Smart roads, instant tolls: Q&A with a highway man

Veteran road engineer Ananth Prasad, the former transportation secretary and highways chief of Florida, now heads the transportation group at HNTB, one of the biggest U.S. public-infrastructure engineering firms. He was in Philadelphia Thursday, checking on work for PennDot, Amtrak, SEPTA and other area clients. I asked about the future of driving, as car and software companies push sophisticated applications for use on America's aging Interstates, and Washington officials talk to lobbyists about boosting tolls and other ways of paying for it all. (See also my Jan. 6 post, "Can U.S. Highways Handle the New Mobility?") 

Here's a lightly edited transcript of our Q&A:

DiStefano, Inquirer: What happened to all the improved highway, bridge, port and airport projects promised in last year's presidential campaign?

Prasad, HNTB: There was a lot of optimism for the new administration. President Trump and candidate Clinton talked about infrastructure. Of course, eight years ago, President Obama talked about infrastructure. The economic stimulus he did, out of $800 billion only $40 or $50 billion went to infrastructure. So you can see, it's a good talking point.

The President has focused on the "public-private partnerships" [P3] model rather than more federal investment. His thoughts about trying to massage $1 of public investment to $10 of private investment, those are good concepts and could advance big projects. Coupled with favorable tax treatments for investments in infrastructure, that will spur more public-private partnerships.

But unfortunately that will not solve the problem. Because P3 requires that you pay back the investment with a return on that investment — 8 or 9 percent, 12 or 13 percent. You have to have a revenue stream to pay for that: taxes and fees, or tolls.

If you don't want to raise taxes or fees or tolls in the first place, how are you going to raise the money for P3?

A: There is efficiency to be gained. But I'd challenge anybody to make those efficiencies total 5 percent. You're not going to see efficiencies of 30 or 40 percent.

I worked for a Republican governor and under a Democratic administration. Whichever is in charge, public contracts are procured competitively.  A low bid intrinsically gives you the lowest price the market can bear. while paying equipment, labor and reasonable profit.

Q: But aren't roads supposed to be a lot cheaper in Spain, in Australia…?

A: There's been a lot of Australian companies and Spanish companies come and bid work in Florida. They are not winning a lot of bids. When they have an advantage, it's because the currency-conversion ratios are favorable. Not because concrete is cheaper.

Asphalt prices are [related to] oil prices. Aggregate [crushed stone] is not an issue in Pennsylvania. In Florida, they don't have hard rock, so they import it from Nova Scotia. If I have a ton of asphalt and 100 tons of concrete I can buy cheaply, I'll do it. That is reflected in the bids.

Labor is a big issue.

Q: Because government rules make it too expensive?

A: No, because there's not enough.

In Georgia, for example, they have the projects, but they can't find the labor. The construction industry needs to figure out how to attract a new generation of labor to its workforce. The new generation is not interested in that work. And now the folks who built the interstates when they were young, they are retiring. How do you attract new labor?

It seems the younger generation is going after the new types of work. With the technology revolution in the last 15 years the workforce is following that revolution. But we still haven't figured out a cost-effective way for robots to pour concrete in a column or compact dirt. We have to figure out how to attract that talent back into this labor work.

We need to make sure we create enough jobs in the U.S. to sustain the American workforce. But at some point, if you can't get that workforce, you have to look at foreign labor. That's right now in big discussions.

Q: In Philly, my colleague Jane Von Bergen reports the building-trades unions have large apprenticeship classes recently. Won't this problem solve itself?

A: I agree generally speaking with President Trump, we have not done a good job giving our workforce the skill set.

Again, we are focusing on American jobs. And rightfully so. But at some point if you need a million jobs and the construction workforce is 400,000 — I'm just using general numbers — if we could put 200,000 apprentices into the workforce, you would still need outside labor. The American Road and Transport Builders' Association tracks this on a state-by-state basis, and they are [projecting labor shortages].

Q: Is it easier to find people in nonunion states?

A: The union states are a lot more structured in terms of training people through apprenticeships. In the less-union states like Florida and Texas, that's what the industry is working towards.

Q: Are wages high enough?

A: We had an acute shortage [of highway construction labor] in Florida before the recession. I asked contractors in Michigan, can your guys come down here and work for the winter? The answer was that they can make more money staying home and shoveling snow.

While the [Trump] administration is rightly focused on investments that will make American infrastructure great again, we need to think much more broadly than steel plants and automakers. Without getting into politics, I think many of us can agree, why shouldn't a car that's sold in the USA be made in the USA? But automation has taken a lot of labor out of the factories. So how can we repurpose excess labor into these other fields that need labor?

We need to look at what the pay structure is. In a low-bid environment there's a federal wage-rate table. States have their own wage rates. Whatever the floor is, I won't win the contract if I raise wages above it. But maybe it's time for us to look at raising the wages to get the talent in. Then let the low-bid environment take over.

