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Kathy Ruffalo Ruffalo and Associates, LLC. TOPICS. Status of Highway Trust Fund – short and long term Interim report of Financing Commission Status of Reauthorization. “Today’s problems cannot be solved by thinking the way we thought when we created them.” - Albert Einstein.

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Status of Highway Trust Fund – short and long term

Interim report of Financing Commission

Status of Reauthorization

“Today’s problems cannot be solved by thinking the way we thought when we created them.”

- Albert Einstein

transportation today
Transportation today
  • Steady increase in congestion rates
  • Continued loss of life on our highways
  • Freight tonnage moving by truck and rail increasing
  • Transit ridership is increasing
  • Global competitors have aggressive transportation policies
  • Continued need to balance economic development, environmental, social and consumer demands
short term funding shortfall
Short-term funding shortfall
  • CBO and Treasury estimate a shortfall to the Highway Trust Fund in FY 2009
  • Shortfall means federal highway obligation limitations will be reduced if steps are not taken soon
short term solutions
Short-term solutions
  • Senate Finance Committee has passed “fixes” for the short-term – but only through 2009
  • House has yet to pass
  • 2010 remains a real concern
congress created two commissions
Congress created two commissions
  • Congress is searching for long-term solutions to the growing funding gap and its consequences
  • National Surface Transportation Policy and Revenue Study Commission
  • National Surface Transportation Infrastructure Financing Commission
national surface transportation infrastructure financing commission
National Surface Transportation Infrastructure Financing Commission
  • 15 Commissioners- appointed by Congress or Secretary of Transportation
  • Began work in April 2007
  • Recently released interim report
  • Two years to release final report
commission required to examine
Commission required to examine:
  • Current Highway Trust Fund (HTF) revenues
  • Project how HTF revenues may change
  • Alternatives for funding the HTF
  • Highway and transit needs for HTF funds
  • State “opt-out” program
preliminary observations
Preliminary observations
  • System demands are outpacing investment
preliminary observations1
Preliminary observations
  • System maintenance costs can make capacity expansion difficult
preliminary observations2
Preliminary observations
  • Fuel tax, at current rates, is not sufficient
preliminary observations3
Preliminary observations
  • More direct user charges should be explored
preliminary observations4
Preliminary observations
  • Not only need more investment, need more intelligent investment
funding vs financing
Fuel tax

Vehicle fees

Direct user fees

Indirect user fees

General Fund or other sources

General obligation debt

Grant anticipation borrowing

User fee revenue bonds

Federal credit assistance

Toll road concessions

Asset leases

Funding vs. Financing
format for evaluating funding and financing mechanisms
Format for evaluating funding and financing mechanisms
  • Use of criteria to make objective observations
  • Provide Congress with “pros” and “cons” for each mechanism
  • If possible, make recommendations on the type of funding or financing that can best meet particular transportation objectives – emissions, congestion, freight needs, transit, etc.
evaluation criteria
Evaluation criteria
  • Revenue potential
  • Sustainability
  • Political viability
  • Ease/cost of implementation
  • Ease of compliance
  • Ease/cost of administration
  • Level of government
evaluation criteria cont d
Evaluation criteria – cont’d
  • Promotes efficient use
  • Promotes efficient investment
  • Promotes safe and effective system operations/management
  • Addresses externalities
  • Minimizes distortions
  • Promotes spatial equity
evaluation criteria cont d1
Evaluation criteria – cont’d
  • Promotes social equity
  • Promotes generational equity
status of reauthorization
Status of reauthorization
  • Hearings held on commission report
  • House and Senate authorizing committees have begun hearing process
  • “Top-tier” issues – congestion, freight movement, public transportation, safety, project delivery and environment
  • Finance – Ways and Means will be more engaged
  • What to do with earmarks?
  • House and Senate hope to have draft bills ready by Spring of 2009
  • House wants to complete floor action by May
  • Senate will take longer
  • New Administration will want to weigh in
  • Extensions will be painful
so what do we do
So…….what do we do?
  • Need a national transportation policy
  • Need a bi-partisan solution
  • Modal fights will only ensure failure
  • Historic opportunity to revolutionize federal transportation programs
  • Cannot wait for someone else to fix the problem – need to address head-on
  • Business as usual is not going to work and doing nothing is not an option

Ancient wisdom says that when you discover you are riding a dead horse, the best strategy is to dismount.

Too often, in government, we try other strategies – such as:

cont d
  • Buy a stronger whip
  • Change riders
  • Appoint a committee to study the horse
  • Arrange a visit to other sites to see how they ride dead horses
  • Provide additional funding to increase the horse’s performance
  • Study alternative uses for dead horses….and
my personal favorite
My personal favorite…….
  • Promote the dead horse to a supervisory position
  • http://financecommission.dot.gov/
  • kathy@kruffalo.com