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The right to say "I told you so" is no prize when it comes at the cost of 13 lives. But last summer's fatal collapse of the I-35W bridge in Minneapolis gave sudden, dramatic legitimacy to the drumbeat warning by the American Society of Civil Engineers (ASCE): that the nation's aging infrastructure is chronically, dangerously under-funded. For a few weeks, Minnesota became the poster child for a nationwide disease. Faced with growing congestion, rising construction costs and scarce funding, states are scrambling just to keep their highways and bridges safe, not to mention adequate to the needs of changing populations.Tennessee is no exception. In its 2005 long-range plan, the Tennessee Department of Transportation projected it would fall $2 billion short of what it needs to effectively maintain and grow the state's transportation system through 2015—and that was before the federal government rescinded $4 billion nationally in transportation funding. Those rescissions punctuated a point that's become increasingly clear: Washington is shifting back to the states more of the burden for what has been a federally subsidized highway system.Late last year TDOT revised its shortfall projection upward, to $5.5 billion through 2015. "This equates to a $1.3 billion shortfall over the next five years," says TDOT spokesman Julie Oaks. "If current trends continue, the funding gap could grow significantly."

Meanwhile, U.S. Secretary of Transportation Mary Peters is urging states toward the edge of the federal nest, touting toll roads and promoting private investment in infrastructure projects. Having passed pilot toll legislation last year and with public-private partnership (PPP) legislation in the works, Tennessee—historically among the most conservative states regarding transportation funding—seems ready to take the plunge into alternative financing.

TDOT Commissioner Gerald Nicely says the state faces a long-term problem that will demand "fundamental change" in the way infrastructure is funded—a forecast echoed by industry insiders and lawmakers in Tennessee and across the United States.

James Weaver, general counsel to the Tennessee Road Builders Association (TRBA) and the Tennessee Chamber of Commerce and Industry, says the problem is multi-faceted, involving policy at every level of government, and it is indiscriminate, impacting quality of life or economic opportunity in every part of the state. "It can't be a partisan issue," Weaver says. "I have Republican friends who are just as interested in economic issues in the rural areas of the state as my Demo- cratic friends are. I have Republican friends who represent and work in urban areas, and they don't like sitting in traffic jams any more than my Democratic friends do. At the end of the day, they will be able to address the issue because it won't be partisan, we'll all be Tennesseans, and it's just about what's best for Tennessee."

Easier said than done when the problem is complex, the solutions are largely political, and the conversation must begin with a gut-check for lawmakers and taxpayers alike.

The rubber meets the road

Overseeing 14,150 miles of roadway and 19,519 state- and locally owned bridges, Tennessee has a lot on its plate with upkeep alone. According to the ASCE, vehicular traffic increased 48% in the state from 1990 to 2003. Much of that is commercial traffic—and trucks today are far heavier than road designers anticipated 40 years ago. The resulting wear and tear comes at a steep price. In 2005, according to TDOT's report, the state faced a $37.4 billion backlog of road and bridge projects addressing safety and congestion problems. That's part of $54.4 billion TDOT says it needs just to maintain and modernize the existing transportation system through 2030.

Those numbers have forced tough choices at the department. "TDOT's doing the best it can, but if you look at the way we're maintaining our roads today versus the way we maintained them seven, eight, 10 years ago, we're painting our roads rather than doing some really good maintenance on them," says Kent Starwalt, executive vice president of the TRBA.

But convincing Tennesseans that TDOT needs more of their money may be a hard sell. In 2003, Gov. Phil Bredesen took office having campaigned on the disparity between the quality of Tennessee's roads and its schools. Tennessee's infrastructure is still well-maintained relative to most other states; its highways get good marks from the trucking industry, which in 2006 and 2007 called I-40 in Tennessee the best road in the nation.

The problem, says Pete DeLay, chairman of the Tennessee Infrastructure Alliance, is that gradual degradation is not dramatic; the time between a funding cut and its effect dulls any sense of public urgency. The result can be both dangerous and expensive, he says. "Our road system is not much different from your house. If you let your house reach a certain point of disrepair, you almost don't have enough money to fix it."

Pete Rahn, director of the Missouri Department of Transportation and new president of the American Association of State Highway and Transportation Officials, agrees. "You have to get into a crisis circumstance for the public to recognize it," he says. "We've already gone off the curve, where things that could have been fixed for $1 now cost us $5."

