Transcript Bankruptcy for Governments

Rethinking the Federal
Surface Transportation
Program
by
Robert W. Poole, Jr.
Director of Transportation Policy,
Reason Foundation
www.reason.org/transportation
[email protected]
Overview of presentation
Need for increased highway investment
Near-term outlook for reauthorization
Shortcomings of current proposals
Need for a Plan B
What a Plan B might consist of
The need for increased highway
investment is well-documented.
Major highways and bridges are wearing out
and must be replaced.
Cost of reconstructing Interstates has not
been included in most estimates of “needs.”
Locations of people and business are very
different from when the Interstates were
being planned.
Many highways and bridges are under-sized
for current—and projected—traffic.
How large is the highway funding
shortfall?
Estimates from AASHTO, Policy & Revenue
Commission, Financing Commission, and
FHWA C&P Report.
Federal, state, and local capital investment.
2008 FHWA C&P report (all roads)*:
“Sustain” scenario: $27B/year short
“Improve” scenario: $59B/year short
*Using B/C>1.5; no tolling/pricing
Reauthorization prospects
Timing:
Most observers say Spring 2011
Slight chance of “lame-duck” attempt
If not next Spring, may be after 2012
presidential election.
Funding increase: chances close to zero
Hence, need for a Plan B
The Oberstar bill
Further centralizes control in DC, not
states.
Empowers MPOs at expense of state
DOTs.
Makes most highway funding “flexible.”
Expands “livability” programs.
Heavily regulates tolling and PPPs.
DOT’s Draft Strategic Plan
Also highly centralized and pro”livability.”
Aims to force people out of cars and
freight from trucks to trains.
Spend highway money on repair, not
capacity expansion.
Seeks “transportation revenue” usable
for all modes, discarding userspay/users-benefit principle.
What is “livability”?
Attempt to reshape cities and infrastructure
to let people live and work without cars.
Shift ever-larger sums from HTF to transit,
bike paths, sidewalks, etc.
Aim is large mode-shift away from auto use.
FTA now evaluating “New Starts” based on
community development, not transportation.
MPOs to be required to develop “smartgrowth” land-use plans, to get federal
transportation funds.
Problems with livability agenda
Doubling density leads to only 4 to 5% reduction in
VMT.
Hence, smart growth is very costly way to reduce
GHGs (e.g., $4,000/ton).
Higher density leads to worse traffic congestion.
Higher-density cities have more costly housing.
Transit today typically handles 1.5% of urban travel;
doubling it (at huge cost) would still leave over 95%
of trips by car.
Problems with inter-city
mode shifting
Goods movement will double by 2050.
Most studies predict rail will retain or slightly
expand mode share (in ton-miles).
Truck volume will double; hence, large
highway capacity expansion needed.
Most HSR plans involve shared use of freight
rail ROW; serious conflicts likely.
Inter-city bus (coach) provides unsubsidized
alternative to massively subsidized HSR.
A digression on federal subsidies
Net federal subsidies, by mode,
1990-2002
Passenger rail:
Urban transit:
Airlines:
Highways:
$186/thousand pass-mi
$118/thousand pass-mi
$ 6/thousand pass-mi
$ -2/thousand pass-mi
Source: “Federal Subsidies to Passenger Transportation,” USDOT Bureau of
Transportation Statistics, Dec. 2004
The need for a Plan B
Oberstar and DOT plans are bad for
highways, drivers, and trucking.
You can’t fight “something” with
“nothing.”
High likelihood of change in Congress.
Opportunity to rethink entire federal
program.
The users-pay/users-benefit
principle is sound—but at risk
Fairness: those who pay benefit.
Proportionality: use more; pay more.
Self-limiting: unlike Europe’s gas taxes
Predictable: annual revenue stream.
Investment signal: at least in the form
of tolling.
But diversion of Trust Fund monies
is destroying this principle.
1956: Interstates only
1970: other highways, bus facilities
1973: rail facilities
1982: Mass Transit Account
1991: “flexible” STP and CMAQ can fund
bikeways, sidewalks, trails, etc.
1998 and 2005: even more flexibility
Today, 25% of Highway Trust Fund monies
are used for non-highway purposes.
Oberstar and DOT would make nearly all HTF
“flexible,” no programs for new capacity.
Outline of a possible Plan B
Restore the users-pay/users-benefit principle to the
Highway Trust Fund.
Refocus the federal program on Interstate
reconstruction and modernization.
Devolve other highways, transit, etc. to states—or
fund non-highway modes out of general revenues,
not HTF.
Empower states to toll Interstates, both urban and
rural.
Don’t regulate state use of PPPs; instead, assist via
expanded TIFIA and Private Activity Bonds.
Budgetary impact of refocused
federal program (1)
Programs no longer funded by Highway
Trust Fund:
Urban transit:
$8.0B/year
Enhancements/misc.
1.8B/year
Safety regulation:
1.1B/year
Total:
$10.9B/year
Budgetary impact (2):
Interstate 2.0
Rebuild 233 interchange bottlenecks: $128B
Add HOT networks in 19 mostcongested metro areas:
$98B
Reconstruct and modernize long-haul
Interstates, starting with key
truck routes:
???
Net federal increase @ $10B/yr would be
$200B over 20 years.
Political feasibility (1):
Highway community
Increased funding for the most
important highways, urban and rural.
Addresses loss of trust in Trust Fund.
Restores users-pay/users-benefit
principle.
But major break from 30-year status
quo.
Political feasibility (2):
Non-highway programs
“Social infrastructure” should be paid for out
of general taxes.
General fund: 2008 and 2009 bailouts of
Trust Fund equal current Transit Account
budget (≈$8B/yr). Plus $19.5B in 2010-11.
State/local support is already 70-80% of
transit funding.
Political feasibility (3):
state highway budgets
Assumptions:
Feds replace transit funds
States don’t replicate all former highway
programs.
State $ worth more than federal $
Increased use of tolling and PPPs
Use of B/C screen of 1.2 or 1.5
46 states shortfall of only 4-11 cents/gallon;
only 4 & DC greater.
Next steps:
Plan for changed make-up of next Congress.
Work with new leadership on Plan B
legislation.
WPRI/Reason Foundation study on tolling
Wisconsin’s Interstates.
Fight hard against any lame-duck
reauthorization bill.
Questions?
Contact information:
www.reason.org/transportation
[email protected]