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12 September 2013 MAP-21 and the Future of Federal Transportation Funding Joung H. Lee, Associate Director for Finance and Business Development and Deputy Director, AASHTO Center for Excellence in Project Finance. TRANSPORTATION LIBRARIANS ROUNDTABLE THURSDAY 12 SEPTEMBER 2013.

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slide1

12 September 2013

MAP-21 and the Future of Federal Transportation Funding

Joung H. Lee, Associate Director for Finance and Business Development

and Deputy Director, AASHTO Center for Excellence in Project Finance

slide2

TRANSPORTATION LIBRARIANS ROUNDTABLE

THURSDAY 12 SEPTEMBER 2013

MAP-21 and the Future of Federal Transportation Funding

Joung H. Lee

Associate Director for Finance and Business Development

American Association of State Highway and Transportation Officials

Deputy Director

AASHTO Center for Excellence in Project Finance

constitutional duty to provide for transportation
CONSTITUTIONAL DUTY TOPROVIDE FOR TRANSPORTATION

“To establish Post offices and post Roads”

Article I, Section 8, U.S. Constitution

Source: National Archives and Records Administration

slide4

GRADUAL DECLINE IN NATIONAL TRANSPORTATION INVESTMENT

Sources: Congressional Budget Office, Office of Management and Budget

continued deterioration of infrastructure conditions
CONTINUED DETERIORATION OF INFRASTRUCTURE CONDITIONS

Source: American Society of Civil Engineers

increased indirect costs to the traveling public
INCREASED INDIRECT COSTS TO THE TRAVELING PUBLIC

Source: American Society of Civil Engineers

us is falling further behind on the quality of infrastructure compared to peer nations
US IS FALLING FURTHER BEHIND ON THE QUALITY OF INFRASTRUCTURE COMPARED TO PEER NATIONS

2012-2013

2008-2009

Source: World Economic Forum, The Global Competitiveness Report

map 21 continues to rely on highway trust fund the backbone of federal funding
MAP-21 CONTINUES TO RELY ON HIGHWAY TRUST FUND—THE BACKBONE OF FEDERAL FUNDING

Source: Gary McCoy, CagleCartoons.com

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MOTOR FUEL TAXES COMPRISE 91% OF HTF REVENUES BUT FACE AN UNCERTAIN LONG-TERM FUTURE

Source: Federal Highway Administration, Highway Statistics, 2011

slide11

HIGHWAY TRUST FUND HEADWINDS:

#1. AMERICANS AREN’T DRIVING AS MUCH

Source: Federal Highway Administration

highway trust fund headwinds 3 impact of alternative fuel vehicles
HIGHWAY TRUST FUND HEADWINDS:#3. IMPACT OF ALTERNATIVE FUEL VEHICLES

$57B drop

Source: Congressional Budget Office

slide14

CASH TRANSFERS FROM GENERAL FUND HAVE AVOIDED 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 between 2008 and 2014
slide21

STATES HAVE LONG RELIED ON VARIOUS REVENUE SOURCES TO INVEST IN TRANSPORTATION

  • 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

slide22

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

slide24

CURRENT STATE TRANSPORTATIONREVENUE DISCUSSIONS

(SUCCESSFUL STATES IN UNDERLINE)

  • 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
slide25

CURRENT STATE TRANSPORTATIONREVENUE DISCUSSIONS

(SUCCESSFUL STATES IN UNDERLINE)

  • 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
slide26

STATE TRANSPORTATION REVENUE DISCUSSIONS

(SUCCESSFUL STATES IN UNDERLINE)

  • 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.

slide27

SOME COMMON THEMES BEHIND STATE SUCCESS STORIES

  • Needs are reasonable and relatable to the public
  • Potential benefits of investment are clear
  • Political leadership from the executive branch
  • Broad coalition of supporters beyond self-interested groups
slide28

ILLUSTRATIVELY, SHORING UP HTF WOULD NOT PRESENT AN UNREASONABLE BURDEN

  • Average household pays $46 in federal and state 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—an action that would fix the Highway Trust Fund shortfall

Source: American Road and Transportation Builders Association

aashto s reauthorization strategy on revenue and funding
AASHTO’S REAUTHORIZATION STRATEGY ON REVENUE AND FUNDING
  • Engagement: State DOT leaders educating Congressional members and staff on value of federal investment
  • Support: Providing technical assistance to Congressional committees
  • Flexibility: “All options are on the table”: Remain agile to take advantage of window of opportunity
key transportation funding and finance resources
KEY TRANSPORTATION FUNDING AND FINANCE RESOURCES
  • Transportation Governance and Finance: A 50-State Review of State Legislatures and Departments of Transportation from AASHTO and NCSL
  • Final Reportof the National Surface Transportation Infrastructure Financing Commission
  • 2010 Conditions and Performance Report from USDOT
  • AASHTO Center for Excellence in Project Finance
  • FHWA Office of Innovative Program Delivery
  • NCSL Transportation Funding and Finance Legislation Database
  • NCSL Public-Private Partnerships for Transportation: A Toolkit for Legislators
practioners need your help
PRACTIONERS NEED YOUR HELP!

Research assistance is needed on:

  • Clear demonstration of how much users pay, and what they get from the transportation system for what they pay
  • Tangible examples of economic benefits due to investment in transportation
  • Translation of complex financing concepts and jargon into everyday language
  • Up-to-date information on transportation funding and various system statistics, both at the federal and state level
conclusion
CONCLUSION

“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