View from Capitol Hill: Federal Highway Funding and Policy Challenges Greg Cohen, President & CEO American Highway Users Alliance
Thank You to SC&RA! What it the American Highway Users Alliance? Road Users: AAA, ABA, ATA, OOIDA, RVIA, AMA Businesses: Safety Companies, Farmers, Auto Dealers, Engineers, Suppliers, Manufacturers of Cars and Trucks, Energy Companies, Tire Companies, Truck & Bus Companies Non-Profits: Safety Advocates, Trade Groups, Chambers SC&RA is a member. Thank you! We are here to represent the complex landscape of pro-highway Americans who support dedicating their highway user fees to improved roads.
American Highways: Background • ~4 million miles of roads in the USA • ~47,000 miles are on the Interstate System, carrying about 25% of traffic. • ~220,000 miles are on the National Highway System (including the Interstates), carrying about 50% of all traffic • ~1 million miles are considered to be on the “federal-aid” network, carrying about 80% of traffic • All 4 million miles are eligible for safety improvement / hazard elimination funds.
American Highways: Background • Local governments own 77% of roads. • States own about 19% of roads (800,000 miles). • Feds own only 3% of roads. • 74% of roads and bridges are in rural areas but carry only 33% of traffic • 26% of roads and bridges are in urban areas, carrying 67% of traffic.
Current Bridge Conditions • Structurally Deficient Bridges: 11.2% nationwide • Best: Nevada @ 2.2% • Worst: Pennsylvaia @ 24.9% • Posted Bridges: 10.7% nationwide • Best: Nevada @ 0.8% • Worst: Kansas @ 27.2% Source: FHWA National Bridge Inventory
American Highways: Funding • About 50% of all funding is capital expenditures • 25% is maintenance • The rest is bonds, interest, highway patrol, and administration • 22-24% of all spending on roads is federal • 42-45% of all capital spending on roads is federal. • Federal user fee revenue is about $36B-$37B / year • Expenditures (including non-highway) ~$51 B / yr. • Annual deficits of about $15 B / year
American Highways: Federal Funding • Bailouts are not sustainable into the future.
American Highways: Federal Funding • At flat spending, trust fund deficits exceed $100 B over ten years.
How much do you pay the Fed. Govt. for roads? • Average vehicle driven 11,489 miles • Hybrid: 40 mpg pays $53 / year • Sedan: 22 mpg pays $96 / year • SUV: 16 mpg pays $132 / year • Single unit truck (8 mpg / 13,469 miles) = $411 • Combination truck (5 mpg / 68,907 miles) = $3363 • Not a bad deal for access to 4 million miles of roads. • In fact, too good a deal to last. Infrastructure needs are compounded with system aging.
Major Highway Bills • 1916: Beginning of federal-aid program • 1956: Interstate authorization, creation of Highway Trust Fund • 1982: Increase of gas tax from 4-cents to 9 cents; 1 cent goes to transit • 1990 and 1993; gas tax increases – deficit reduction • 1998: “TEA-21” – 6 year $217 Billion bill increases funding 40%, full utilization of trust fund • 2005: “SAFETEA-LU” – 6 year $286.5 billion, known for “Bridge to Nowhere”. Spends down all funds in the Trust Fund.
MAP-21 in Perspective • MAP-21 was signed into law in July 2012 after a nearly 3 year delay. • Passed Congress with strong bipartisan majorities. • Funds highways through September 30, 2014 • Goals of MAP-21 • Establish Priorities (NHS, HSIP – big winners) • Reform Programs to Restore Public Trust • Eliminate Earmarks • Consolidated and Eliminated Programs • Established “Performance-Based” Programs (inc. asset mgmt) • Streamlined Environmental Reviews & Red Tape
Priorities • Congressional Priorities except funding largely achieved in MAP-21. • Reform • Consolidation of Programs • Streamlined Environmental Reviews • Administration Priorities NOT generally reflected in MAP-21. May attempt through regulation. • “Livable Communities” • “Complete Streets” • More hwy money for non-highway modes, particularly rail & bike • Turn the Highway Trust Fund into a “Transportation” Trust Fund.
After MAP-21: Priorities for 2014-2020 • Reauthorization will most likely avoid re-litigating all of the fights for reform under MAP-21 • However, the Obama Adminstration has and may continue to interpret the law in ways that Congress disagrees with. • There is particular interest in how the Administration will interpret the various performance goals. • Congress may make adjustments in response to Administration regulations.
Funding Issues • MAP-21 only “found” two years worth of revenue • Outlays exceed revenues by $10-15 billion / year • To prevent funding cuts, Congress put $20 billion in non-user revenue into the Trust Fund (FY12-14) • This $20 billion “bailout” was on top of $35 billion transferred into the HTF between 2008-2011. • Additional Sustainable Sources of Revenue Critical to continue program beyond 9/30/14.
