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November 1, 2005


The gubernatorial committee set up to address Delaware Department of Transportation's financial situation decided not to offer recommendations. Instead, it will submit a report defining the situation and listing possible sources of additional revenue along with the pros and cons of pursuing each of them.

Governor Ruth Ann Minner would then be expected to choose which ones to put before the General Assembly, which would have the final say as it enacts next year's capital-spending law, the so-called 'bond bill'.

Senator Anthony DeLuca said that suggestions the governor "can call a special session of the General Assembly and this is going to get done" are unrealistic. "It's not going to happen."

He said legislators and the general public "will have to be educated" about the dimensions of the problem and its ramifications. Representative Roger Roy said members of the joint committee which drafted that legislation during this year's session "didn't have any idea what the size of the problem was."

The core problem, which transportation secretary Nathan Hayward and DelDOT officials have been putting before people in a variety of public and private venues since the Assembly's 'bond bill' committee drastically slashed the department's fiscal 2006 capital spending program last spring, is that money which was supposed to be available in the Highway Trust Fund  for building and upgrading roads and other transportation-related capital projects has been siphoned off over the years to finance operations.

Consequently, Hayward has said the department needs new and enhanced sustainable revenue streams just to be able to complete projects already authorized without adding any new projects to the list. "We need more than boutique solutions," he said at a meeting of the governor's committee on Oct. 31.

Michael Morton, chief of fiscal policy and analysis in the state comptroller general's office, presented a detailed scenario of what will happen if nothing is done. DelDOT, he said, will amass a cumulative shortfall of $2.7 billion by fiscal 2012.

If capital financing is maintained at the current level with only adjustments for inflation, he said currently authorized projects literally could never be completed.

Morton's presentation listed several possible sources of new revenue. The largest return, $48 million, would come from a 2% increase in motor vehicle document fees. Raising tolls on the Delaware Turnpike and the Delaware 1 toll road by $1 would bring in $29.5 million and $25 million, respectively. A 5 increase in the gasoline and diesel fuel tax would produce $25 million.

Hayward told the committee he wants  to explore a "concession option." That would involve long-term 'leasing' of the turnpike, Route 1 and the proposed U.S. Route 302 toll road, separately or in combination, to a private enterprise. While terms of the arrangement could vary widely, a basic arrangement would involve the concessionaire receiving all toll revenue for a stated number of years in return for an immediate large lump-sum payment to the state. Hayward said that money should be treated as an endowment with DelDOT using the income it generates to finance future capital projects.

He cited as a possible model, the recent arrangement involving the Chicago Skyway, which links the Indiana Turnpike with Dan Ryan Expressway in Chicago. A consortium of Cintra Concessiones, a Spanish company, and a subsidiary of Macquarie Bank, a multinational bank headquartered in Australia, is paying $1.8 billion for a 99-year lease.

During discussion at the meeting, which was dominated by members of the legislature who are on the committee, several other proposals were suggested. None appeared to generate a favorable consensus while only one -- cutting the DelDOT staff by offering an early-retirement plan -- was rejected.

DeLuca said a good starting point would be for the 'bond bill' committee to start from scratch each year re-authorizing subsequent steps in the process of bringing specific projects through the planning, design and construction stages. "It's easy to get [projects] started; it's not easy to come up with the [money] needed to build them," he said. "Everything that's in the pipeline doesn't have to be completed."

Sussex County Administrator Robert Stickels suggested imposing a "special real estate tax" on properties in new developments to pay for the roads needed to support the developments.

Representative Wayne Smith suggested as a variation on that a fee imposed at the time of settlement of a property sale. He described that as a "low-pain" alternative since it would, in effect, be spread over the 15- or 30-year term of mortgage.

2005. All rights reserved.

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