THE FEDERAL HIGHWAY TRUST FUND IN CRISIS THE IMPACT ON SURFACE TRANSPORTATION PROGRAMS

1. THE FEDERAL HIGHWAY TRUST FUND IN CRISISTHE IMPACT ON SURFACE TRANSPORTATION PROGRAMS Jack Basso Chair Mileage Based User Fee Alliance

2. The national investment on roads and transit has gradually declined. Sources: Congressional Budget Office, Office of Management and Budget

3. And infrastructure conditions continue to deteriorate. Source: American Society of Civil Engineers

4. Meantime, the public already bears additional costs indirectly. Source: American Society of Civil Engineers

5. Compared to our global peers, we’re falling further behind on the quality of infrastructure. 2012-2013 2008-2009 Source: World Economic Forum, The Global Competitiveness Report

6. In 2012, MAP-21 was able to provide a five-year policy bill—but with only two years of funding.

7. Like prior transportation bills, MAP-21 relies on the Highway Trust Fund—the backbone of Federal surface transportation funding since 1956. Source: Gary McCoy, CagleCartoons.com

8. In 2011, motor fuel taxes comprised 91% of Highway Trust Fund revenues. But they face an uncertain long-term future. Source: Federal Highway Administration, Highway Statistics, 2011

9. Highway Trust Fund Headwinds: #1. Americans aren’t driving as much. Source: Federal Highway Administration

10. Highway Trust Fund Headwinds:#2. Gas tax has lost its purchasing power.

11. Highway Trust Fund Headwinds:#3. Alternative fuel vehicles will further erode future HTF receipts. $57B drop Source: Congressional Budget Office

12. In the meantime, cash transfers from the General Fund have avoided the Highway Trust Fund “fiscal cliff.” • 15 September 2008: $8.017 billion General Fund transfer to HTF • 7 August 2009: $7 billion General Fund transfer to HTF • 18 March 2010: $19.5 billion General Fund transfer to the Highway Trust Fund • 6 July 2012: $2.4 billion Leaking Underground Storage Tank Trust Fund transfer to HTF • FY 2013: $6.2 billion General Fund transfer to HTF • FY 2014: $12.6 billion General Fund transfer to HTF (scheduled) • Total General Fund transfers to Highway Trust Fund:$53.3 billion since 2008

13. But outlays will outpace receipts by about $15 billion per year and more for a foreseeable future.

14. If no new revenues are found, federal highway obligations will fall by almost 100% in FY 2015

15. So what can be done?

16. There is currently no shortage oftechnically feasible revenue options.

17. In fact, States have long relied on a variety of revenue sources to invest in transportation. State revenue sources for roads, bridges, rail and transit: • Fuel taxes (all states + DC + PR); 6 index; largest single source of highway funds used by half the states • Sales taxes on fuel, or other taxes on distributors or suppliers (14 states + PR) • Motor vehicle or rental car sales taxes (29 states) • Vehicle registration, license or title fees (48 states + PR) • Vehicle or truck weight fees (37 states) • Tolls (24 states + PR, plus non-state toll entities) • General funds (34 states + DC; Vt. on occasion) • Interest income (37 states + DC + PR) • Other (40 states + DC + PR) Source: National Conference of State Legislatures.

18. In addition, States also utilize various financing tools to accelerate project delivery. • Tools that borrow against or leverage state revenues for surface transportation projects: • General obligation or revenue bonds (44 states + DC + PR) • GARVEE bonds (33 states + DC + PR) • Private Activity Bonds (PABs) (6 states) • TIFIA federal credit assistance (12 states + PR) • State infrastructure banks (SIBs) (34 states + PR) • Public-private partnerships (PPPs or P3s) (authorized in 33 states + PR) • Design-build (authorized in 38 states + PR) Source: National Conference of State Legislatures.

19. Recently, States have been leading the charge on meeting the transportation revenue challenge.

20. Here is a list of transportation funding proposals under consideration, with successful initiatives underlined. • Raising fuel taxes: California, Idaho, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, Pennsylvania, Utah, Vermont, West Virginia, Wisconsin, Wyoming • Directing gas tax proceeds to direct transportation uses: Indiana • Reducing gas tax, but increasing other taxes for a net increase for transportation: Pennsylvania, Virginia

21. Here is a list of transportation funding proposals under consideration, with successful initiatives underlined. • State sales tax toward transportation: Arkansas, Idaho, Virginia, West Virginia • Sales taxes on fuel, or other variable taxes/fees: District of Columbia, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Pennsylvania, South Carolina, Utah, Virginia, West Virginia, Wisconsin • Vehicle registration fees: Idaho, Michigan, New Hampshire, Pennsylvania, Virginia, West Virginia, Wisconsin

22. Here is a list of transportation funding proposals under consideration, with successful initiatives underlined. • Vehicle Miles Traveled Fee (VMT) pilot projects: Oregon • Framework to study a VMT fee:Arizona, Florida, Washington, Wisconsin • Special fees or taxes for electric or alternative fuel vehicles: Arizona, Virginia, Washington, West Virginia Source: National Conference of State Legislatures.

23. Illustratively speaking, shoring up the Federal Highway Trust Fund would not present an unreasonable burden on Americans. • The average household pays $46 in gas tax per month. This is less than per monthly cost of: • Electricity and gas: $160 • Cell phone: $161 • Cable and internet access: $124 • For example, a 10-cent increase in the federal gas tax translates to $1.15 more for the average driver per week—this action alone would fix the Highway Trust Fund. Source: American Road and Transportation Builders Association

24. Why do we need strong Federal investment in transportation? • Investment in transportation will save time and money, improve safety, and decrease congestion • Investment in transportation will support economic development • The transportation agencies spend their funds efficiently • The transportation system has deteriorated, and current funding will not meet the needs • Increased funding will be used to build specific projects

25. Concluding Quote“Together, the united forces of our communication and transportation systems are dynamic elements in the very name we bear—United States. Without them, we would be a mere alliance of many separate parts.”President Dwight D. Eisenhower February 22, 1955

26. Questions?