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Wednesday, February 4, 2015

OPINION: We Must Find Unified Approach to Brent Spence Problem

Protestors gathered outside Covington's Rivercenter last week during the Kentucky and Ohio Governors' press conference regarding the Brent Spence Bridge./FTM

by Adam Meier

A previous article discussed the strengths and weaknesses of the recent proposal by Governors’ Beshear and Kasich to fund the Brent Spence Bridge (BSB).  This article is intended to build on that and offer a specific proposal to kick-start the conversation of finding a previously unconsidered non-toll funding mechanism.

There are no easy silver bullet solutions to funding the Brent Spence Bridge.  And this proposal may be dismissed as quickly as the rest.  But thus far, most of the solutions have been all or nothing…one extreme or the other.  The time has come to quit advocating the two extremes of the argument without suggesting any viable alternatives or compromise.  It’s not about your or their side winning the argument, it’s about finding a solution to a complex problem that affects us all, directly or indirectly, that we can all live with.

So let’s put our differences aside, and come up with a unified plan.  Federal aid is not likely to come our way when our two states are on such different pages.  It is time to get Northern Kentucky United to Build Our New Bridge Now.  We all want a bridge.  None of us want tolls.  And we all want the Federal Government to pay for it.  But how do we do it?

Well, now more than ever we are better situated to obtain Federal Funding.  We now have a Senate Majority Leader and Speaker of the House separated only by the BSB. And we all remember when President Obama stood in front of the BSB to use it as the backdrop to promote his jobs bill.  So that means we have the leaders of both legislative chambers and the chief executive officer of our country who have all expressed an interest in seeing the BSB built.  This puts us in a good position to finally get legislation to the floor.

I also think we have a compelling argument that this should be a federally funded project.  First, this is literally an interstate bridge, a prime example of interstate commerce, one of the (few) enumerated powers of our Federal Government.  Freight equaling roughly 3% of our national GDP crosses the bridge annually, and it was recently named the 4th most congested highway location by the American Transportation Research Institute.

It should also be noted that the modern interstate system, at the time of its creation, was referred to as the National System of Interstate and Defense Highways (emphasis added).  It was funded and built not only for civilian purposes, but also for national defense as a way to move military equipment and personnel efficiently.  So although we are told by the House Transportation and Infrastructure committee that it does not have the money, it is not the only logical federal source of the appropriation.

To the contrary, the Department of Defense has the largest budget.  We've spent more on a single plane than it will cost to build the Brent Spence Bridge.  DoD can find it in its budget to build bridges in Afghanistan and elsewhere, so why not here?  We have GE Aircraft Engines a few miles north of the BSB, as well as its DoD suppliers all along I-75 and I-71.  The BSB is a critical artery for our country's defense, so a Defense Authorization and Appropriation bill that authorizes and funds critical infrastructure at home would be germane to its mission and entirely appropriate.

But with that said, we should not simply rely on our federal legislature, cross our fingers, and hope this happens.   We need a catalyst—that is, a deliberate and unified action from our Kentucky and Ohio General Assembly.  We need our state level legislative leaders to initiate action and get the ball rolling.  One thing I've learned about projects that involve mixed funding from local/state and federal sources is that the federal government likes to see matching funds before kicking in its share.  It demonstrates that the state (or locality) is willing to put skin in the game, and that it is a real priority to its residents.  So far, when it comes to the BSB, state level elected officials point at the federal government to take responsibility for the entire cost.  Federal officials point at the state, propose an unlikely conditional funding source, or tell us to toll.  What I propose is that the State start the action by putting skin in the game, but doing so with Federal funds.

