transportation.org 1 monday 23 march 2015 2015 annual meeting i-81 corridor coalition roanoke, va...
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MONDAY 23 MARCH 20152015 ANNUAL MEETING
I-81 CORRIDOR COALITIONROANOKE, VA
Joung H. LeePolicy Director
American Association of State Highway and Transportation Officials
MAP-21 REAUTHORIZATION
Funding and Financing theFederal Program
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FUNDING AND FINANCING THE FEDERAL PROGRAM
• Common Misperceptions About Transportation Funding and Making the Value Proposition
• Current Challenges Facing Federal Surface Transportation Funding
• Funding and Financing Frameworks at Federal and State Government
• Getting it Done: Recent Transportation Revenue Initiatives at the State Level
• Review of Current Federal Program Funding Proposals
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A PARADOX• Everyone says transportation Investment is
important…o “66% of voters say that improving the country’s
transportation infrastructure is extremely (27%) or very (39%) important. Another 27% say it is somewhat important. Just 6% say it is not important.
o “Four in five (80%) voters agree that federal funding to improve and modernize transportation “will boost local economies and create millions of jobs from construction to manufacturing to engineering.” Just 19% disagree with this.”
Source: The Rockefeller Foundation Infrastructure Survey
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A PARADOX• But they don’t want to pay• Support for:
o Private investment: 78%o National Infrastructure Bank: 60%o Bonding: 59%o Eliminating subsidies for American oil companies: 58%
• Opposition to:o Increasing the federal gas tax: 71%o Tolling interstate highways and bridges: 64%o Mileage-based user fee: 58%o New tax on foreign oil: 51%
Source: The Rockefeller Foundation Infrastructure Survey
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MAKING THE VALUE PROPOSITION
Question: How much does the typical driver pay in gas tax in a year?
Probably six thousand, seven thousand
dollars a year
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MAKING THE VALUE PROPOSITION• “64% of voters say that how the government
currently spends money on building and maintaining our transportation infrastructure is inefficient and unwise, including one in four (26%) who says it is very inefficient. Just 32% say the government currently spends efficiently and wisely.”
Source: The Rockefeller Foundation Infrastructure Survey
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGESAND POSSIBLE PATHS FORWARD
• Common Misperceptions About Transportation Funding and Making the Value Proposition
• Current Challenges Facing Federal Surface Transportation Funding
• Funding and Financing Frameworks at Federal and State Government
• Getting it Done: Recent Transportation Revenue Initiatives at the State Level
• Review of Current Federal Program Funding Proposals
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100Historical CPI-U Estimated CPI-U Based on 21-year Average from 1994-2014
PURCHASING POWER LOSS OF GAS TAX DUE TO INFLATION
52% Purchasing Power Loss by 2024
39% Purchasing Power Loss by 2014Perc
enta
geGAS TAX HEADWIND:
SIGNIFICANT LOSS OF PURCHASING POWER
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GAS TAX HEADWIND:SIGNIFICANT LOSS OF PURCHASING POWER
ITEM UNIT/DESCRIPTION 1993 2010 PERCENT CHANGECollege Tuition Average Tuition and Required Fees 3,517$ 9,136$ 160%
Gas Per Gallon 1.12$ 2.73$ 144%Movie Ticket Average Ticket Price 4.14$ 7.89$ 91%
House Median Price 126,500$ 221,800$ 75%Bread Per Pound 1.08$ 1.76$ 62%
Income Median Household 31,272$ 49,167$ 57%Stamp One First-class Stamp 0.29$ 0.44$ 52%Beef Per Pound of Ground Beef 1.57$ 2.28$ 46%Car Average New Car 19,200$ 26,850$ 40%
Federal Gas Tax Per Gallon $ 0.184 $ 0.184 0%Sources: U.S. Census Bureau, U.S. Department of Transportation, U.S. Postal Service, U.S.Department of Commerce, U.S. Department of Education, National Association of Theater Owners
Sample of Nominal Prices Relative to Federal Gas Tax, 1993 and 2010
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$57B drop
GAS TAX HEADWIND:IMPACT OF ALTERNATIVE FUEL VEHICLES
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(Yea
r of E
xpen
ditu
re D
olla
rs in
Bill
ions
)
Total HTF Outlays Total HTF Receipts Minus GF Transfers
HIGHWAY TRUST FUND: DISCREPANCIES IN RECEIPTS AND OUTLAYS
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• Sep 2008: $8 billion General Fund transfer to HTF• Aug 2009: $7 billion General Fund transfer to HTF• Mar 2010: $19.5 billion General Fund transfer to HTF• July 2012: $2.4 billion Leaking Underground Storage Tank Trust
Fund transfer to HTF*• Nov 2012: $5.9 billion General Fund transfer to HTF**• Oct 2013: $11.7 billion General Fund transfer to HTF**• Aug 2014: $9.765 billion General Fund transfer to HTF• Aug 2014: $1 billion Leaking Underground Storage Tank Trust
Fund transfer to HTF*
Total General Fund transfers to Highway Trust Fund:$61.9 billion since 2008 ($65.3 billion inclusive of LUST transfers)
CASH TRANSFERS FROM GENERAL FUND HAVE AVOIDED HIGHWAY TRUST FUND “FISCAL CLIFF”
* This is not a transfer from General Fund as a portion of HTF receipts are normally deposited into Leaking Underground Storage Tank Trust Fund.** Amount transferred after budgetary sequester.
