Advice for Passing a Massive Infrastructure Referendum

Atlanta's voters rejected a one-cent sales tax to fund a public transportation overhaul. Lessons from Denver, Los Angeles and Phoenix.

Image
Reuters

When voters in Atlanta went to the polls at the end of July for a major transportation funding referendum, transportation watchers turned their eyes to Georgia with hopes of a positive story of local leadership after a long, frustrating year for federal transportation funding.

Metro Atlanta voters were asked to increase their sales tax by a penny for ten years, with most of the revenues dedicated to an itemized list of $6 billion in road and transit improvement projects. The "T-SPLOST" referendum was billed as a critical step forward for the city’s economy, and a chance to break the funding drought for transit expansion in a city that has spent decades pushing the limits of new road capacity.

The news from Atlanta was not good. Despite endorsements from leaders in both parties, a massive public relations campaign by the Atlanta Chamber of Commerce, and support from environmental groups, the proposal was decisively rejected. It’s a stinging defeat for local officials, and a setback for the city’s image as a rock star of the modern Sun Belt economy. The damage to its reputation was soon confirmed, when credit rating agency Moody’s declared a "credit negative" for Atlanta and downgraded a bond rating for MARTA, the city’s strained transit authority. Moody’s message was pretty straightforward: "The Atlanta region needs major upgrades to its dated and limited transit system and congested roadways to maintain its long-term position as an influential economic center." It’s an ominous warning for other areas of the country facing similar investment challenges.

There is a very real national interest in the success of large, transformative infrastructure projects in our major cities. No city is an island – Atlanta is an international transportation hub and an important engine of commerce for the U.S. economy as a whole. Atlanta’s epic infrastructure failure hurts us all. We should do what we can to see that it’s not repeated.

As Atlanta decides how best to move forward, there are lessons it can take from other cities like Los Angeles, Denver, and Phoenix that succeeded in passing similar infrastructure referenda. Denver’s ambitious FasTracks program is a particularly good example. It relies on incremental sales tax revenue to fund a massive expansion of its transit system with projects in multiple cities and counties in Denver’s metro area. And like Atlanta, Denver failed by a wide margin in its first referendum attempt—a 1999 initiative dubbed “Guide the Ride.” It took five more years before voters agreed to fund a redesigned and rebranded "FasTracks" proposal. During that time, the FasTracks campaign retained a political consulting firm and proactively engaged the public and local businesses in the planning process.

FOCUS: Renewal  bug
Stories of Urban Reinvention. See full coverage

Denver used another creative approach that has helped assure voters their money is being spent effectively: it partnered with the federal government to leverage available funding with a low-interest loan from the Department of Transportation’s Transportation Infrastructure Finance and Innovation Act program, which it will repay in part from dedicated sales tax revenues. Like Denver, Los Angeles passed its own "Measure R" tax referendum, and Mayor Villaraigosa has since campaigned tirelessly for a "30/10 Initiative" that will use a TIFIA loan to accelerate thirty years worth of planned projects to be completed in ten years. The Mayor has enlisted support from Senator Barbara Boxer, who chairs the committee that determines TIFIA’s funding, and Transportation Secretary Ray LaHood, who has spoken favorably of the 30/10 approach. Atlanta could benefit from studying both of these projects.

Not every city has the advantage of a powerful committee chair who can encourage federal cooperation for local transit projects. But the growing popularity and expanded funding for TIFIA is an opportunity to reconsider the federal role in helping cities with early-stage planning and project selection for large initiatives like T-SPLOST. More cities should have early access to the advice and counsel of federal agencies and their expert staff, so local planners can prioritize suitable projects for federal financing and signal their intent to voters before a referendum vote, not after. Just contemplating a competitive application can add value for local taxpayers, because it forces an implicit market test of projects to decide which are most worthy of funding. I’m betting not a lot of Atlanta’s 157 projects would make the cut.

TIFIA is already receiving more interest than it can handle, so the immediate priority is ensuring the evaluation process for fully developed project applications. With fierce competition for TIFIA loans growing fierce, that means cities like Los Angeles and Denver that already have a dedicated funding source approved will have much better chances than a city like Atlanta that’s still trying to get its act together. But the Department of Transportation has recently signaled that a more inclusive and interactive approach may be in the works. Department of Transportation officials recently held online webinars to answer questions about TIFIA financing and the application process. Hundreds of people from around the country participated. The Department of Transportation has also made vague announcements that it is developing a new “Project Finance Center” to expand its expert financial staff and offer support services to project sponsors.

Hopefully expanding outreach and technical support services for local planners will become a priority for the Department over time, because cities like Atlanta are going to need all the help they can get.

This post originally appeared on the CFR blog Renewing America.

About the Author

  • Scott Thomasson, the president of NewBuild Strategies LLC, an energy and infrastructure consulting firm in Washington, D.C.