is motivated by a belief that the public interest demands strong public oversight over investment decisions relating to public infrastructure. Advocates of this point of view in Congress and elsewhere argue that the national road system is "a public good" that should be provided and maintained by the public sector to serve the public interest. They contend that a series of private toll concessions would lead to "cherry picking," resulting in a patchwork of uncoordinated facilities that would undermine the integrity and connectivity of a  national highway network. PPP opponents are particularly critical of  contractual "non-compete" provisions,  diversion of upfront lump-sum lease payments to non-transportation purposes and  long-term leases of existing toll facilities. Referring to the 99-year lease of the Chicago Skyway and the 75-year lease of the Indiana Toll Road, Sen. Jeff Bingaman (D-NM, at right), chairman of the Subcommittee on Infrastructure of the Senate Finance Committee  observed,  "I think we ought to reconsider the perverse incentive that the tax code creates for such long leases...If current depreciation rules lead to forms of investment that we judge to contravene public policy, then the Finance Committee should consider changing those rules...".

These concerns are legitimate and need to be addressed, observed the participants in our survey, noting that recent concession proposals provide for strong safeguards to protect the public interest.  But  opposition to private sector involvement is motivated by more than just an altruistic desire "to protect the public interest." Rather, we have found that it is fueled by a complex mix of motives. Some people are concerned that a widespread use of PPPs would shift more power over infrastructure development to the states and weaken the federal role in transportation. 

Congressional lawmakers are opposed to PPPs because they suspect  private sector involvement would lead to an erosion of congressional control over public investment decisions and reduce opportunities for earmarking. 

Public employee unions worry that transportation facilities under private management would lead to a loss of union jobs and prevent unions from organizing workers at those facilities. The trucking industry fears that private road concessions would lead to rapidly escalating tolls.

And some Beltway interest groups and lobbyists are concerned that private sector involvement would decentralize decisionmaking to the states and lessen their ability to influence the transportation program at the federal level. To the extent that many of the public-private partnerships are likely to involve foreign entities, there is also concern - justified or not - about foreign control of strategic transportation assets. 

PPPs at the Crossroads

There are well founded speculations that Congress may attempt  to assert oversight over public-private partnerships and place conditions on long-term  toll road concession agreements, ostensibly "to protect the public interest."  The House Transportation and Infrastructure Committee is rumored to consider establishing a regulatory commission to oversee public private partnerships.  An influential member of the Senate Finance Committee has raised the possibility of amending the federal tax code to prohibit "excessively long" concession lease terms. Some interest groups in  the trucking industry and public employee unions may be expected to vigorously applaud congressional  moves to assert oversight and impose regulatory restraints on PPPs. There are indications that the National Transportation Infrastructure Finance Commission also will recommend certain legislative restrictions on private toll road concessions.

Whether efforts to rein in PPPs will come to pass, and if they do, how onerous the restrictions will be, remains an open question. So far, there have been few signs of any organized attempts by PPP proponents to change congressional minds. Ongoing advocacy efforts of various PPP coalitions appear fragmented and uncoordinated. This may change as we draw closer to the reauthorization deadline and as the  House Transportation and Infrastructure Committee makes its intentions better known by releasing a preliminary legislative proposal (next February, we are told). Of particular importance at that time will be the posture of  the governors and state legislatures. Will they go along with recommendations for federal controls over  PPPs or will they assert the right to determine for themselves the conditions of  locally negotiated partnership agreements? Above all, will the current level of experience with long-term concession-based public-private partnerships offer state officials and legislators sufficient confidence and comfort level to champion  this novel approach  in the face of determined congressional and labor union opposition?

How this complex interplay of political forces will eventually play out in the post-election environment may ultimately determine whether the private sector will become a major partner in the efforts to renew the country's  transportation infrastructure. Or will private capital (especially foreign capital), faced with mounting legal restrictions and regulatory barriers in the U.S., turn its attention to investment opportunities abroad and deprive fiscally strapped state and local governments of much needed resources to modernize and expand America's infrastructure? That is the bottom-line question.     

The need for public-private partnerships to help rebuild the nation's overburdened and underfunded surface transportation network is growing. Even before gas prices spiked and gas tax hike prospects dived, the Washington State Transportation Commission was calling for P3s. They did so in this January 2007 report, and then again here.

The January, 2007 report states that P3s should be closely examined as a potential strategy for completing planned major projects including the SR 520 floating bridge replacement, I-5 Columbia River Crossing, the State Route 167 extension to the Port of Tacoma, I-90 Snoqualmie Pass improvements, the State Route 704 Cross-base Highway in Pierce County, improvements to the state ferry system's busiest dock, in downtown Seattle, Colman Dock, and for other ferry terminal, freight rail capacity and transloading improvements. Two other P3 candidates would be the unfunded and badly-needed $2 billion worth of pavement and interchange work on I-5 in Seattle; and treacherous, deadly U.S. Route 2 in Snohomish County, also in need of about $2 billion worth of work. That's money which again, the state doesn't have.

Legislators are taking notice. At Cascadia Center's West Coast Tolling and Traffic Management Workshop in late June of this year, Washington State Senate Majority Caucus Vice-Chair Ed Murray of Seattle (D-43rd, pictured below, right) voiced his strong support for surface transportation P3s. Public radio station KPLU-FM reported:

ANCHOR: "Western Washington is coming up tens of billions of dollars short of what's needed for highway improvements, bridge replacements and transit infrastructure. Tolls and more involvement by the private sector were among the solutions discussed at a workshop in Seattle Thursday....