39.0 39.8 39.8
4.1
35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0
1.4 1.3 1.3 0.1
1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1
9.9 9.9 9.9
- -
5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Dol
lars
in B
illio
ns
Highway Highway Safety Transit
ESTIMATED FEDERAL HIGHWAY TRUST FUND OBLIGATIONS
For illustrative purposes, this scenario assumes an additional deposit of $4.4 billion into the Highway Trust Fund in FY 2015 ($3.7 billion to Highway Account; $0.7 billion to Mass Transit Account) and maintenance of a “minimum prudence balance” of $4 billion for the Highway Account and $1 billion for the Mass Transit Account.
©2015 American Association of State Highway and Transportation Officials. All Rights Reserved.
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGESAND POSSIBLE PATHS FORWARD
• Common Misperceptions About Transportation Funding and Making the Value Proposition
• Current Challenges Facing Federal Surface Transportation Funding
• Funding and Financing Frameworks at Federal and State Government
• Getting it Done: Recent Transportation Revenue Initiatives at the State Level
• Review of Current Federal Program Funding Proposals
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CURRENT CHALLENGES FACING FEDERAL SURFACE TRANSPORTATION FUNDING
Infographic available at
http://invest.transportation.org
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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
STATES HAVE LONG RELIED ON VARIOUS REVENUE SOURCES TO INVEST IN TRANSPORTATION
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• Tools that borrow against or leverage state revenues for surface transportation projects:o General obligation or revenue bonds (44 states + DC + PR)o GARVEE bonds (33 states + DC + PR)o Private Activity Bonds (PABs) (6 states) o TIFIA federal credit assistance (12 states + PR)o State infrastructure banks (SIBs) (34 states + PR)o Public-private partnerships (PPPs or P3s) (authorized in 33 states +
PR)o Design-build (authorized in 38 states + PR)
Source: National Conference of State Legislatures
STATES ALSO UTILIZE VARIOUS FINANCING TOOLS TO ACCELERATE PROJECT DELIVERY
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POTENTIAL OF THE PPP (P3) OPTION• Can advance large complex transportation projects with revenue
streams
• Can provide greater leveraging of revenue streams (access to private sources of investment capital)
• Can create cost savings and production / operating efficiencies
• Can transfer construction, financing and other risks from the public sector to private partner(s)
• BUT PPPs themselves do not create new money for state/local project sponsors. The private investment must be repaid with general revenue (taxes) or project-specific revenue (tolls).
In other words, PPPs are project delivery and financing approaches, they are not funding sources.
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGESAND POSSIBLE PATHS FORWARD
• Common Misperceptions About Transportation Funding and Making the Value Proposition
• Current Challenges Facing Federal Surface Transportation Funding
• Funding and Financing Frameworks at Federal and State Government
• Getting it Done: Recent Transportation Revenue Initiatives at the State Level
• Review of Current Federal Program Funding Proposals
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STATES ARE LEADING THE WAY ON MEETING THE TRANSPORTATION REVENUE CHALLENGE
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• Raising fuel taxes: California, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, South Carolina, South Dakota, Utah, Vermont, 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, South Carolina, Virginia
RECENT STATE TRANSPORTATIONREVENUE DISCUSSIONS
(SUCCESSFUL STATES IN UNDERLINE)
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• General purpose funds toward transportation: Arkansas, Georgia, Idaho, Iowa, Michigan, Minnesota, Oregon, Pennsylvania, Texas, Virginia, Washington
• Sales taxes on fuel, or other variable taxes/fees: District of Columbia, Georgia, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Pennsylvania, Puerto Rico, South Carolina, South Dakota, Texas, Utah, Virginia, West Virginia, Wisconsin
• Vehicle registration fees: California, Idaho, Illinois, Michigan, Pennsylvania, Virginia, West Virginia, Wisconsin
RECENT STATE TRANSPORTATIONREVENUE DISCUSSIONS
(SUCCESSFUL STATES IN UNDERLINE)
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• Vehicle Miles Traveled (VMT) Fee: Oregon• Framework to study a VMT fee: Arizona, Florida,
Nevada, Washington, West Virginia, Wisconsin• Special fees or taxes for electric or alternative fuel
vehicles: Arizona, Georgia, Michigan, South Dakota, Virginia, Washington
Source: National Conference of State Legislatures.
