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December 20, 2014

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Has I-11 hit a dead end?

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Julie Jacobson / AP

From left, Arizona Department of Transportation Director John Halikowski, Arizona Gov. Jan Brewer, Nevada Gov. Brian Sandoval, Steven Horsford, D-Nev., and Nevada Department of Transportation Director Rudy Malfabon unveil a sign marking the corridor for the future Interstate 11 between Phoenix and Las Vegas, Friday, March 21, 2014, at the Hoover Dam in Arizona. It was a symbolic effort meant to keep up momentum on the project, which is coming of age in an era of scarce highway funding.

Interstate 11 is the West’s dream transportation project. It would link Las Vegas to Phoenix — the two largest U.S. cities not yet connected by an interstate — and eventually could stretch from Mexico to Canada.

Senate Majority Leader Harry Reid is ushering the project through the Washington bureaucracy. Every politician and chamber of commerce between Reno and Phoenix supports the project to boost the economy with swifter routes for tourists and truck drivers navigating the West.

After a decade of planning, it’s almost time to start building. But there’s a bump in the road: There’s no money.

The federal fund that pays for most freeway projects is bankrupt, and Congress isn’t doing anything to bail it out. Without a fix soon, I-11 could remain stacks of rolled-up plans gathering dust with every other major transportation project in America.

“This may be the most dire moment the American transportation system has faced in decades,” Transportation Secretary Anthony Foxx said.

I-11’s challenges are indicative of partisan rifts in Congress that have stalled major policy reforms in recent years, from immigration to taxes to housing.

Transportation officials must find a way to build and maintain a network of interstates for the era of the Prius, while Congress has equipped the nation’s highway fund with a financial structure built in the era of the ’57 Chevy.

Lawmakers are unlikely to take the time or spend the political capital to repair the massive sinkholes in the highway fund, especially during an election year. They’ll likely just pave over the fund’s minor cracks before it runs out of money this summer.

But that’s not enough to save I-11.

A problem ignored

Lawmakers knew this day was coming a decade ago. The Highway Trust Fund, established in 1956, has been steadily losing money, and its expenses now outpace revenue by about $20 billion a year.

Money to build and repair roads relies heavily on gas taxes. But Congress hasn’t raised the gas tax rate since 1993. For 21 years, the federal rate has been stalled at 18.4 cents per gallon.

Over that same period, the average price of a gallon of gas has zoomed up by 182 percent — from $1.30 to $3.66.

The highway fund also has taken hits because its funding model conflicts with other federal priorities, such as promoting more fuel-efficient cars and growing ridership on public transit. Those initiatives help with climate change and traffic, but they also mean drivers fill up less often and produce less in gas tax revenue than ever before.

Making matters worse, the politics of Washington have favored austerity over spending big on infrastructure projects since the Great Recession.

“It’s such an outdated model,” said Tracy Larkin Thomason, deputy director for the Southern Nevada region of the state’s Department of Transportation. “We’re basically not traveling the roads the way we used to.”

By August, the Highway Trust Fund — the nation’s transportation bank account — will start bouncing checks, Foxx said.

“Your morning commute will be longer because the roads you’re driving on will crumble, and no one will show up to fix them,” Foxx said.

Congress often approves minor repairs to avert near-term disasters, and that could happen with the highway fund. Over the past five years, Congress has passed 27 short-term measures to keep the fund barely in the black. Typically, they inject billions from the nation’s primary checking account, the general fund. Senate Democrats are debating the 28th short-term fix, and House Republicans are likely to go along with it.

Even if that bill passes, the fund will run out of money again soon without major reform in how it raises money.

“You just kick it down the road one year at a time, and that’s not a good way to make policy because you can’t do long-range planning,” said Rep. Dina Titus, a Las Vegas Democrat and the only Nevadan on the House Transportation Committee.

It’s hard to see Congress solving the highway fund’s problems anytime soon. Lawmakers would likely need to raise the gas tax or create a new system to catch hybrid car drivers, such as a tax on miles traveled. But any tax increase is dead on arrival in Washington. Tea Party Republicans oppose any growth in spending, and Democrats and Republicans can’t pass even popular tax reform bills.

What it means for I-11

So Nevada transportation officials hold their breath waiting for Congress to save I-11.

But they’re also realists. This ordeal underscores that the federal government will play a smaller role in transportation funding in the future.

“They recognize that the cavalry is not coming, so they’re trying to think of their own tailored solutions,” said Robert Puentes, a senior fellow of transportation at the Brookings Institute.

In Nevada, officials already have turned to private companies and local taxpayers to get big projects done. It’s a sign of what may come for I-11, which doesn’t yet have a price tag. Public-private deals, popular in Europe, are relatively new in the United States, with a handful of states having tried them.

Here’s how they work: States borrow a couple hundred million dollars from a private company to start construction right away but pay the loan back slowly over many years with interest. It’s the transportation version of a mortgage, Larkin Thomason said.

Nevada is partnering with private companies for the first time to raise about $200 million to retool almost four miles of congested Interstate 15 through downtown Las Vegas. The $1 billion Project Neon is expected to finish by 2018 or 2019. If the project relied on federal highway funds, it would take 15 years longer, Larkin Thomason said.

Some states have turned to sales or property taxes for transportation work. Clark County boosted its own gas tax. The commission in September voted to tie the county’s fuel tax to inflation, allowing the rate to rise gradually. It is expected to generate $700 million in revenue through bonding for more than 180 local transportation projects over the next three years.

That will help pay in part for 15 miles of new highway in Boulder City that planners hope eventually will serve as the first road laid for I-11. Construction could begin by the end of this year.

Puentes warned there will be growing pains as America adjusts to building highways without federal help. Major projects like I-11 may have to be put on hold for decades.

That means the nation will need new ways to transport people, ideas, goods and money.

“Transportation really affects everything we do,” Larkin Thomason said. “And it really is necessary for our economic vitality.”

What Nevada's delegation says

Nevada, thanks to its powerful players in Washington, has traditionally leaned on federal funds for big projects such as I-11. Without a fix to the federal fund, Nevada will have to push back or cancel plans.

Sens. Harry Reid, a Democrat, and Dean Heller, a Republican, continue lobbying to secure federal funding for I-11, even if the highway’s long-term problems don’t get fixed. They urged senators to include a congressional designation for I-11’s northern route in the next transportation bill, a move that would signal Congress’ official seal of approval. That would open potential fundraising avenues for state officials, much like a 2012 designation did for the southern route.

“It’s about just getting your priorities straight on these issues,” Heller said. “And the squeaky wheel gets the grease around here, so you start talking about it now, and it may take 10 years or a dozen years to get something moving.”

Rep. Steven Horsford, D-Nev., is co-sponsoring a bill to create a national infrastructure bank that would fund transportation projects through loans via the private sector.

Rep. Mark Amodei, R-Nev.: “It is a phenomenally tough time for highway funding money. You can get the policy stuff lined up, but finding the funding is still going to be a pretty significant challenge.”

Rep. Joe Heck, R-Nev.: “Funding transportation projects in a time of tight budgets and no earmarks has to be about priorities, and this (I-11) project, which would connect two major cities and boost economic growth in both areas, must be a priority.”

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