The cost of congestion

Weaver has a theory for why truckers rate Tennessee's interstates so highly: "Every road is smooth when you're sitting still in a traffic jam." Weaver says the interstate "parking lot" he sees from his office window in Nashville suggests Tennessee's infrastructure crisis isn't looming—it's here. Congestion is "probably one of the top two quality-of-life issues facing every urban area in the state," he says.

Darek Bell, co-owner of Bell and Associates Construction Co., notes that in 2006 Nissan chose to locate its headquarters in Franklin, a Nashville suburb, rather than to Atlanta—a city whose gridlock has cost billions of dollars in potential new business, he says. Now Franklin is gridlocked, too. According to TDOT, Middle Tennessee is home to 21 of the state's most congested stretches of urban interstate; the ASCE calculates Nashville commuters spend $730 annually in excess fuel and lost time. But all of metro Tennessee is feeling the crunch. While Memphis is less congested than Nashville, according to the Urban Mobility Report, its rate of congestion from 1982 to 2003 was 1,000%—nearly triple Atlanta's.

It's a scene "repeated from Mountain City to Memphis," Weaver adds. "There's no construction out there. It's just too many cars and too few lanes." Indeed, there has been no new road construction in Tennessee in Bredesen's five-year tenure. In 2006, budget concerns prompted TDOT to defer temporarily 12 projects already on the board and include no new projects in its three-year plan. Maintenance has been TDOT's funding priority, Nicely says. "I think the real hit is going to be expanding capacity and widening and building new transportation facilities."

Continued...

Disconnected

Rural communities are feeling the hit, too. TDOT advocates a four-lane "connector" between every county seat and the nearest interstate, but with money scarce, 21 rural counties without connector funding are going nowhere fast. A 2005 TRBA study says county employment statistics indicate "a direct correlation between jobs and roads." They would get no argument from Pickett County Executive Stephen Bilbrey, whose office in Byrdstown, near the Kentucky line, is a 40-mile, two-lane stretch to I-40. His county's 7.1% unemployment rate is among Tennessee's highest.

Bilbrey says lack of a connector caused Hutchinson Manufacturing, once the county's biggest employer, to relocate some operations to "connected" Livingston; it also effectively ended Pickett County's courtship with a new manufacturer. While retirees have moved there, the county is losing younger folks. Some 80% of Pickett's high school graduates who go on to college don't return, he says, and the under-populated school system risks losing state funding.

One road can now drive a county's economy, he says. "People want to get that product in and out. They don't want to store it. Just-in-time manufacturing is key." That's especially true in Tennessee, among the top five states for road-based distribution, with 92% of its commodities delivered and transported on highways.

Rahn illustrates the point with a Chinese proverb: "To be rich, first you need a road." China, in an infrastructure boom, now knows what "the American public has forgotten," he says, "the connection between our transportation system and our economy."

A taxing problem

You can't build roads without money, and Tennessee's gas tax has been an increasingly weak source of it. Stuck at 21.4 cents a gallon since the 1980s, the tax earns less as cars gain fuel efficiency. Unlike Georgia's gas sales tax, Tennessee's flat tax doesn't increase with the price of fuel.

Ultimately, Nicely says, Tennessee will have to consider more elastic forms of funding, such as a gas tax indexed to a standard measure like the Consumer Price Index. But perhaps because of Tennessee's noticeably high sales tax, any move that smacks of a tax hike can bring political fallout. And with gas now at $3 a gallon, even Bredesen—who has long advocated raising the state gas tax—has toned down tax talk.

"It's hard to explain to people why there's a problem [with road funding]," Bell says. "Everybody I talk to thinks they are paying a fortune in taxes, when they're paying what they were 20 years ago."

The new "t-word"

What Tennessee lacks in fiscal imagination, it has made up for in responsibility. One of the few "pay-as-you-go" states, Tennessee doesn't bond its roads projects. But that's about to change, at least to some degree.

Bredesen says he does not like bonding as "a general solution." But he has not yet dismissed Nicely's proposal to borrow $145 million to complete 840S, the long-stalled, 20-year-old Nashville loop. Pay-as-you-go is slow, Bredesen admits, and time-sensitive projects might justify bonding, especially if those bonds are backed by a designated revenue stream—like tolls.

