Making the Case for Highway Investment: Learning from The
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Transcript Making the Case for Highway Investment: Learning from The
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
Credit: AASHTO analysis of FHWA data
Credit: AASHTO analysis of DOL data
Volatile Truck Sales Tax
(by quarter in thousands)
Credit: AASHTO analysis of CBO data
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 reelection
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
[email protected]
202-857-1200
www.highways.org
www.facebook.com/highwayusers