At a time when all transportation news seems to be bad, a bit of good tidings emerges.

Analysis of the long term revenue outlook has determined that the Commonwealth now has debt capacity to issue up to $500 million in transportation bonds.

VDOT hopes to sell a bond package totaling $493 million this May and is cautiously optimistic of being able to issue a second $300 million package in May 2011.

Bond funding will be a combination of insurance premium tax revenues and interest earned on Transportation Trust Fund and Highway Maintenance and Operation Fund dollars.

Excitement over this announcement must be tempered by the fact that proceeds will pay for projects in the current Six-Year Plan. No new projects are funded.

In 2007, HB 3202 authorized the issuance of $3 billion in bonds in $300 million increments over a ten-year period. However, the obligation to pay off Federal Highway Reimbursement Anticipation Notes (FRANS) issued in the Gilmore administration combined with declining transportation revenues have prevented the sale of these bonds until now. (FRANS notes will not be totally retired until FY 2013)

The total proceeds will be distributed under the HB 3202 allocation formula which calls for 20% for public transit, 4.3% for the Rail Enhancement Fund and the balance for federal matching funds, revenue sharing and individual projects. However, the severe shortage of state transportation construction dollars means that proceeds from this initial sale will be limited to transit, rail and federal match, plus a one-time $15 million infusion to complete revenue sharing project commitments.