REPORTER: "The gathering, sponsored by the non-profit Cascadia Center, brought together public officials, entrepreneurs and policy-makers, wrestling with the region's growing transportation woes. Democrat Ed Murray is vice-chair of the senate transportation committee in Olympia. He told the group that traditional sources of transportation funding are drying up."

STATE SEN. ED MURRAY: "There is simply not enough revenue to do what we need to do, in this state, anyway, for education, for health care, and to use the amount of money we would need to use - $50 billion - to finance a transportation system" (ed. - in Central Puget Sound).

REPORTER: "Murray says government is likely to move toward more contracts with private sector businesses to build and operate toll highways and transit systems....

Those, and bridges or tunnels may come to mind first when contemplating transportation P3s. But other sectors, such as maritime cargo, are stimulating public-private deals, too. Freight rail - expected to double in the U.S. over the next 30 years - is also ripe for P3s. The Seattle Times reports today the non-profit research group Rand in a new study estimates $148 billion in needed improvements to the U.S. freight rail infrastructure; and adds that a third of that will need to be covered either by P3s or tax incentives.

There's a spotlight on the whole arena. Foreign- and domestic-based private infrastructure investment funds backed by U.S. public employee and building trade union pension funds have been buying into North American transportation infrastructure projects more and more in recent years. In Europe, Canada and Australia, transportation P3s are already well-established.

In article published just yesterday, the New York Times mentions several of the union pension funds which are now or are planning to invest in surface transportation infrastructure. The list includes the Washington State Investment Board, which has $81.9 billion under management. The board invests on behalf of 17 funds for public employees including teachers, other school workers, law enforcement officers and firefighters; and on behalf of another 21 funds supporting industrial insurance, higher education, developmental disabilities and wildlife protection. Here's the NYT:

Some American pension funds see an investment opportunity. "Our infrastructure is crumbling, from bridges in Minnesota to our airports and freeways," said Christopher Ailman, the head of the California State Teachers' Retirement System. His board recently authorized up to about $800 million to invest in infrastructure projects. Nearby, the California Public Employees' Retirement System, with coffers totaling $234 billion, has earmarked $7 billion for infrastructure investments through 2010. The Washington State Investment Board has allocated 5 percent of its fund to such investments.

Some foreign pension funds that jumped into the game early have already reaped rewards: The $52 billion Ontario Municipal Employee Retirement System saw a 12.4 percent return last year on a $5 billion infrastructure investment pool, above the benchmark 9.9 percent though down from 14 percent in 2006.

Sorry, but I'm not seeing Gordon Gecko here. Still, it's plainly worrisome to some voters - and those who must account to them - that a private interest with a profit motive, rather than a solely public entity with no such incentive, would manage transportation assets for a state, regional or local government.

The choice is often between getting a vital project built sooner versus much later (and at a far higher cost), or not at all. With additional capital available from "private" funds, we can begin again to keep pace. These deals are typically not "make-a-quick-buck" schemes. The public sector retains ownership of the facility and control of tolls, rates and fees, over a payback period of 35 to 40 years, or longer. Performance standards for the private partners - who often operate and maintain the facilities, once built - can be baked into the contracts.

In the meantime, more than half the battle has to do with reality versus calumny around "private, foreign" infrastructure funds, as Leonard Gilroy of the Reason Foundation and Matthew J. Brouillette of the Commonwealth Foundation point out in this Philadelphia Inquirer op-ed:

...the New Jersey Teachers' Pension Fund is a major shareholder in the Spanish toll-road operator Cintra. Australia-based Macquarie, one of the biggest international toll-road firms, has received significant investments from the Mid-Atlantic Carpenters Pension Fund and the Midwest Operating Engineers Pension Fund. Therefore, restricting the participation of foreign firms actually threatens the investments of hard-working Americans - union members, public employees and individual investors alike.

When our friends, family and neighbors are invested in these companies, are they really foreign?....(states) should welcome companies interested in creating job opportunities and investing billions of dollars in the state. This is the reverse of outsourcing - it's "insourcing" - and it's good for the economy.....Those fostering foreign fears need a reality check. We drive foreign cars and strap our kids into foreign-made car seats every day. Most people watch the news on foreign-made televisions and surf the Internet on computers filled with foreign-made parts. We routinely fly on foreign-made Airbus planes. But somehow we don't want to drive on asphalt poured by a foreign company?

The Washington State Investment Board's plans are another indication that transportation P3s are seen not only as in the public interest due to the mobility and economic gains; but that Regular Joes and Janes right here on our home turf are prominent among the investors who reap the rewards.

Funding is just one piece of the puzzle right now in transportation. At the same time that infrastructure needs are demanding creative solutions, the push is growing to move beyond oil in surface transportation, toward new generations of electric-powered and flex-fuel cars, something that Anne Korin (left) of the Set America Free Coalition explained well on the Dave Ross Show last Friday on KIRO-AM 710 in Seattle, appearing with our Senior Fellow Steve Marshall and Chelsea Sexton of Plug In America. They'll all be speaking at Cascadia Center's "Beyond Oil: Transforming Transportation" conference Sept. 4 and 5, co-sponsored with Idaho National Laboratory, Microsoft, USDOT and WSDOT. There's a stellar agenda, and space is still available. Register here, directions here. To get a sense of the game-changing mindset, here's a current Wired profile on one our "Beyond Oil" speakers, the electric car infrastructure champion Shai Agassi of Better Place.

Whether the issue is funding or fueling surface transportation, dramatic change isn't a nice-to-have. It's a must-have.