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12 September 2013 MAP-21 and the Future of Federal Transportation Funding Joung H. Lee, Associate Director for Finance and Business Development and Deputy.

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Presentation on theme: "12 September 2013 MAP-21 and the Future of Federal Transportation Funding Joung H. Lee, Associate Director for Finance and Business Development and Deputy."— Presentation transcript:

1 12 September 2013 MAP-21 and the Future of Federal Transportation Funding Joung H. Lee, Associate Director for Finance and Business Development and Deputy Director, AASHTO Center for Excellence in Project Finance

2 2 MAP-21 and the Future of Federal Transportation Funding Joung H. Lee Associate Director for Finance and Business Development American Association of State Highway and Transportation Officials Deputy Director AASHTO Center for Excellence in Project Finance TRANSPORTATION LIBRARIANS ROUNDTABLE THURSDAY 12 SEPTEMBER 2013

3 3 CONSTITUTIONAL DUTY TO PROVIDE FOR TRANSPORTATION “To establish Post offices and post Roads” Article I, Section 8, U.S. Constitution Source: National Archives and Records Administration

4 4 Sources: Congressional Budget Office, Office of Management and Budget GRADUAL DECLINE IN NATIONAL TRANSPORTATION INVESTMENT

5 Source: American Society of Civil Engineers CONTINUED DETERIORATION OF INFRASTRUCTURE CONDITIONS

6 Source: American Society of Civil Engineers INCREASED INDIRECT COSTS TO THE TRAVELING PUBLIC

7 7 Source: World Economic Forum, The Global Competitiveness Report US IS FALLING FURTHER BEHIND ON THE QUALITY OF INFRASTRUCTURE COMPARED TO PEER NATIONS

8 8 MAP-21 IS A SIX-YEAR POLICY BILL WITH ONLY TWO YEARS OF FUNDING

9 9 MAP-21 CONTINUES TO RELY ON HIGHWAY TRUST FUND—THE BACKBONE OF FEDERAL FUNDING Source: Gary McCoy, CagleCartoons.com

10 10 MOTOR FUEL TAXES COMPRISE 91% OF HTF REVENUES BUT FACE AN UNCERTAIN LONG-TERM FUTURE Source: Federal Highway Administration, Highway Statistics, 2011

11 11 HIGHWAY TRUST FUND HEADWINDS: #1. AMERICANS AREN’T DRIVING AS MUCH Source: Federal Highway Administration

12 12 HIGHWAY TRUST FUND HEADWINDS: #2. GAS TAX HAS LOST ITS PURCHASING POWER

13 13 Source: Congressional Budget Office $57B drop HIGHWAY TRUST FUND HEADWINDS: #3. IMPACT OF ALTERNATIVE FUEL VEHICLES

14 September 2008: $8.017 billion General Fund transfer to HTF 7 August 2009: $7 billion General Fund transfer to HTF 18 March 2010: $19.5 billion General Fund transfer to the Highway Trust Fund 6 July 2012: $2.4 billion Leaking Underground Storage Tank Trust Fund transfer to HTF FY 2013: $6.2 billion General Fund transfer to HTF FY 2014: $12.6 billion General Fund transfer to HTF (scheduled) Total General Fund transfers to Highway Trust Fund: $53.3 billion between 2008 and 2014 CASH TRANSFERS FROM GENERAL FUND HAVE AVOIDED HIGHWAY TRUST FUND “FISCAL CLIFF”

15 BUT HTF OUTLAYS ARE ESTIMATED TO OUTPACE RECEIPTS BY $15 BILLION OR MORE PER YEAR

16 IF NO NEW REVENUES ARE FOUND, FEDERAL HIGHWAY OBLIGATIONS WILL FALL BY ALMOST 100% IN FY 2015

17 17 IN FY 2015, VIRTUALLY ALL HTF RECEIPTS WILL BE USED TO PAY FOR PRIOR-YEAR COMMITMENTS

18 STATE-BY-STATE IMPACT WOULD BE DEVASTATING

19 19 SO WHAT CAN BE DONE?

