Fixing Interstate 81 There’s broad support for widening I-81, but if the state uses tolls to fund the project, how will that affect the trucking industry and businesses along the corridor?
by Robert Burke Virginia Business October 2003
You don’t need to warn Don Zimmerman about big trucks. He faces them almost daily on the drive between his home in Vinton and his job at a steel manufacturing plant in Salem. As he wheels his Isuzu Rodeo along crowded Interstate 81 near Roanoke, lines of tractor-trailers roar past or creep up the hills of this mountainous region. “I definitely see it first hand,” says Zimmerman, a vice president at John Hancock Joist Co., of the endless flow of trucks. “It’s just amazing.”
Once safely at his desk, though, Zimmerman turns around and sends his nine-truck fleet out on the interstate. Hancock makes steel girders and joists, and I-81 is its pipeline to customers all over the country. “I know I’m part of the problem,” he says. “I just don’t know what the solution will be.”
The problem, of course, is a lot bigger than Zimmerman’s small fleet. I-81 is one of the busiest truck routes in the country, running from Tennessee through New York to the Canadian border. The 325 miles in Virginia carry anywhere from 25,000 to about 50,000 vehicles a day depending on the section of road, with the count topping 60,000 in some urbanized areas. And on this road, cars and trucks are pushed together with ferocity. Designed to handle 15 percent truck traffic, in some places trucks account for more than a third of vehicles, far higher than other interstates in Virginia. It’s also dangerous. In a four-month period last year, there were 694 accidents on I-81, 228 involving trucks, with 12 deaths and 352 injuries. There’s wide agreement today that I-81 badly needs to be improved, not only to save lives but for the long-term economic health of a huge swath of western Virginia.
But what to do and how to pay for it? Those questions are pitting region against region and industry against industry. At the crux is the idea of using tolls to pay the multibillion cost of widening the road. In September two private-sector groups gave detailed proposals for widening I-81 to VDOT and both depend on tolls. Truck-dependent companies up and down the Shenandoah Valley loathe the idea of tolls. On the flip side, though, are road-builders hurt by cutbacks in the state’s transportation budget — for them a toll-funded project of this size would be a bonanza. And, for state transportation planners, tolls might be the only way to get the work done. Virginia hasn’t taken any comprehensive action on transportation funding since raising the sales tax a half-cent in 1986. Today its 17.5-cent-a-gallon motor fuels tax rate is 41st in the nation. “If we want to realistically consider improvements more in the near term rather than a generation away on Interstate 81,” says VDOT Commissioner Philip Shucet, “we’re going to have to look at some use of tolls.”
The two toll-based proposals come via the state’s 1995 Public-Private Transportation Act. Under the law, companies can bid on a project and make a profit if they finish on time and on budget. The more complex and costly proposal comes from a consortium of companies called Star Solutions. It proposes adding two new lanes in each direction just for trucks. Trucks and cars would be separated by rumble strips in narrower corridors and grassy medians elsewhere, especially north of Harrisonburg. The project would take about 12 years and cost $6.3 billion in 2003 dollars, which includes $1.6 billion in federal dollars and $98 million from VDOT. Mandatory separation of cars and trucks solves the safety issue, says James W. Atwell, a former VDOT assistant commissioner who is part of the Star team. “When you’ve got two lanes of traffic and those heavy trucks... nobody’s going to pass,” he says. “But when you separate the cars and trucks it provides for more free movement and free flow of traffic.”
The Star plan would levy tolls only on trucks, which would pay at least $68 for a trip through the state. In addition, the Star plan would build eight truck-only flyovers and make other interchange improvements.
The second bid is from Fluor Virginia, a group led by construction and engineering giant Fluor Corp. It has a lower estimated cost — $5.9 billion — and would take eight years to complete. It calls for tolls on both cars and trucks, and adds a third lane in each direction for cars only, along with 10 truck-climbing lanes on steep grades. Cars driving the entire stretch would pay $16 and heavy trucks would pay $55. Fluor Virginia’s plan doesn’t require federal or state funds. Both proposals call for improving rail lines of Norfolk Southern, which could take about 500,000 trucks a year off the interstate.
