Davey makes pitch for infrastructure dollars

Text of US P3 Infrastructure Forum in New York

I know that I’m supposed to talk about the establishment and character of the State Infrastructure Bank we’re pursuing in Massachusetts, and I promise to do so while I’m standing up here today.  However, I have another goal in mind.

 By the time I’ve concluded this speech, I hope that all of you get the message that Massachusetts should be a target state for investment in infrastructure and that we are willing to consider any and all ideas.  And we want your ideas.  But much like Virginia, Florida, and Texas, all of which have benefited from the investment of private capital, the Commonwealth of Massachusetts should be considered in the same breath as those states as an innovator when it comes to financing infrastructure, and in particular, transportation infrastructure.

Perhaps, then, I should give you a profile of what transportation is in Massachusetts.  For those of you who haven’t visited the Commonwealth lately, MassDOT owns and operates highways, airports, the Port of Boston, the mass transit and commuter rail systems known as the “T,” regional transit systems, and the entity we use to collect fees that to a large degree fund our transportation system, the Registry of Motor Vehicles, or RMV.

In all, we have 10,000 employees, the vast majority of them unionized.

At the highway, aeronautics and RMV, we have an operating budget of approximately three-quarters of a billion dollars.  The T’s operating budget is more than $1.6 billion, and it carries 1.3 million passengers a day on both commuter rail as well as the T, which is the oldest public mass transit system in the US.  By the way, we’re expecting that number of riders to increase by close to 25 percent over the next decade, so capacity is becoming an issue, not just the required “state of good repair.” 

The highway system includes the Massachusetts Turnpike which stretches for 138 miles across just about the entire state, as well as thousands of lane miles distributed among 4 major interstate highways and dozens of intrastate highways and hundreds of local roads.  We will collect tolls of almost $400 million in our fiscal year 2013, and we spend just about every dime of it on debt service and maintenance. MassDOT’s annual capital budget has been running at about $1.75 billion for each of the past several years.  Much of that is federal dollars.

We’re also home to the Central Artery/Tunnel project, known better (or worse) as The Big Dig.  It is a fabulous facility which has changed the very character of the city of Boston, also for the better.  However, it cost way more than we anticipated – no understatement there – and the debt that was issued to finance the facility continues to be an albatross on the neck of the entire transportation system in Massachusetts.

To say the least, then, we have our challenges.  Certainly, we have financial challenges, as does every transportation system in the country.  Ours run from the amount we charge at the fare box; to how we capitalize expenses that we shouldn’t; to how we run the Port of Boston.

In our most recent round of budget deliberations for the T, while we still raised fares by 20 percent, which was met with universal disdain, the $181 million budget shortfall for fiscal 2013 was fixed primarily with “one-time” measures.  But we had no choice.

Yet we also have aspirational projects that we want to implement, primarily because, despite our financial challenges, we have customers that need to be served better by the system we have and should have.  We need to put our physical assets into the state of good repair that our customers demand and deserve.  We want to explore open road tolling and managed lanes on highways that are hugely congested and not just during rush hour.

Our overall goal, after all, is to have an integrated, financially sustainable system of rail, highway, and air to ensure cost effective and timely moveme4nt of people, goods, and materials.

We at the DOT have worked to reduce costs and improve the customer experience since the Department of Transportation was born three years ago, thanks to the leadership of the governor and the Legislature.  Transportation reform gave us the tools and resources to make investments, to reduce costs, and to become customer focused.

In response, we’ve reformed benefits at the T and DOT like health care and pensions, bringing them in line with benefits comparable in the private sector. We’ve had a heightened sense of urgency and been more creative in project delivery, from our nationally recognized Fast 14 project, heavy lift bridges, and bridges in a backpack. We’re completing some projects in days not years. Our unprecedented Accelerated Bridge Program is a the largest statewide transportation investment program in the Commonwealth’s history, reducing the number of structurally deficit bridges by almost 20 percent, which will reduce our maintenance costs.

The Administration has also funded our local road assistance program (Chapter 90) at historically high levels. Online Registry transactions will hit a record this year, reducing on the bricks and mortar branches and reducing costs.

All the while the MBTA’s ridership surged to its highest level since 1946, while we delivered on real-time data, mobile solutions for commuter rail ticketing and parking lot payments, new buses and upgraded stations at State Street, Orient Heights, Ashmont, Wonderland, and Science Park.

We are opening the doors to the system – publishing weekly information on all maintenance activities related to the Big Dig, providing tours of maintenance and operations centers at the MBTA so the public can learn more about how we operate this 114-year-old system, adding monthly public accountability meetings to discuss our metrics, and being honest with the public about where we need to improve.

And, we have much more coming, including subway countdown clocks, improved toll collections, real time traffic data on our highway signs, and completion of our five mega-bridge projects.

I am proud of my team and what they have delivered in the way of customer improvements, project delivery innovations and cost reductions.  We always can, and will continue push for more reform at the DOT. But it is clear that reform, alone, is not enough to solve the financial crises in transportation and deliver the quality service our customers deserve.

Massachusetts wants and needs a State Infrastructure Bank. However, we want this to be a real bank, one that’s capitalized and that serves as a vehicle to foster and invest in infrastructure throughout the Commonwealth.  We don’t want this entity to be simply a “pass-through” for federal aid. We want to partner with the private sector – the construction and concession industries, financial institutions, and state and local and union pension funds – as co-investors with the Commonwealth in a State Infrastructure Bank to finance and build infrastructure projects that are both necessary and creditworthy.  

For example, we see ports as one of the areas where we can leverage private investment matched with state dollars to deepen navigational channels, raise bridges, upgrade cranes, and expand handling areas to encourage more and much needed container traffic and sustainable growth in our fishing fleets.

As a co-investor, private entities can supply not only their own capital but also the credit expertise to determine which projects can be built with cash flows that are available to repay the credit that both the state and the private side together will supply through the infrastructure bank.

For the users of our assets – our customers – this is a commitment that the Commonwealth welcomes and supports by providing investment capital for the purpose of building and improving all infrastructure assets – ports, highways, rail, and airports. The state infrastructure bank is a tool that we hope to launch with the partnership of the Legislature soon. 

For transportation, we are at a crossroads in the Commonwealth where we so clearly see our choice: to tackle our transportation challenges head on and lay out a vision for the future of mobility OR to kick the can again and watch as the quality of life in the Commonwealth erodes.

What are those Public Private Partnerships that can serve as the most effective financing tool that also gets us what we need?  We need you to tell us what they are?

As representatives of the infrastructure investment sector, you are welcome to participate in the development and improvement of all of our transportation infrastructures assets.  However, the cost to participate is the extent to which you supply us with good ideas that first and foremost serve the needs of people of Massachusetts.  Make an effort to understand our needs.  That needs to be apparent at the outset; otherwise, we will think that all you want is to get paid.

Transportation investments and the maintenance of a safe, efficient network of ports, highways, rail, and airports creates jobs and improves the quality of life for our residents. Jobs, economic development and quality of life are our focus. This is the conversation happening in the Commonwealth and at the federal level.

Meet the Author
I would ask all of you in this room to be a part of that conversation and offer your ideas on how we can appropriately fund and expand and improve our transportation system which is vital to the health of our economy. I am working everyday to provide a safe transportation network, build credibility with MassDOT customers, and efficiently manage budgets with ever-constrained resources.  That said, I need your help with ideas that will take us that much further to achieving the best transportation system in the U.S.

Richard Davey is the Massachusetts Secretary of Transportation.