STATE TRANSPORTATION REVENUE DISCUSSIONS(SUCCESSFUL STATES IN UNDERLINE)
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• Needs are reasonable and benefits are relatable to the public
• Users’ share of investment cost is clearer• Strong political leadership is provided from
the executive branch• Formation of a broad coalition of
supporters beyond self-interested groups
SOME COMMON THEMES BEHIND STATE SUCCESS STORIES
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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:o Electricity and gas: $160o Cell phone: $161o 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
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGESAND POSSIBLE PATHS FORWARD
• Common Misperceptions About Transportation Funding and Making the Value Proposition
• Current Challenges Facing Federal Surface Transportation Funding
• Funding and Financing Frameworks at Federal and State Government
• Getting it Done: Recent Transportation Revenue Initiatives at the State Level
• Review of Current Federal Program Funding Proposals
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RECENT MILESTONES AND FUTURE DECISION POINTS
• Oct 1, 2014: MAP-21 extension begins• Dec 16, 2014: Continuing Resolution/Omnibus Appropriations for FY 2015
enacted • February 2, 2015: President’s budget for FY 2016 includes updated GROW
AMERICA proposal• March 5, 2015: House passes the Passenger Rail Reform and Investment Act of
2015 (PRRIA) • Spring 2015: House and Senate developing air, surface, and passenger
reauthorization proposals• March 15, 2015: Debt ceiling suspension expiration• May 31, 2015: MAP-21 extension expires• Summer 2015: Highway Trust Fund insolvency expected
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REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS
• February 2015: Rep. Earl Blumenauer (D-OR)o Raise gas tax by 15 cents over three years and index; set up a road usage
fee pilot program to succeed motor fuel taxes• February 2015: The Obama Administration
o Raise $268 billion in revenue from a 14 percent one-time tax on previously untaxed foreign income; deposit $238 billion to Transportation Trust Fund as part of the six-year GROW AMERICA Act
• January 2015: Sen. Barbara Boxer (D-CA) and Sen. Rand Paul (R-KY)o Invest in Transportation Act of 2015 allows voluntary repatriation of
foreign earnings by US corporations earned in 2015 or earlier at a rate of 6.5 percent; revenues would be deposited into the Highway Trust Fund
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REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS
• January 2015: Rep. John Delaney (D-MD) and Rep. Richard Hanna (R-NY)o Infrastructure 2.0 Act generates $170 billion in revenue from one-time
8.75 percent existing overseas profits accumulated by US corporationso Provides $120 billion to HTF to support a six-year bill; $50 billion to
capitalize American Infrastructure Fund • July 2014: Senate Finance Committee and House Ways and
Means Committeeo $10.8 billion Short-term Highway Trust Fund patch using pension
smoothing, customs duties, mortgage reporting, clarification of statute of limitations on basis overstatement, 100% continuous levy on Medicare providers, and other offsets
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REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS
• June 2014: Sen. Corker (R-TN) and Sen. Murphy (D-CT)o Increase gas tax by 12 cents per gallon and provide offsetting tax relief
• June 2014: Rep. DeFazio (D-OR)o Eliminate federal gas tax; implement per barrel tax on oil up to $6.75
• May 2014: House Republican Leadershipo End Saturday first class mail delivery; provides $10.7 billion in offsets
over ten years• February 2014: House Ways and Means Committee
o One-time tax on certain corporate earnings and profits held by foreign subsidiaries over ten years; raises $126.5 billion
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Joung H. LeePolicy Director
American Association of State Highway and Transportation Officials202-624-5818
MAP-21 REAUTHORIZATION
Funding and Financing theFederal Program