Making Nevada a more convenient place to visit is only one of the missions the transportation industry has taken on. A new interstate, toll roads and traffic cameras are just some ideas up for discussion. Recently, executives representing transportation in Nevada met at Holland & Hart’s Las Vegas office to discuss the changing modes of transportation in the Silver State.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues pertinent to their industries. Following is a condensed version of the roundtable discussion.
How is transportation funded?
Randall Walker: McCarran Airport is a separate, self-contained enterprise fund, so we don’t compete for resources. The aviation industries in the United States are not only self-sustained, but they have a federal bubble over them, that doesn’t allow their sponsoring agency to use airport revenues for non-aviation purposes. The only tax money we get, is airport improvement grants. The federal government collects money from our passengers and then gives us back a portion for the capital projects that are eligible for those grants like ramps, runways and taxiways. Some of it is entitlement we get every year no matter what and we have to spend it appropriately and some of it is discretionary. On average it’s about $25 million. Other than that, everything we use is generated at the airport.
Jacob Snow: We have a half-cent sales tax, nine-cent-per-gallon motor vehicle fuel tax and a one-cent jet aviation fuel tax that comes to the Regional Transportation Commission (RTC). Most of that money is designed for roadway construction. We do infrastructure, but all of our organizations are involved in facilitating commerce and, economic development. We’re a very small organization, a couple hundred employees. Only 4 percent of our budget goes for salary, wages and benefits. We have three primary missions: roadways, transit and traffic management. We also assist the Nevada Department of Transportation (NDOT) and the freeways by operating the signs that tell you the estimated travel times, closed-circuit television cameras, radar monitoring devices and ramp meters. We’re the only agency in the country that has that type of comprehensive traffic management role in operation.
Susan Martinovich: The Department of Transportation, as well as the DMV and the Department of Public Safety, are highway-funded agencies. The challenge that the state is facing with the billion-plus dollar shortfall, is out of the general fund, it’s not out of the highway fund. We are constitutionally protected and separate, but money that goes into the highway fund has to be spent on highway-related opportunities. It’s very categorical. That gives us the challenges to have projects ready in all these categories. We’re actually designing quite a few more projects than we have money for because we want to be ready in any category. I am very proud of the state because in the last few years we have never left federal money on the table. Last year we had enough projects ready and enough in the right categories that we received an additional $9 million in order to put out some additional projects, it’s hair raising but it’s kind of fun.
Are toll roads to supplement transportation funding in Nevada’s future?
Martinovich: It’s still on the table. Our bill, SB 83, came up to allow for the ability for us to have user fees. Boulder City Senator Hardy proposed a bill to do the same thing. It’s not the cure all, but it may be an opportunity to bring in money that’s out there and there’s a lot of opportunity for investment in transportation because it’s solid. It’s usually something the federal government isn’t going to let go away. Our hope is to at least open the door, allow us to look at it, see what’s out there and then really see what roadways would be the best fit for it. We’re looking at the I-15 corridor from 93 down to 215, because it would provide additional access into the resort corridor at Hacienda and at Harmon.
Allen Puliz: The Nevada Department of Transportation has done a great job doing a return-on-equity study before they build. As an industry, nobody likes toll roads, but we understand the need. Our only point was there has to be an option, and you don’t toll anything that the taxpayers have already paid for. We get a lot of people that want to toll the trucks. So as long as there’s an option available and anybody can use it, we’re not against it.
Martinovich: Our bill would be for new construction only, so you’d still have the free lanes. I know there’s always been concern expressed. Others think those free lanes are going to get congested or go to pot, and so people will be forced to use a toll road. That isn’t the case either. It’s to our benefit. We all want I-15 to be in good shape, it affects the economy of the state.
Will there be a traffic camera system implemented in Nevada?
Martinovich: We’re pursuing a bill to allow automated enforcement, but we’re still working on the privacy issues. If you run a red light, it would take a picture of your license plate, a picture of you in the car and send you a ticket. Then you could go and dispute it. Interchanges and intersections are the highest and most severe accidents and we’re giving more credibility to people who choose to break the law. There are still people’s concerns about privacy and being able to dispute the ticket if they weren’t driving.
What is the status of the new Terminal 3 at the airport?
Walker: Terminal 3 has been part of our master plan for a long time. The way we decide to build things at the airport is based on the activity at the Strip because most of our customers are people who are flying in to town to the convention or the hotel business. We have a master plan that says, at these passenger activity levels we need to have this many facilities in place to handle all those passengers. The projected date for Terminal 3 to open is June of 2012. The garage is done and the roadways are almost done, the landscape is going in and the outside of the building looks complete, but the inside of the building still has a way to go. The contractors should be out of there by the end of this year. Then the airlines and concessions have to come in and do their improvements and we have to move in, which all will take about six months. I have no question that we’ll open in June of 2012.
How does the price of gas affect your industry?
Martinovich: The price of gas means people will drive less, which means less revenue into the highway fund. Maybe there will be less congestion on the roads, but the roads still need to be maintained and taken care of. It also increases the prices to run our fleet and equipment. We’ve seen really good bids on projects and with gas going up we anticipate the cost of construction to go up as well.