Though VDOT has both proposals in hand, the process of deciding exactly what to do will likely go on for several more years. It’s taken nearly two years just to get this far. Star first submitted an unsolicited proposal to VDOT in January 2002. Fluor gave its original concept to VDOT in January of this year, and both submitted detailed and modified proposals last month. VDOT is just beginning a federally required environmental impact study.
The cost of each plan changed substantially from earlier estimates. Fluor previously said its plan would cost about $1.8 billion, but that figure climbed when VDOT increased the work it wanted Fluor to include, such as the rebuilding of interchanges. The Star group cut $1.9 billion from its plan by reducing the number of truck-only flyovers and new interchanges, plus using rumble strips and grass medians instead of concrete barriers to separate cars and trucks. But Star’s $6.3 billion estimate is in 2003 dollars. The actual cost over the life of the project is higher, but Star didn’t make that figure public.
The 550-member Virginia Trucking Association favors the Fluor design but says the projected tolls of both plans are too high. “We think it will have an impact not only on trucking companies based out there but on the companies that depend on trucks,” says Dale Bennett, the group’s executive vice president. The group also chided Star Solutions, saying its decision to not reveal full details of its financial plan “serves no purpose other than to mislead the public and policymakers regarding the true costs.”
There is regional resentment as well. “Tolls on trucks will ... make local industry less competitive, force some smaller local firms out of business and ultimately cause our area major losses in revenue and employment,” Augusta County Chamber of Commerce Director Ben Carter said at a VDOT hearing last fall. The American Trucking Association told the General Assembly last year that tolls on I-81 would encourage truckers to take other roads. U.S. 29, for example, could see up to a 273 percent increase in trucks, claimed the association’s vice president, Richard Holcomb. Bennett says many valley businesses and residents “feel like it’s unfair to them. All these years they paid a pretty significant amount of tax that was used to pay for improvements in other parts of the state. And now there seems to be a shift in policy that says, ‘Well, western Virginia, you’re going to have to fix it yourself and bear the cost alone.’”
Large truck-dependent companies could take a major financial hit if tolls are adopted. The valley has many such businesses, such as the Coors Brewing plant in Elkton, which employs about 460 people, and MeadWestvaco Corp., a paper and chemical maker in Covington that employs 3,000 in Virginia. Both put thousands of trucks on the interstate every year and have warned state officials that tolls would give an edge to their competition. Zimmerman says his business is especially at risk. “We should all know by now the delicate situation the steel industry is in,” he says. “We can’t take another rate hike of any kind.”
Shucet says he sympathizes with the region’s complaint that they’re getting a bad deal. “But we have to deal with reality,” he says. “Something needs to be done.” He said that whatever plan evolves won’t be a death blow to trucking companies—though he doesn’t say if that means he’s skeptical of their dire warnings or expects some other plan to emerge. “We will not have served anyone… if we adopt an alternative that puts the trucking industry out of business in Virginia. We won’t do that.”
One thing that could tip the balance toward the Star proposal is the chance for Virginia to get federal money for a pilot study on the mandatory separation of trucks and cars, which is only in the Star plan. Rep. Don Young, R-Alaska, has backed such a study and shown a preference for I-81. In May, Young told the Capitol Hill newspaper Roll Call that a truck-only project in Virginia would be “close enough to where the rest of my Congressional friends can see it. And once they see it they will be mandated across this country.”
That funding would come through the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21), which was due to expire last month. Young reportedly has earmarked $800 million for a truck-only project. Atwell of the Star team says Young’s pilot program gives Virginia “an opportunity to be on the cutting edge. That may be the wave of the future for the movement of truck freight.” Those federal dollars, though, aren’t guaranteed, something Fluor representatives like to point out. “What happens if another Congress doesn’t want to reauthorize that money?” asks Bud Oakey, a spokesman for the Fluor group. “It would be nice to get that money, but I don’t see how you can count on it.”