Q: Do low-wage areas attract more construction projects?

A: Florida, Texas and Georgia made huge funding increases. And now they can't find people with the skills to stripe their roads. In Georgia, which has a $14 billion program, folks at GDot tell me they only have one subcontractor who paints the stripes down the road. We need more.

So how do we incentivize people to go get their truck retrofitted so they can get into the striping business? Do they need help to launch that business, with liability, or health care? Everyone is struggling with this.

Q: Automated vehicles and smart roads — where is that happening?

A: Pennsylvania is really engaged in the tech revolution with automated vehicles and connected vehicles. In Pittsburgh, you have the Carnegie Mellon and Uber infrastructure. We're on the cusp of a total technology revolution in the automobile. It's as similar and as profound as the iPhone revolution 10 years ago.

Ten years from now, cars will be communicating with each other and with roadside connections. Pennsylvania is definitely leading that.

Q: More tolls, but no tollbooths …

A: New York just implemented all-electronic tolling. The Verrazano Narrows Bridge is $15 if they take an automatic photo of your plate and mail you the bill. Or $10 with EZPass, $5.50 for Staten Islanders. And the turnpike's toll gantry, when you cross the bridge from New Jersey into Pennsylvania, that's how it works now.

In a few years, your car will directly communicate with dirt-cheap C-6 transmitters on the roadside: 'I'm going under your gantry.' You won't need an EZPass box. The ID could be in your driver's license, or in your plate.

Q: Does government have to cooperate for this smart road future?

A: The problem is at the federal level. The states are stuck with infrastructure that they need to repair — but under the law, it is primarily a federal responsibility. The feds have not increased their funding. So the [interstate highway] trust fund is broke. They have to decide whether to put general funds in. And meanwhile the government says you shouldn't toll interstates.

Q: For example, U.S. Dot has refused PennDot's requests to toll I-80

A: Right. It's like I gave you $50 billion of interstate to use 50 years ago. Now, it's falling apart, and I'm not going to give you any more money than I've been giving you [the 12 cents-a-gallon federal gas tax that funds interstate maintenance] since 1997.

If Congress doesn't want to allow states to toll, and if it won't raise the gas tax either, what can we do?

Maybe we get the feds out of it. Get rid of the federal gas tax and let the states assume the responsibility of keeping up the infrastructure.

I'm not advocating raising the gas tax. I'm observing, this is what many states have actually been doing [in the absence of congressional action to boost the U.S. gas tax]. Since 2012, 32 states have raised transportation fuel taxes. Those 32 states are from bright blue [Democratic] California to deep red [Republican] Tennessee. Congress doesn't want to touch it.

The biggest elephant in the room is the interstate system that is primarily the responsibility of the federal government to fund.

Either we do justice or let's give the states the ability to step in [and raise taxes for interstate work.] Or they can decide to [let the states] toll every interstate.

So what is the role of government? Is it only to launch new programs? Or to consider what does it cost to sustain this? The infrastructure we have today, it left the station 60 years ago. How do we keep it running?

Q: Who does this right — what states maintain as well as build their roads?

Florida does.

Q: Sure — no snow, its easy.

A: Utah and Oregon, too. They have snow.

The point is, we have to reconcile our roads and what is needed to maintain them. Not get lost in whether that makes government bigger or smaller.

Unless we want to get rid of the interstate. [Young people don't drive.] Possession of a car is still a symbol of economic prosperity. This is a global phenomenon. I grew up in India. We had a scooter. A bicycle. The goal was you get a job and buy a car. You may have to sit in traffic. A lot. But you have an air-conditioned car. You've made it.

Q: How long will we have a gas tax? Volvo is already planning to phase out gasoline engines.

A: Yes. But it's going to take many years to fully change over. There's a lot of pinch points that government has to address. And that is a problem, because elected officials are only elected for a few years. Not the long term.

Q: Will self-driving cars and smart transportation decrease the number of vehicles and the volume of traffic, or increase it?

A: Good question. People are arguing on both sides. And it may affect transit. [When they have access to self-driving smart cars,] people won't necessarily want more mass transit. All this may take people off transit.

U.S. Dot wants to do the right thing. But the auto companies, the [software] companies are united in [saying]: This is a very emerging field — let's not have government regulation inhibit innovation. Let's get it to [some] semblance of a finished system before we [impose] standards. Innovative products don't happen when there is a lot of standardization [in advance.]

The automakers have done a very good job. The industry is united. They know liability is going to be huge. That's a check on them. When a Tesla has an accident, it creates a lot of liability. (That creates pressure) to standardize.

Q: All that new road work, sounds like a big opportunity for your company.

