Transcript Slide 1

M ONDAY 23 M ARCH 2015
2015 ANNUAL M EETING
I-81 CORRIDOR COALITION
ROANOKE , VA
MAP-21 REAUTHORIZATION
Funding and Financing the
Federal Program
Joung H. Lee
Policy Director
American Association of State Highway and Transportation Officials
TRANSPORTATION.ORG
1
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
TRANSPORTATION.ORG
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A PARADOX
• Everyone says transportation Investment is
important…
o
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.
“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.”
TRANSPORTATION.ORG
Source: The Rockefeller Foundation Infrastructure Survey
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A PARADOX
• But they don’t want to pay
• Support for:
o
o
o
o
Private investment: 78%
National Infrastructure Bank: 60%
Bonding: 59%
Eliminating subsidies for American oil companies: 58%
• Opposition to:
o
o
o
o
Increasing the federal gas tax: 71%
Tolling interstate highways and bridges: 64%
Mileage-based user fee: 58%
New tax on foreign oil: 51%
TRANSPORTATION.ORG
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
TRANSPORTATION.ORG
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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.”
TRANSPORTATION.ORG
Source: The Rockefeller Foundation Infrastructure Survey
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGES
AND 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
TRANSPORTATION.ORG
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TRANSPORTATION FUNDING AS SHARE OF GDP
TRANSPORTATION.ORG
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GAS TAX HEADWIND:
PURCHASING POWER LOSS OF GAS TAX DUE TO INFLATION
SIGNIFICANT LOSS OF PURCHASING POWER
Historical CPI-U
Estimated CPI-U Based on 21-year Average from 1994-2014
100
90
80
Percentage
70
60
50
39% Purchasing Power Loss by 2014
40
30
20
10
0
52% Purchasing Power Loss by 2024
GAS TAX HEADWIND:
SIGNIFICANT LOSS OF PURCHASING POWER
Sample of Nominal Prices Relative to Federal Gas Tax, 1993 and 2010
ITEM
College Tuition
Gas
Movie Ticket
House
Bread
Income
Stamp
Beef
Car
Federal Gas Tax
UNIT/DESCRIPTION
1993
Average Tuition and Required Fees $
3,517
2010
$
9,136
Per Gallon
$
1.12
$
2.73
Average Ticket Price
$
4.14
$
7.89
Median Price
$ 126,500
$ 221,800
Per Pound
$
1.08
$
1.76
Median Household
$
31,272
$
49,167
One First-class Stamp
$
0.29
$
0.44
Per Pound of Ground Beef
$
1.57
$
2.28
Average New Car
$
19,200
$
26,850
Per Gallon
$ 0.184 $ 0.184
PERCENT CHANGE
160%
144%
91%
75%
62%
57%
52%
46%
40%
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
TRANSPORTATION.ORG
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GAS TAX HEADWIND:
IMPACT OF ALTERNATIVE FUEL VEHICLES
$57B
drop
TRANSPORTATION.ORG
Source: Congressional Budget Office
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HIGHWAY TRUST FUND: DISCREPANCIES IN RECEIPTS AND OUTLAYS
62
(Year of Expenditure Dollars in Billions)
57
52
47
42
37
32
TRANSPORTATION.ORG
Total HTF Outlays
Total HTF Receipts Minus GF Transfers
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CASH TRANSFERS FROM GENERAL FUND HAVE
AVOIDED HIGHWAY TRUST FUND “FISCAL CLIFF”
•
•
•
•
•
•
•
•
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)
TRANSPORTATION.ORG
* 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.
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ESTIMATED FEDERAL HIGHWAY TRUST FUND OBLIGATIONS
Highway
45
Transit
39.8
39.8
40 39.0
Highway Safety
35.0
35
35.0
35.0
35.0
35.0
35.0
35.0
35.0
35.0
Dollars in Billions
30
25
20
15
10
9.9
9.9
9.9
5.3
4.1
5
1.4
1.3
1.3
0.1 -
1.1
-
5.3
5.3
5.3
5.3
5.3
5.3
5.3
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
2018
2019
2020
2021
2022
2023
2024
2025
0
2013
2014
2015
2016
2017
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.
FEDERAL AND STATE FUNDING: CURRENT CHALLENGES
AND 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
TRANSPORTATION.ORG
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CURRENT CHALLENGES FACING FEDERAL
SURFACE TRANSPORTATION FUNDING
Infographic available at
http://invest.transportation.org
TRANSPORTATION.ORG
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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)
TRANSPORTATION.ORG
Source: National Conference of State Legislatures
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STATES ALSO UTILIZE VARIOUS FINANCING
TOOLS TO ACCELERATE PROJECT DELIVERY
•
Tools that borrow against or leverage state revenues
for surface transportation projects:
o
o
o
o
o
o
o
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)
TRANSPORTATION.ORG
Source: National Conference of State Legislatures
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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.
TRANSPORTATION.ORG
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGES
AND 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
TRANSPORTATION.ORG
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STATES ARE LEADING THE WAY ON MEETING
THE TRANSPORTATION REVENUE CHALLENGE
TRANSPORTATION.ORG
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RECENT STATE TRANSPORTATION
REVENUE DISCUSSIONS
(SUCCESSFUL STATES IN UNDERLINE)
• 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
TRANSPORTATION.ORG
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RECENT STATE TRANSPORTATION
REVENUE DISCUSSIONS
(SUCCESSFUL STATES IN UNDERLINE)
• 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
TRANSPORTATION.ORG
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STATE TRANSPORTATION REVENUE DISCUSSIONS
(SUCCESSFUL STATES IN UNDERLINE)
• 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
TRANSPORTATION.ORG
Source: National Conference of State Legislatures.
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SOME COMMON THEMES BEHIND
STATE SUCCESS STORIES
• 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
TRANSPORTATION.ORG
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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
o
o
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
TRANSPORTATION.ORG
Source: American Road and Transportation Builders Association
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FEDERAL AND STATE FUNDING: CURRENT CHALLENGES
AND 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
TRANSPORTATION.ORG
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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
TRANSPORTATION.ORG
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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 (RKY)
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
TRANSPORTATION.ORG
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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
o
Infrastructure 2.0 Act generates $170 billion in revenue from one-time
8.75 percent existing overseas profits accumulated by US corporations
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 Committee
o
$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
TRANSPORTATION.ORG
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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 Leadership
o
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
TRANSPORTATION.ORG
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MAP-21 REAUTHORIZATION
Funding and Financing the
Federal Program
Joung H. Lee
Policy Director
American Association of State Highway and Transportation Officials
202-624-5818
[email protected]
TRANSPORTATION.ORG
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