Virginia's Rail Enhancement Fund (REF) was created by Governor Mark Warner, with Virginia General Assembly approval, in 2005 as one of the nation's first dedicated sources of state revenue for rail infrastructure improvements. Capitalized through a portion of vehicle rental fees collected by the Commonwealth, the REF was the product of a series of recommendations by the Commission on Rail Enhancement for the 21st Century, an advisory commission convened by the Governor to examine the future of rail transportation in the Commonwealth.
Origins of the REF
The Authorization of the Rail Enhancement Fund (REF) was the culmination of a long campaign by rail advocates, most notably passenger advocates, several of whom are also founding members of VRPI. They succeeded in getting Virginia's first significant, one-time appropriation for rail in the 2000 transportation budget.
In 2001, Virginians for High Speed Rail (VHSR) produced and widely distributed a proposed State Rail Plan for Virginia. That plan suggested a need for an annual $50 million funding source for rail freight and passenger projects in the Commonwealth. At the urging of VHSR, Governor Mark Warner in 2004 appointed the Commission on Rail Enhancement for the 21st Century, which recommended the REF, which was subsequently authorized by the General Assembly. The first grants from REF were awarded by the Commonwealth Transportation Board (CTB) in late 2005.
Uses of the REF
The REF has typically been utilized by the Class I railroads (CSX and Norfolk Southern), the Port of Virginia, and Virginia Railway Express for major capital investments. The REF has occasionally been tapped as a resource for Virginia's state-supported Amtrak service, including 100% of the capital funding to extend the Washington to Richmond Northeast Regional to Norfolk. However, the statutory requirement for a 30% match and the restriction against federal matching funds has severely limited the REF's utility as a resource for intercity passenger rail. Following the establishment and funding of Virginia's Intercity Passenger Rail Operating and Capital Fund (IPROC) in 2014, the state has made no further plans to use the REF for intercity passenger projects.
Left: Among REF-funded freight rail projects is the Virginia segment of the CSX National Gateway, which makes existing routes accessible to double-stack intermodal trains connecting the Port of Virginia to markets in the Midwest.
VRPI Publications on the REF
VRPI has a long-standing interest in the REF. Several members were among the original advocates for establishing a dedicated state fund for rail capital projects. In addition, two current members of the VRPI Board of Directors (Dick Beadles and Meredith Richards) served on the Governor's Commission for Rail Enhancement in 2004. Three VRPI Board members (Dick Beadles, Dwight Farmer and Wiley Mitchell) subsequently served on the Rail Advisory Board, which was charged with oversight of the REF and nominally functioned in that capacity until it was eliminated by Governor McDonnell in 2013.
In the first ten years of the REF, VRPI published two policy studies related to the funding program:
- Virginia's Investment in Rail: Protecting the Public Interest (2006), addressed issues of protecting the public interest when states such as Virginia make large public investments in privately owned rail infrastructure.
- Effectiveness of the Rail Advisory Board (2010) raised questions about whether the Rail Advisory Board was being used as intended by the Governor's Rail Commission and the Virginia Legislature.
Ten-Year Review of the Rail Enhancement Fund
The REF is now undergoing a ten-year review conducted by the CTB, as required by HB1887 passed by the 2015 General Assembly. The bulk of the work on the review is being done by The Virginia Department of Rail and Public Transportation (DRPT) and the CTB Rail Subcommittee.
The REF study has three primary areas of focus: (1) Potential statutory revisions of the REF in the Virginia Code of Laws; (2) Potential revisions of the goals and policies of the REF program; and (3) Enhancements to the standards by which grant applications are approved, especially the metrics used to conduct the Public Benefits to Cost Analysis (BCA) for proposed REF projects. At public meetings of the CTB Rail Subcommittee, VDRPT has raised issues, presented options and made recommendations for each of these aspects of the review. The most recent VDRPT draft report summarizes the proposed statutory changes, revised policy goals, and enhanced BCA metrics for REF projects.
VRPI Comments on the REF Review
VRPI Board members have attended Rail Subcommittee meetings and given public comments on the REF review. In addition, VRPI submitted the following policy-related documents to the committee:
- Comments of VRPI on the Rail Enhancement Fund raises significant public policy issues arising from the first ten years of the REF.
- Comments of VRPI on Presentations to the CTB Rail Subcommittee in Support of HB1887 responds to VDRPT's presentations of options and recommendations on the three topics of focus.
The CTB adopted several recommendations for changes to the REF and formed a REF Task Force to consider further amendments. In particular, the task force is evaluating additional project performance standards to apply to grant applications and performance reviews for funded projects. VRPI is represented on the Task Force by Executive Committee Member, Dick Beadles.
The influence of VRPI's comments on the REF Review is clearly evident in some of the task force's deliberations, particularly those concerned with the Virginia Constitutional restrictions on state investments in Internal Improvements, which are limited to parks and highways. This means, quite simply, that any adopted performance metric for state-funded rail capital projects must ultimately refer back to how the project benefits the Virginia Highway System, rather than exclusively how it benefits rail.
"Virginia Needs a Clearer Vision"
Virginia is in the enviable position among states of having dedicated resources for both freight and passenger rail. In that respect, we've been a national leader. However, with few exceptions, the deployment of those resources has been reactive, rather than proactive in nature. There needs to be a better balance between projects initiated by the grantees and those initiated by DRPT. Any revisions to the law and the public policy goals of the REF should allow for more flexibility in the strategic use of the fund to meet state goals and priorities. The identification and prioritization of rail needs should be the fundamental responsibility of DRPT and should follow a comprehensive, long-range State Rail Plan.
"Virginia ... needs a clearer vision of what it hopes to accomplish in cooperation with the private railroads. Just to keep private railroads in business, and to add to their bottom lines (both acceptable objectives) is not enough. If we can't get more transportation growth out of Virginia's rail program in the next 15 years than we have demonstrated during the last such period, then the justification for spending so many taxpayer dollars on rail should be questioned objectively."
Do we want a world class network of interconnected commuter and intercity passenger rail and freight that moves seamlessly by rail from port to market? Do we want to conserve land, energy and the environment? Where do we want to be in 5, 10, 15 and 20 years, how do we use our resources to get there, and what additional resources will we need? Virginia needs a visionary Rail Plan that sets the course for future investments, from goals to policy to implementation.
The creation of the REF set the stage for Virginia to make its first major public investments in rail since the Civil War. Virginia has made great progress since its authorization. Yet, if we do not use this and other resources more strategically, we will not realize their promise. Are we content to fund an enhanced service here and a modest improvement there? Or do we reach for a larger, clearer vision? Ten years after Virginia first gained the ability to help shape the future of rail in the Commonwealth, we have not satisfactorily answered that question.