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
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Eliminate Earmarks
 Consolidated and Eliminated Programs
 Established “Performance-Based” Programs (inc. asset mgmt)
 Streamlined Environmental Reviews & Red Tape
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Priorities
 Congressional Priorities except funding largely
achieved in MAP-21.
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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.
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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
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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?
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Opportunities for Solutions
 Tax reform is the best opportunity to deal with the ailing
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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”.
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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.
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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?
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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
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& 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
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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