Transcript Transportation in Crisis- The Need for Visionary Leadership

Closing the Gap: Financing Regional
Transportation Needs
NYU Wagner Rudin Center for
Transportation Policy and Management
June 4, 2008
Remarks by
JayEtta Hecker, Director
U.S. Government Accountability Office
Reflections on “The Funding Crisis”
• Excessive focus on “the funding GAP” can divert needed focus on
the “what”, “who”, and “how” of national and regional public
transportation infrastructure policies
• GAO has called for a comprehensive restructuring of the federal
role & clear definition of national interests and desired performance
outcomes.
• Economic significance of well-performing transportation system
creates an urgency for moving toward cost-effective allocation of
scarce transportation dollars.
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Four Key Points for Discussion:
1. Drivers compelling need for comprehensive federal reforms
2. GAO “Principles” for reexamination
3. How more specifically defined national interests and
performance outcomes can drive reforms
4. State/Regional opportunities
• Vis-à-vis federal programs of future
• Reforming from within
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1. GAO Work Has Identified Drivers Requiring
Comprehensive Reexamination of Federal Role
• Degrading system condition & performance
• Absence of clear and distinct national interests
• Rare link of federal funding to system performance
• Absence of C/B or ROI focus for infrastructure investments
• Impending highway trust fund shortfall
• Progressive deterioration of user-pay base
• Long term fiscal imbalance
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2. GAO Calls for Restructuring Federal Surface Transportation
Program & Recommends Focus on Underlying Principles
• Well-defined goals based on identified areas of national interest
• Clearly defining the federal and other roles in achieving each
goal
• Incorporating performance and accountability into federal
funding flows
• Employing the best tools and approaches to emphasize return
on investment
• Ensuring fiscal sustainability
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3. Restructuring Would be Driven by Defining Specific
Areas of National Interests and Performance Goals
• Energy/Environmental Externalities of Transportation?
• Reliability and Flow of Interstate Freight?
• National Connectivity?
• Maintenance/Upgrading of the Interstate?
• Transportation Safety and Security?
• Metropolitan Congestion?
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Specifying Different Goals and Levels of Federal
Interests Could Contribute to a Rational & Efficient
Alignment of Roles and Responsibilities
Each goal will have varying levels of BENEFICIAL INTERESTS
among varied parties--e.g.
 Local governments/municipalities/citizens interest in metropolitan
congestion?
 States interest in regional connectivity/economic development/bridge
condition?
 State and MPO incentives to address regional corridors/sustainability
of primary reliance on earmarked programs?
 System users interest in system performance?
 Commercial users interest in reliable freight flows?
Weakening user-pay base, high federal match, proliferation of
earmarks, and stove-piped programs can create “moral hazard”
distorting choices of system owners and users
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Distinct federal programs/goals could be
better served by differentiated tools
• direct financing vs. enabling and incentivizing others
• grants vs. loans vs. guarantees
• competitive, merit-based vs. formula allocation
• varying match levels
• promoting appropriate institutional capacities and authorities
• promoting more consistent and efficient pricing of
infrastructure/internalizing full social and economic costs
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Importance of federal role in advancing Direct
Pricing of Transportation Infrastructure
• promote efficient use of existing infrastructure
• movement toward internalizing more of social and
economic costs in decisions of system owners & users
• minimize moral hazard effect on system owners and
users
• generate more accurate signals of new investment
priorities
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4. State/Regional Opportunities vis-a-vis
federal program/reform/”reauthorization”
• Focus on importance of strategic reform vs. more “parochial”
interests
• Support differentiation of priority areas requiring federal
support (e.g. environment/energy leadership; interstate
freight, multi-region corridors) from areas with strong state
and local interests/ability to address
• Promote federal support for more strategically aligned
regional entities
• Support reduction of explicit and implicit barriers to tolling
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State/Regional Opportunities
independent of federal program reform
• Strive to overcome splintered mgt of infrastructure in region
• Optimize focus on performance of existing systems/networks
• Promote cost/benefit driven investment and decision making
• Promote improved public “ownership” of costs/trade offs
• Establishment of state legal framework for expansion of road
pricing and use of PPPs
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Sources: GAO Studies Document the Need for Systemic
Reform of Federal Transportation Policies and Programs
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January 2005 - Absence of C/ B Analysis, Transportation Investments (GAO 05-172)
September 2005 – Promise of ITS Falls Short (GAO 05-943)
June 2006 – Challenges and Strategies of Expanding Use of Tolling (GAO 06-554)
November 2006 – Intercity Passenger Rail Options (GAO 07-15)
June 2007 – Barriers to Inter-modal Transportation (GAO 05-727)
September, 2007 - Forum on Reexamination (GAO 07-1210SP)
July 2007 – Promoting Efficient Use of Existing Infrastructure (GAO 07-920)
August, 2007 – Federal Policy Toward Freight Railroads (GAO 07—94, 07-770)
January 2008 – Federal Role in Freight Mobility (GAO 08--287)
January 2008 – Trends in State Highway Contracting (GAO 08--198)
February 2008 – Observations on Surface Policy Commission (GAO 08--478T)
February 2008 – Protecting the Public Interest in PPPs (GAO 08--44)
March 2008 – Restructuring Federal Surface Transportation Programs (GAO 08—
400)
May 2008 – Challenges and Investment Options for the Nation’s Infrastructure
(GAO-08-763T)
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Recap:
Structural policy and institutional reforms to promote more rational and
cost-effective allocation of scarce transportation dollars
are AT LEAST AS IMPORTANT
as developing “financing” strategies for “Closing the Gap”.
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Optimizing HOW money is collected, distributed, and used will itself
affect HOW MUCH is needed and what impact transportation
“investments” will have.
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