20 THERE IS CURRENTLY NO SHORTAGE OF TECHNICALLY FEASIBLE REVENUE OPTIONS

21 21  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) Source: National Conference of State Legislatures STATES HAVE LONG RELIED ON VARIOUS REVENUE SOURCES TO INVEST IN TRANSPORTATION

22 22 Tools that borrow against or leverage state revenues for surface transportation projects: o General obligation or revenue bonds (44 states + DC + PR) o GARVEE bonds (33 states + DC + PR) o Private Activity Bonds (PABs) (6 states) o TIFIA federal credit assistance (12 states + PR) o State infrastructure banks (SIBs) (34 states + PR) o Public-private partnerships (PPPs or P3s) (authorized in 33 states + PR) o Design-build (authorized in 38 states + PR) Source: National Conference of State Legislatures STATES ALSO UTILIZE VARIOUS FINANCING TOOLS TO ACCELERATE PROJECT DELIVERY

23 23 STATES ARE LEADING THE WAY ON MEETING THE TRANSPORTATION REVENUE CHALLENGE

24 24 Raising fuel taxes: California, Idaho, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, Pennsylvania, Utah, Vermont, West Virginia, 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, Virginia CURRENT STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE)

25 25 State sales tax toward transportation: Arkansas, Idaho, Virginia, West Virginia Sales taxes on fuel, or other variable taxes/fees: District of Columbia, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Pennsylvania, South Carolina, Utah, Virginia, West Virginia, Wisconsin Vehicle registration fees: Idaho, Michigan, New Hampshire, Pennsylvania, Virginia, West Virginia, Wisconsin CURRENT STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE)

26 26 Vehicle Miles Traveled Fee (VMT) pilot projects: Oregon Framework to study a VMT fee: Arizona, Florida, Washington, Wisconsin Special fees or taxes for electric or alternative fuel vehicles: Arizona, Virginia, Washington, West Virginia Source: National Conference of State Legislatures. STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE)

27 27 Needs are reasonable and relatable to the public Potential benefits of investment are clear Political leadership from the executive branch Broad coalition of supporters beyond self- interested groups SOME COMMON THEMES BEHIND STATE SUCCESS STORIES

28 28 Source: American Road and Transportation Builders Association 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 Electricity and gas: $160 o Cell phone: $161 o 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

29 29 AASHTO’S REAUTHORIZATION STRATEGY ON REVENUE AND FUNDING Engagement: State DOT leaders educating Congressional members and staff on value of federal investment Support: Providing technical assistance to Congressional committees Flexibility: “All options are on the table”: Remain agile to take advantage of window of opportunity

30 30 KEY TRANSPORTATION FUNDING AND FINANCE RESOURCES Transportation Governance and Finance: A 50-State Review of State Legislatures and Departments of Transportation from AASHTO and NCSLTransportation Governance and Finance: A 50-State Review of State Legislatures and Departments of Transportation Final Report of the National Surface Transportation Infrastructure Financing CommissionFinal Report 2010 Conditions and Performance Report from USDOT2010 Conditions and Performance Report AASHTO Center for Excellence in Project Finance FHWA Office of Innovative Program Delivery NCSL Transportation Funding and Finance Legislation Database NCSL Public-Private Partnerships for Transportation: A Toolkit for LegislatorsNCSL Public-Private Partnerships for Transportation: A Toolkit for Legislators

31 31 PRACTIONERS NEED YOUR HELP! Research assistance is needed on: Clear demonstration of how much users pay, and what they get from the transportation system for what they pay Tangible examples of economic benefits due to investment in transportation Translation of complex financing concepts and jargon into everyday language Up-to-date information on transportation funding and various system statistics, both at the federal and state level

32 32 CONCLUSION “Together, the united forces of our communication and transportation systems are dynamic elements in the very name we bear— United States. Without them, we would be a mere alliance of many separate parts.” President Dwight D. Eisenhower February 22, 1955

33 33 QUESTIONS?


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