Walker: High fuel costs are real problematic. Airlines can react very quickly to fuel prices, and we’re already starting to see that globally. We’ve already seen most of the major airlines announce that they’re going to reduce the growth that they announced a few months ago. It’s just a whole spin-off effect. I’m really worried about the increase in the gas price in terms of the overall economy to Las Vegas and Nevada. It’s going to have a significant impact.
Puliz: Not only has it affected tourism, it affects our costs. The trucking industry refigures every week on fuel surcharges. So if fuel goes up, it gets immediately passed on for every chicken to every cocktail that’s brought in from out of town because we don’t make a lot of this here ourselves.
Walker: We saw the last time the fuel was high, a lot more people were coming together in the same vehicle. You can’t do that in an airplane. Everybody pays for their own seat. So it becomes a little bit more problematic from the air service perspective. Air customers stay longer and tend to be more affluent than the driving customer.
Snow: The majority of the populous believes when the price of fuel goes up that the taxes are going up as well, and that is not the case.
What role do minority contractors play in bidding for transportation projects?
Snow: There’s a federal project and certain federal laws that apply to minority participation. We’ve essentially extended it to all of our projects and we have to set a goal every year based on what is possible in terms of the minority participation for the projects we have. We have to show progress towards meeting that goal and participate with the various chambers of commerce for outreach. RTC hosts periodic workshops where we bring in minority business owners and go through the steps of the process so that they can be certified to participate.
Walker: It’s always a challenge. The problem is that we have federal requirements. We had to complete a disparity study and now that it has been accepted by our board, we are re-implementing the things that we used to do for minority participation. We’re hopeful that we will start seeing the same level of participation we saw in the past but we also require good faith efforts in our bids. The contractor has to show us that they’ve gone out and made a real effort to try to include these businesses that are available. It’s all based on availability. The whole disparity study is, who’s available and are they being used. They have to come back and say, “I got bids from these people, and if I didn’t select them, here’s why.” Then we have to look at it and see if they really made a good faith effort, and if they did, then they’ve met the requirement. If they haven’t, then we have to deal with it.
Martinovich: We had what we call a race neutral stand. We hoped that they’d hire DBEs [Disadvantaged Business Enterprise] and it just didn’t happen. So about a year ago the Federal Highway asked us to be race conscious. We said “okay, but if we get sued, you’re with us,” and they agreed. So now we are race conscious, and we’re at about 10 percent. It’s actually pretty high. We have to get that outreach and say, now we have this goal, we’re required to meet it and we’ll lose federal funding if we don’t.
Can we expect an interstate connecting Las Vegas and Phoenix?
Snow: We’re making very good progress and getting more and more partners involved in the game, which really helps our chances. The first step that needs to be taken is to get Congress to designate that corridor as an interstate, which is the best way to make this happen. It takes the bureaucracy out of the equation. Once we can get that designation, we can really move things faster. People mention the Boulder City bypass. Really it’s the first phase of Interstate 11 in Nevada and they have been planning and designing to get that in place.
Martinovich: When a facility is designated as an interstate it has to be constructed to interstate standards and have full control of access within 25 years. You could also put up signage that says “Future I-11,” and that really helps with perception and getting future funding. Everyone is moving forward, we’ve talked to Arizona. We’re just waiting for funding, but if we come together and get the designation then it goes towards the earmarks if they still have them. In the next transportation bill, they’re talking about having a pot of money for projects of national significance. Well, the corridor between L.A. and Las Vegas is a corridor of national significance because it helps feed up into Salt Lake and across to the east. So we think that there’s a good opportunity by just getting everything in play. If everything was in place, as far as entitlements, money, legislation and everything had a green light, the construction process would take two to three years.
Puliz: It would be a huge economic impact in the state of Nevada. The north is more into distribution than we are, but it’s something the south is working on very diligently to try to grow.
Snow: Roughly 9 percent of all the visitors to Nevada come from Arizona, and 90 percent of that 9 percent coming by U.S. 93. We really need to focus on making sure that when the people want to make that trip they can get to and from Nevada without a really big back-up and keep that as congestion free as possible. It’s a very important corridor for us.
Martinovich: That’s why we’ve done the improvements on I-15. It’s going to get to a point where you can’t widen it enough to address all the needs. We’ve got to look at other routes that come into Nevada.
Will a high speed train from Las Vegas to Los Angeles ever exist in Nevada?
Snow: It’s not a fantasy. There’s a good chance that we will see Desert Express being funded, and if it gets funded it won’t take long to get that constructed. They’re working on finalizing their environmental impact statement. I expect that we’ll see an announcement on a record of decision from the Federal Railroad Administration sometime in the spring. Then they have the option of going forward with what we call a RIF. It’s a federal loan program that would lend them the several billion dollars of money they have asked for. They’re already preparing the preliminary applications for it. That would largely fund the project. They also have a considerable amount of private sector dollars that are involved in that.
Walker: It would have a benefit because it gives people another way to get to Las Vegas. Our goal is to bring people to Las Vegas to help drive the economy and be an asset working together to help the community thrive.