The state’s road-building companies think it would be nice to get the I-81 project going no matter how it’s paid for. Last year a $2.8 billion cut from VDOT’s six-year construction plan meant the loss of 166 projects statewide. “There’s no doubt about it that our industry is hurting,” says Richard D. Daugherity III, executive vice president of the Virginia Road and Transportation Builders Association. “I think that we are running into such a financial bind that one way or another you’re going to have to turn to tolls.”
And it doesn’t matter which consortium gets chosen, or if neither wins out. If Shucet succeeds in pushing through a major widening of I-81, then many of the state’s road-building companies will get the work anyway because it’s cheaper to use local suppliers of raw materials and labor. “There are enough companies in Virginia who are interested in this job,” says Jack Lanford, chairman of Roanoke-based Adams Construction, a Star team member and the state’s largest asphalt producer. “I don’t think we’re going to have any trouble at all lining up people to do it.”
Virginia’s problem is lining up the money. According to VDOT the buying power of the state’s transportation taxes has dropped 40 percent since 1986. At the same time, construction costs have risen 48 percent and the number of vehicle miles traveled has climbed 79 percent. The state today is short on revenues and so saddled with debt that its six-year transportation plan calls for borrowing $407 million from road construction to pay for road maintenance. And debt payments, which used to consume just 1 percent of transportation revenues in 1986, now use 13 percent.
Virginia’s approach to paying for road construction has changed a lot, says Ray Pethtel, a leader of the Fluor team who served as interim VDOT commissioner before Shucet’s arrival. For decades the state took a pay-as-you go approach. Then in the 1980s and 1990s it began borrowing but always had new revenue to cover the debt payments, says Pethtel. Under former governor Jim Gilmore, it began depending more on debt backed by future federal payments. “For a particular project that’s okay,” Pethtel says. “But when you’re trying to fund a whole program ... you’ve got to have new revenue.”
There is little chance that the current legislature would agree to any tax increase for transportation spending. In the most recent General Assembly session, proposals to raise money for road-building failed. Two bills sponsored by Sen. Kevin Miller, R-Harrisonburg, to add a 4.5 percent sales tax to the price of gasoline and to index the motor fuels tax to inflation both died in the Senate Finance Committee. A third bill, sponsored by Del. John A. Rollison III, R-Woodbridge, to dedicate a third of the annual insurance license tax to leverage bonds for road construction passed the House but died in the finance committee as well.
Rollison is a case study on the hazards of proposing transportation tax increases. He helped get two regional transportation referendums on the ballot last fall only to see them trounced by voters. Then in June, Rollison — an 18-year veteran and chairman of the House Transportation Committee — was beaten in a GOP primary by a 27-year-old conservative anti-tax challenger. That helped silence any talk of a fuel tax increase. “If I was looking at a gas tax increase, I wouldn’t hold out much hope for that this year,” says Daugherity, a self-described conservative Republican. “I don’t think it’ll ever get through the conservative House.”
Instead, tolls are emerging as a potential funding source for projects such as a part of the long-planned third crossing in Hampton Roads and a 14-mile section of high-occupancy, car-only toll lanes along the Capital Beltway in Northern Virginia. VDOT received an unsolicited PPTA proposal from Fluor Daniel for the latter project this summer. The I-81 project might break ground for more toll-funded roads, but its actual groundbreaking is still a long way off. Local governments have until early November to comment on the Star and Fluor plans, then there is a lengthy environmental review, negotiations with the Federal Highway Administration, public comment and likely challenges over the project’s environmental impact. Plus, pro-rail groups are pushing for improving rail infrastructure rather than laying new asphalt through some of Virginia’s most scenic areas. There’s no telling what might emerge. “As we work through that process and as we work through the environmental process, new options may take shape,” Shucet says.
Zimmerman, meanwhile, has learned to cope with his commute. The hard part is getting up to speed on the entrance ramps, he says. “It was no problem 25 years ago. You could almost get on with your eyes closed due to the low volume. But now you’d better be ready to go,” he says. “Once you’re on, it’s just a matter of keeping up with everyone else.” That’s true for anyone with a stake in what happens to I-81: Keep up, or get run over.