Each year, the states receive federal funds from the Federal Highway Trust Fund to use at its discretion for roads and infrastructure projects.  These funds are collected from the federal 18.4 cent/gallon gas tax paid at the pump.  Kentucky, for example, received in excess of $700M last year, although they allocated it in large part to the expansion of the Mountain Parkway, which, while important, is an intrastate route that will carry but a fraction of the traffic of the BSB.  The BSB project is expected to cost about $2.4B-$2.7B.  Since government projects rarely come in on time or under budget, let's assume a cost of $3B to make the math easy.  What I propose is that Kentucky, Ohio, and the Federal Government each come up with $1B of the funding needed.  I call this a Public-Public Partnership--since the term P3 is already used to describe Public-Private Partnership, I'll refer to this as a "3P".  Here is how it should work.

First, the Kentucky General Assembly should pass a resolution that states, in pertinent part, that "It is this Commonwealth's intention to fund 1/3 of the total project cost of the Brent Spence Bridge Corridor Project. If the Federal Government authorizes and appropriates funding in the amount of $1,000,000,000 in its FY 16 budget to be used on the Brent Spence Bridge project, the Kentucky State Legislature will allocate $200M in the 16/17 following biennial budget and issue bonds for the remaining $800M. This shall be conditional on the Ohio State General Assembly appropriating the same amount, without the use of tolls as a revenue source."  Let's call this the "Public-Public Partnership '3P' Resolution”.  We should ask that the federal legislation be completed no later than 12/31/15, prior to the next general assembly.  Ohio should also pass a companion resolution expressing the same intent.

This would demonstrate a commitment by our States to the Federal Government that we are serious, are unified, and have a common plan of action.  It is also easier to get $1 billion commitment than a $3 billion commitment from the Federal government.  As I said, we now have our local federal reps/senators in leadership positions.  So we ask them to sponsor the "Bridge to Somewhere Act", which authorizes and appropriates sufficient funds ($1B) to cover the BSB as a national project of defense infrastructure significance.  The appropriation can be made contingent on Ohio and Kentucky each raising $1B in funding for the project in its FY16/17 budget.  Let's assume our local federal leaders get this legislation passed, and the President signs this into law.

Once that is passed, the Kentucky General Assembly can allocate $200M using funds from the current year Federal Highway Trust Fund allocation in the biennial budget.  It's only a portion of Kentucky's expected share and still leaves some left over for other infrastructure needs across the state.  Kentucky could then issue bonds, which could be secured primarily by future trust funds allocations (to keep interest rates down) and secondarily out of future year general funds (in the unlikely event highway trust fund allocation won’t cover).  It should issue approximately $200M in 1 year maturity bonds, $200M in 2 year maturity bonds, $200M in 3 year maturity bonds, and $200M in 4 year maturity bonds.  Over the next 4 years, $200M from (plus amount to cover interest) shall be taken from the federal trust fund allocation to repay the matured bonds, with the remainder to be used for projects around the state. The Ohio legislature would contemporaneously follow the exact same process and now each state has $1B to contribute to the project.

This approach allows us to finance it with our future entitlements (if you will) of Federal Highway Trust Fund distributions.   Using the $200M/year formula, it still gives our state approximately 2/3 of its normal trust fund allocation and would likely be paid off in 4 years.   And did I mention there were no tolls...and that 100% Federal Funds are used to build the BSB?

What’s proposed above is merely an idea…a proposal...a conversation starter—with the hope that idea turns into a grown up dialogue.   We may need to change variables (i.e, amount, term and number of bond issuances) to get statewide legislative support, but if followed, it could be a viable plan.  A plan that is constitutional.  A plan that could have us breaking ground within a few years.  A plan that could find common ground with all involved.

So what’s next?  If you like what is presented above, call your state legislators, and tell him to sponsor or pass the 3P (not to be confused with P3) Resolution.  Contact your federal legislators and ask them to sponsor or pass the "Bridge To Somewhere Act".  And when these legislators have no clue what you are talking about, send them this article.  Share this article with friends.  Let's build momentum toward building our Brent Spence Bridge, soon, without tolls, and using federal funds.

Adam Meier is an attorney licensed in Kentucky and Ohio and a member of the Fort Thomas City Council

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