Funding Factors Now & Into the Future Purchasing Power of the Gas Tax down 40% since 1993. Future Issue: Fuel economy standards could reduce revenues 21% by 2022. Truck sales tax hit due to recession and expensive regulations. Weak economy reduced VMT from 3.025 trillion miles to 2.925 trillion miles
What are States Doing? • More than 10 states considered revenue increases in 2012. None passed in 2012. VA, MD, VT, and WY have taken action in 2013. Except for WY all have changed the tax structure to include a % tax on wholesale fuel sales. • Leveraging existing funds: 10 states considered new bond issues or creating State Infrastructure Banks • 33 States allow PPPs: Pennsylvania the latest. PPP enabling legislation failed in NJ, HI, and OK. • VMT legislation: CO, VT, WA (OR in phase 2 pilot) • Electric vehicle annual fees: VA & WA
How Do We Fix the Fiscal Mess? • Option 1: Cut spending substantially in FY15 • Cutting new spending from $40 billion to $5 billion would, in theory, prevent shortfall. • Spending in FY16-22 would ramp up from $33 to $38 billion • Option 2: Short-term bailouts that fund month-to-month “extensions” of MAP-21 • Option 3: Raise additional revenue from current and/or traditional user fees and taxes.
Raising New Revenue: Senate Finance Committee Options Paper Increase federal fuel tax 10-15 cents / gallon Or Increase truck sales, tire, and use taxes Or Move to a percent sales tax instead of a per gallon tax --- New Fees: Oil barrel, VMT fees, drivers license surcharges, hybrid car fees, bicycle taxes.
Raising New Revenue: Senate Finance Committee Options Paper Other potential sources Dedicate more revenue from oil and gas lease sales to the HTF Authorize more private activity bonds, direct subsidy bonds, tax credit bonds, National Infrastructure Bank, Reduce taxes on foreign investment in US infrastructure New idea (Delaney): encourage repatriation of corporate holdings in foreign countries by creating incentives to invest those funds in US infrastructure bonds.
Challenges to Getting to Option 3? Political challenge requires bipartisanship. Shuster and Boxer seem committed to this. But both believe Congress needs help to make the public case. Challenge is “Outside-The-Beltway” Combating misconceptions Most people are unaware of reforms in MAP-21 Most people think they pay much more than they do in fuel taxes. Average gas tax is $96 per year. “If it seems like a deal is too good to be true, it probably isn’t.” Many people do not consider needs to be dire To many government crises – is this a “real” one?
Opportunities for Solutions Tax reform is the best opportunity to deal with the ailing Highway Trust Fund. Finance Chairman Baucus (D-Mont) not running for re-election Ways & Means Chairman Dave Camp (R-Mich) term-limited from keeping chairmanship beyond 2014 Both would like a bipartisan deal before they leave their posts. Other opportunities could come on tax bills, “Grand Bargain” debt-ceiling (if we hit it), etc. Best to solve revenue problem before reauthorization.
HwyUsers Campaign Effort In addition to traditional lobbying efforts, the HwyUsers is putting together a major campaign called “Keep America Moving”. 2012 Congressional Scorecard was a start Target: Important States and Congressional Districts Focus on Tax Writing Committees (Ways and Means in the House & Finance in the Senate). Coordinate with Members to avoid blind-siding them. Media & Social Network Effort: Op-Eds, Facebook & Twitter teams Presentation to State & Local Chambers and Service Orgs.
What Could Work in 2013? • Establish credibility by recruiting leaders at the national, state, and local level. • Bipartisan & Diverse. • Use broad businesses & community leaders to deliver messages. • National Vision: • Possibly a Rebranding of the NHS? 4% of the roads. 90% of the freight.
“Convoys” for 2013 • Road tour with the right leaders (WH official, Shuster, Rahall, Boxer, Vitter) could still help get state leaders, mayors, and volunteers on board. • How to take advantage of the many more forms of communication that exist in 2013? • Teams of Facebook & Twitter users on offense and defense. • Video promotions • Billboards • Speakers’ bureaus • Op-ed writing teams from lots of different organizations
Funding • Hard to get Funding without the Credibility, Vision & Plan • MAP-21 prioritized the NHS and established performance concept. The Act improved credibility but earmark and program reforms need to be communicated to media & public. • More credibility requires leadership. Who are the people Americans trust most? • Fund the plan – do not work off the current, inadequate spending baseline. • Tout the benefits of the user fee / trust fund concept and make the case for raising fees to fund the plan.
What Can You Do to Help? Participate in the Campaign Contact me about ways to get involved. Support a convoy stop in your State. Support politicians who support highway users. Do not support those who don’t. Talk with business leaders in your state about getting a briefing on the campaign. Offer to write or put your name on a campaign op-ed or letter to the editor. Talk to AHUA staff about how you can use social media to promote the campaign.
Thank You! Gregory M. Cohen, P.E. President & CEO American Highway Users Alliance firstname.lastname@example.org 202-857-1200 www.highways.orgwww.facebook.com/highwayusers