Lawmakers' sudden willingness to discuss tolling reflects both the depth of their concern about funding and the degree to which the federal government has been able to breathe new life into an old concept. "That's all they talk about, every time you get around that bunch in Washington," says House Transportation chairman Phillip Pinion (D-Union City). "They are strong proponents of tolling and public-private."

Thirty-three states toll, according to the National Governor's Association, and five have opened new toll lanes or roads since 1990. Another six are planning their first toll roads.

Make that seven.

Last year the Tennessee General Assembly passed legislation authorizing two pilot toll projects, a bridge and a road. The projects won't be named until next year, but a likely candidate is a $267 million Hadley Bend Connector linking Nashville to Sumner County, home of the legislation's Senate sponsor, Diane Black (R-Gallatin). The state likely would pay for the pilot projects with toll-backed bonds.

As a relative latecomer to tolling, Tennessee can learn from other states' experience, Pinion says. While Texas has a patchwork of several small tolling authorities, for example, Tennessee gives sole authority to the state. Tennessee also would prohibit tolling existing infrastructure, avoiding the sort of legal upheaval caused by Pennsylvania Gov. Ed Rendell's current push to toll I-80.

Most critical to tolling's success are accurate economic projections. Georgia lawmakers took a gamble when they built the state's only toll road near Atlanta in the 1990s. After a few excruciating months, the projected traffic came—and stayed. Georgia is now considering new projects, including express toll lanes. Pinion says since Tennessee's toll legislation passed, several communities, including Memphis and Soddy-Daisy, near Chattanooga, have proposed pilot projects. During this legislative session, he says, he'll propose lifting the two-pilot cap.

If you build it, will they come?

Pinion also plans to introduce PPP legislation, an idea that seems to be gaining traction among Tennessee's lawmakers. PPPs generally allow private investors to finance roads or bridges, recoup their investment through tolls for a set lease period, and then turn operations back over to the state. With no new revenue streams in sight, Pinion says, PPPs could offer time-effective solutions to communities' infrastructure problems.

Starwalt warns that the state should proceed with caution: "It's important, if these projects are done, to make sure they're viable. Is there going to be enough money to build a bridge in Soddy-Daisy, enough revenue from the tolls? If there isn't, what liability does the state have? Do they let the bridge rot and close it and say you can't use it anymore?"

Bell says PPPs allow the private sector to absorb the risk of projects that may not pay off until years after initial investment. Michigan attorney Aleksandra Miziolek, who specializes in PPP contracts and law, says by the time the state takes over a toll facility, it usually generates money well beyond maintenance costs. Bredesen is blunt: "There's nothing magic about public-private partnerships. In the end, you've got to get the revenue from somewhere to pay off the bonds or to pay for the construction, and basically that's either taxes or tolls. There's no other magic source of money."

Ultimately, the state's role is to provide necessary access regardless of profitability, Rahn says. "Most of our system is not economically viable as a toll road. I think 8% to 10% is probably a reasonable range that we can count on PPPs to come up with a financing solution."

Getting there from here

That begs a larger question: How big a fix is asphalt?

To citizens of Pickett County or commuters in Nashville, its merits are obvious. "There will always be a need to widen roads and to build new roads," says Brent Sweger, a planner with the Kentucky Transportation Cabinet. "But you cannot pave your way out of congestion."

Nicely's TDOT has pushed proactive congestion-relief programs (like Smart- Way and Smartfix, which allow drivers to avoid bottlenecks). And TDOT's 2005 plan recommends a 10-year, $665 million strategic investment in alternative transportation, from bike routes to public transit—though "revenue and cost issues obviously have limited any ability to add strategic investment dollars into our budget," Oaks says.

But Trip Pollard, an attorney from the Southern Environmental Law Center who helped craft the plan, says an effective, sustainable transportation system requires more fundamental change. Indiscriminate road building and restrictive zoning, which separate people from where they shop and work, are policies "built on the assumption of cheap oil, which we don't have anymore," Pollard says.

Sweger agrees: "Highway planning and design have only focused on additional pavement as a solution. But the number-one thing that's driving congestion is not the lack of funding or the lack of necessary roads—it's not properly addressing how land is developed."

In the long term, he says, states must convince communities to consider infrastructure in a whole new way.

That project will take a lot more than money.

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