Two simple ways to fix the SR-520 cost-overrun mess

January 13, 2014

Washington Transportation Secretary Lynn Peterson recently admitted the SR-520 Bridge Project she manages is $420 million over budget. Cost overruns have already consumed the $250 million contingency fund, and Secretary Peterson says she needs $170 million more to keep the project afloat. Peterson said “the good news” is she wants to get the $170 million from increased borrowing and by taking money from road improvements in other communities.

That’s pretty far from good news.

More debt would be paid back by taking more toll money from drivers. But issuing debt would also lead to other problems not addressed by the Secretary.

State transportation officials want to impose tolls on I-90 or increase in the gas tax to fund the $1.4 billion Montlake section of SR-520. Maximizing debt capacity on SR-520 would increase that pressure and limit financial options. That is not good precedent.

Secretary Peterson will likely try to get much of the money by drawing funds from many projects in communities around the state. It wouldn’t be the first time communities lost money because of mis-managed projects. Lawmakers promised the public the gas tax increases in 2003 and 2005 would go to specific projects. A number of those projects have been de-funded indefinitely because cost overruns on other projects siphoned off their money.

The practice of de-funding projects put public safety at risk.  For an example, state officials could end funding for every bridge replacement or seismic retrofit budgeted this biennium under the state’s preservation program. Such actions would shift about $157 million to SR-520; still short of what Secretary Peterson says is needed.

Or, state leaders could cancel funding for the following regional highway improvement projects in the current 2013-15 biennium:

The Secretary said taxpayers will not be on hook for cost overruns. However, people in many communities may not receive the safety improvements they were promised, or they will have to pay additional tolls, either directly on SR-520 or indirectly on I-90.

It doesn’t have to be this way. Lawmakers could easily enact changes that would free up enough money to pay for all cost overruns without borrowing more money or putting public safety at risk.  Here are two obvious commonsense reforms:

  • State officials could stop charging themselves sales tax on the state’s own public projects
    • Lawmakers require state officials to add sales tax on top of construction costs, a device that inflates the cost of building roads to shift gas tax money into the general fund to spend it on other programs. Not charging themselves sales tax on the SR-520 project alone would free up approximately $200 million, more than enough to cover current cost overruns.

 

  • Using normal market construction wages, rather than artificial prevailing wages
    • State officials charge themselves an artificial prevailing “minimum wage,” usually equal to union-level wages in the area. Studies show imposing prevailing wages boosts total project cost by 5% to 15%. At a conservative 5%, using normal market construction wages on the SR-520 replacement bridge would save about $190 million, again more than enough to cover current cost overruns.

 

Commonsense policy changes like these would get the SR-520 project moving forward without sacrificing congestion relief, safety, or quality. Public officials should be wise and accountable with the billions of dollars we give them in transportation taxes.  The traveling public is counting on them to keep their promise to keep road and bridge projects on time and on budget.

Comments

520 Cost Overrun Solutions

The common sense policy changes Bob describes would solve the 520 cost overrun problem, but not get at the root of 520's unsustainable financial situation. The bridge's design is too expensive, and the refusal by the State to charge all the current and future users a toll gives away massive revenue potential.

The currently unfunded west end (Montlake/Portage Bay) segment is outrageously expensive, due to all sorts of non-highway design components and mitigation measures that go way beyond what is required by law. The $1.4 BILLION cost of the current design is outrageous!

Surely, there must be some cost savings to be found in a scaled-back design. No State highway should cost $1 BILLION per mile. A more affordable design would help keep the project on budget.

In addition, the State should toll all the users of the current and new bridge. Right now, car and truck drivers are paying a toll to help fund the bridge's replacement. Transit is exempt, even if busses create the most wear and tear on the facility. Also, the unfunded segment (west end) should be tolled ASAP. Why aren't people using this helping pay for its replacement, like those already paying tolls on the Lake Washington bridge itself?

On a permanent basis, the State simply must charge users of all seven new lanes. The current plan is to continue tolling car and truck drivers for the four general purpose lanes that will be replaced. HOV's and Transit vehicles should be tolled to pay for the new diamond lanes they will directly benefit from, as well.

Finally, bicyclists and pedestrians should also pay for the new seventh lane under construction. Considering this lane will be wider than any of the motorized vehicle lanes, it's only fair.

The State can no longer plan to give these special interests a free ride. All of 520's users should pay for the direct benefit they receive.

Transportation mess

All good points, thank you. In addition:
1. Put hold on all expenditures going to Sound Transit, King County Metro and all projects boring holes for underground "Terror dream" places.
2. Release all WSDOT employees and contract with foreigners (like Indiana has done) to eliminate congestion. Payment based upon traffic moving volume per unit of time during rush hours. Allow only lowest bidders to perform (including non union).
3. Start plans for replacing floating bridges with Europe style suspension bridges via commercial/foreign contractors.
4. Consult Army engineers for how to contract for old bridge repairs.
5. Deregulate the taxi industry and allow "jitney" style competition from "qualified" drivers. Encourage use of auto-braking vehicles on bus/light rail route replacements
6. Start a competition over old rail lines (like Burk Gillman near UW) to demonstrate a couple (or more) miles of true, profitable 21st century systems like Israel is planning on installing.

Transportation Mess

If the tolls on 520 had been reasonable. Like $1.50 each way anytime. It wouldn't be empty at rush hour with only the wealthy using it. Meanwhile. I-405, I-5 and I-90 not to mention all the regular streets are being trashed by the over use. (We will pay for that). We will pay and pay and pay. We deserve it. We do nothing about it but complain and editorialize.

Walking thru the parking lot on Mercer Island after a Rotary meeting I asked Judy Clibborn, head of state transportation committee about why they didn't charge an amount low enough on 520 that would make it used by masses thus bringing in more revenues and she said "It's working just fine as we expected."

HEY DID YOU KNOW THAT THE CONTRACT BETWEEN THE STATE AND THE CONTRACTOR CALLS FOR FINES DAILY FOR DELAYS CAUSED BY THE CONTRACTOR. BUT WAIT................... THE STATE HAS TO PAY THE CONTRACTOR TWICE AS MUCH FOR THOSE DELAYS. O THE CONTRACTOR PROFITS FROM DELAYS EVEN IF THEY CAUSE THEM HELLO!!!!!!

Sorry, why would this anger me right?

Do the people that do not use 520 know they are wasting as much in gas and tire wear etc. Not using 520?? Figure it out at sixty cents a mile. Pollution from cars idling no big deal.

What a joke we citizens are letting our elected leaders constantly trash us. It's the contractors fault, no it's the state's fault, no it's the contractors fault. Meanwhile they hire experts to determine whose fault it is.

Oh hear about a tunnel project. At least that ones closer to us getting a good reaming than the bridge. Still no Vaseline though. Who pays? us morons who let it happen.

Don't get me going on studded tires and what they do to our roads from October until April?? Oh sorry I forgot about the five snow days a year maybe.

This is OZ!