The Role of Government Finance Professionals in the Coming Transportation Revolution
I’m a transportation geek – and I don’t mean I’m really into cars. In fact, while I have a passion for taking and writing about road trips, I hate driving. Correction, I hate commuting. So it goes without saying that I’m super excited about driverless cars, ridesharing, and other mobility options that will reduce dependence on personal vehicles. The crazy thing is that I live in the place that is, in my opinion, responsible for our dangerous addiction to personal vehicles: my beloved city of Los Angeles, California.
I was born in downtown Los Angeles and have lived in Southern California for most of my life. I grew up in the quintessential suburbs of Orange County. My immigrant grandmother lived with my family, and because she spoke broken English and didn’t know how to drive, she learned the public transit system and the local dial-a-ride. We went everywhere together on foot and via public/free transit. Once I moved to the East Coast for law school, I didn’t have a car and taught myself how to get around with a combination of taxis and public transportation.
When I graduated from law school and returned briefly to Orange County, the lack of easily accessible public transit and affordable taxis disheartened me. At that time, I made it my goal to do what I could to improve mobility through alternatives to personal vehicles. That is one of the reasons why I became a government finance attorney.
Today, I practice in Los Angeles, where I represent numerous banks and municipalities on a diverse array of public projects, including educational, city enterprise and transportation facilities. Because of my extensive experience representing municipalities and banks, I have a unique understanding of both sides of government finance: the needs of borrowers and the constraints of lenders. My deep knowledge of both players allows me to bridge the knowledge (both legal and practicable) gaps and avoid misunderstandings between banks and municipalities.
Understanding government’s unique issues and constituencies and balancing those factors with banks’ lending directives to approve loans is challenging, but also where I add the most value because I can see both sides of the issues and articulate solutions that work for both parties. Yet, at the end of the day, government finance really comes down to whether the revenues are, and will continue to be, sufficient.
In transportation finance in particular, the current financing mechanism needs attention and additional private participation. Since 1923, the primary source of revenue for state transportation programs and projects has been fuel taxes levied at the state and federal levels. Fuel taxes have declined as a source of money for transportation projects because their buying power is reduced by inflation and increased fuel efficiency. The irony is that as the number of clean energy/non-fossil fuel electric cars occupying our roads increases, funding of our infrastructure decreases.
New systems of user fees have been developed, particularly charging drivers on the basis of vehicle miles traveled, but to date, implementation of this method of revenue generation has been limited. Another funding option is the raising of taxes and fees, which can unfortunately put state and local governments at the mercy of the whim of fickle voters.
A more long-term viable alternative is increasing participation and collaboration with private companies. With private companies like Apple, General Motors, Lyft and BMW Group expanding their footprints into driverless cars and other mobility options, we should encourage participation in the financing of the necessary infrastructure upgrades required to facilitate the coming transportation revolution. “P3s” (public-private-partnerships) also provide greater flexibility for states and local governments because, if properly structured, voter approval may not be required and the limited general fund and other funds of such governments may not be at risk. Proper structuring will require active participation by government finance professionals.
To usher in and maximize the effectiveness and safety of the oncoming transportation revolution, transportation agencies, lenders, private companies and policymakers will need the assistance and insight of government finance professionals to identify unique issues and continue to create legal financing structures that maximize government participation and efficiency. Working daily in the often myopic area of government finance, lawyers, financial advisors, bankers and other professionals in government finance can and are ready to assist in ensuring that the coming transportation revolution is as smooth as possible.