Unavoidable maze of financing
FINANCING THE Big Dig is a 2010 campaign issue. Five years after project completion, this speaks volumes about the challenges associated with building and paying for a mega-project.
Federal and state funding programs work well for smaller projects. Their price tags are easier to swallow and their construction cycles are shorter. Typically, these projects are completely financed before a shovel ever goes into the ground.
On the other hand, mega-projects like the Big Dig are subject to multiple funding authorizations and annual appropriations. These projects are only partially funded when they go into construction. There’s no turning back, but the road ahead is unpaved.
This is a fundamental and unavoidable flaw. Sure, finance plans are required. However, due to the size and duration of a mega-project, these plans cannot accurately consider game-changing events. Financing strategies may be disrupted by the economy, cost increases, regional rivalries, political shifts, and the willingness of future leaders to follow through on the commitments of their predecessors.
Big Dig financing was affected by all of the above, and then some. Reductions in the amount of anticipated federal aid as well as the need to increase spending on state and local road and bridge programs, resulted in a financing strategy that resembled a patchwork quilt. Direct (pay-as-you-go) spending, federal aid, state bonds, tolls, and borrowing against future grants were all included. Always controversial and sometimes messy, the project was completed and the benefits have been realized.
In future big projects, the gas tax, tolls, borrowing against future grants, spending priorities, and program cuts must all be on the table and debated. On the revenue side, taxes and tolls are political hot potatoes, but they tie directly to infrastructure investment, and make sense. Between the two, the gas tax offers the most benefit for the least impact on the individual. The point is that whatever our personal preferences, leaders need to make choices, sell those choices, accept that they will be criticized, and hope that those who come after will follow through or find another way to get the job done.
The value of any big project and how it is financed will always be subject to debate. The Big Dig experience suggests that future leaders will shy away from mega-projects. That would be a terrible mistake. The Big Dig left behind a lot of good. Just ask the people who travel through and above it everyday, and remember what it replaced.
James J. Kerasiotes was secretary of transportation and Turnpike Authority chairman. He oversaw the Big Dig from 1991 to 2000. He is currently COO of Wing Inc.