Do you do design-build projects? We've had some big delays in Pennsylvania with those.

Design-build is interesting. You can save time and money and create a lot of innovation [by putting designers, architects and engineers to work together instead of in sequence]. The challenge is to find contractors you can work with.

Q: The Delaware River Joint Toll Bridge Commission got just one bid, at nearly $100 million over budget, to rebuild what is now the I-95 bridge over the Delaware and add tolls. Is that normal, to just get one bidder?

A: One bid is very rare. A lot of states [are] rejecting single bids. In Florida, every time we rejected one-bids, we always got [a] better, lower bid. Rebidding has always been in favor of the public.

Q: You drive much?

A: I was up in Alaska recently. We took the Dalton Highway from Prudhoe Bay above the Arctic Circle down to Valdez port. I like the Pacific Coast Highway. And U.S. 1 in Florida.

Q: Aren't Americans right to resist higher road taxes — shouldn't transportation become more efficient?

A: I don't like to pay more taxes. But not all taxes are the same. When you pay [income, sales or property] tax, you don't always know who it benefits. When you pump gas and pay the gas taxes, you know it's going to the roads. In most states. It erodes the trust of the public when (they use it for something else).

In New Jersey, they have a 'lockbox' for the gas tax, so you know the money you pay really is used for transportation. But that's not what happens in Pennsylvania. In Pennsylvania, a lot [around $800 million a year] of the state's gasoline tax is diverted to the state police.

(Gov. Wolf proposed in this year's draft budget to start charging towns that choose not to hire local police 25 cents a person — $63 million a year — for state police protection. Some Republicans want higher fees, which could take pressure off the gas tax. Pennsylvania's gas tax is now 58.3 cents a gallon, the nation's highest, on top of the 18.4-cent federal gas tax.)

What is a good tax?

Q: A tax that pays for something I use. A bad tax pays for something the other guy uses, and I don't think he deserves it.

A: Exactly. We need more conversations at the state level about taxes and where the money goes.

Squeezing the government, streamlining, efficiency, is not going to solve the problem. It's not going to generate you a revenue stream that will cure your interstate ills.

Q: Will smart roads clear up traffic on I-95, I-76, Pa. 422?

A: Or if the cars drive themselves, at least you can be comfortable [doing something else while in traffic].

A typical Floridian might pay $25 in gas tax every month. Talk about another nickel, and you can't get it passed. But your cable and your [mobile] phone bill have risen and risen, into the hundreds a month, for internet, games, texting. Our priorities have changed. We're more interested in spending on things that might get us into trouble, than on making sure we get home quickly so we can spend time with family.

Q: You said construction wages aren't too high. Do hiring or reporting rules need to change?

A: In Florida, we had McKinsey do a study on Davis-Bacon [the federal construction contracting minimum-wage law, which sets building-trades wages far above the basic hourly minimum]. McKinsey concluded the effect of the wage schedule [on boosting construction costs] was very little. But many of the requirements for participating have never changed, and they may have gotten out of line. A subcontractor doing as little as $20,000 of work has to do a lot of federal reporting. Let's true up some of those numbers and streamline, so small businesses are not burdened by reporting weekly wages. That's what I told [U.S. Rep.] Bud Shuster (R., Pa.) [of the House Transportation Committee] we need to do. That will help these small businesses reduce their costs and eliminate barriers to participation.

Q: Are construction company lobbyists joining with Silicon Valley lobbyists to pressure Congress and the states for smart-transport bills?

A: It used to be asphalt and concrete guys. It's true that big-data and automation have a lot of tech companies engaged in the transportation world, that weren't here five years ago.

And it's the automakers.

Q: They've always lobbied for more road spending.

A: And now BMW, Volvo, GM, Ford, they are significantly investing in technology. They are more interested in 'How does my car communicate with the signal?'

Q: Who are you fighting in Washington?

A: There's a low-frequency signal, the 5.9-gigahertz band, that's been protected for years by the U.S. Dot for connected vehicle technology for many years. Now, the telecom guys want that released — they have a push in Congress to release that frequency to mobile-phone providers, for extra bandwidth. But they are asking for it at a time when a lot is happening. It's important that we protect that band.

Look, I'm a civil engineer. I went to school to study concrete strength and asphalt and spill density, and now I'm talking about 5.9 gigahertz. Technology is making significant inroads here. The Googles and Apples of the world, there's so much investment they have made in coming up with the smartphone and its applications. Those companies have to keep innovating. Or they will turn into Blockbuster Video.

So they are looking at the iPhone and the time you spend in a car. If you don't have to drive that car, if it's part of an intelligent transportation system, that's good for the tech companies. So you get all these firms to spend a lot of money to go into the next space. And stay relevant. Or they will be extinct. So the car is now the next big American thing.