Surface Transportation Authorization AASHTO Executive Director John Horsley SCOH Subcommittee on Construction Chicago, Illinois August 4, 2009

President Obama’s Inaugural Address, January 20, 2009 “The state of the economy calls for action…We will act, not only to create new jobs, but to lay the foundation for new growth. We will build the roads and bridges that bind us together.”

Today’s Crisis In Transportation Funding Insolvency of Highway Trust Fund: By August provide $27 billion in interim funding or highway program collapses. Insolvency of Highway Trust Fund: By August provide $27 billion in interim funding or highway program collapses. By September, Cancel $8.7 billion rescission By September, Cancel $8.7 billion rescission Skyrocketing construction costs have reduced program purchasing power Skyrocketing construction costs have reduced program purchasing power Need for Revenue to sustain highway and transit programs or they will be cut by 2/3 rd in FY 2010 and beyond. Need for Revenue to sustain highway and transit programs or they will be cut by 2/3 rd in FY 2010 and beyond.

Funding Options Accept 35% reduction in Federal Aid and reduce State transportation programs by amount of cutback. Accept 35% reduction in Federal Aid and reduce State transportation programs by amount of cutback. Accept 35% reduction in Federal Aid and increase states taxes to make up for Federal cutback. Accept 35% reduction in Federal Aid and increase states taxes to make up for Federal cutback. Reject Cutback and Tell Congress to Increase Revenues Enough to Sustain the Federal Program at Levels Needed. Reject Cutback and Tell Congress to Increase Revenues Enough to Sustain the Federal Program at Levels Needed.

Recovery Act Spending as of July 24, 2009 States had obligated $17 billion in highway projects States had obligated $17 billion in highway projects 64% of state-apportioned funds had been obligated, involving over 6,000 projects 64% of state-apportioned funds had been obligated, involving over 6,000 projects All 50 states had met the 50% obligation requirement All 50 states had met the 50% obligation requirement 2,400 projects under construction valued at $6 billion 2,400 projects under construction valued at $6 billion

6 AASHTO Recommendations Regarding Highway Program Restructure Program to directly address 6 National Objectives Restructure Program to directly address 6 National Objectives Distribute 90% of Program through six programs apportioned to the states Distribute 90% of Program through six programs apportioned to the states Distribute remainder: approximately 2% to Federal lands, 1% to research, and 7% through National Programs Distribute remainder: approximately 2% to Federal lands, 1% to research, and 7% through National Programs

T&I Chair Draft Bill, Approved by Subcommittee, June 24, 2009 US DOT Under Secretary for Intermodalism Four Major Programs: Critical Asset Investment: (No highway capacity expansion allowed)Critical Asset Investment: (No highway capacity expansion allowed) Interstate MaintenanceInterstate Maintenance National Highway SystemNational Highway System BridgeBridge Highway Safety Improvement

T&I Proposal (continued) Surface Transportation Program 10% Transportation Enhancements10% Transportation Enhancements MPO sub-allocations 80%MPO sub-allocations 80% Balance of state 20%Balance of state 20% Congestion Mitigation/Air Quality Improvement Freight Program, formula distribution

T&I Proposal (continued) 40 national programs eliminated 40 national programs eliminated 75 national programs consolidated 75 national programs consolidated Metropolitan Mobility/Access Program $50 billion which would leverage additional funds through GARVEE Bonds, Private Activity Bonds, TIFIA, Metropolitan Infrastructure Banks Metropolitan Mobility/Access Program $50 billion which would leverage additional funds through GARVEE Bonds, Private Activity Bonds, TIFIA, Metropolitan Infrastructure Banks Projects of National Significance $25 billion Projects of National Significance $25 billion

T&I Proposal (continued) $262.5 billion for highways $262.5 billion for highways $12.5 billion for safety $12.5 billion for safety $100 billion for transit $100 billion for transit $25 billion for projects of national significance $25 billion for projects of national significance $50 billion for metropolitan mobility and access $50 billion for metropolitan mobility and access $50 billion for high speed rail $50 billion for high speed rail

T&I Proposal (continued) $250 billion from Highway Trust Fund Revenues/general funds $250 billion from Highway Trust Fund Revenues/general funds $150 billion National Infrastructure Bank $150 billion National Infrastructure Bank $100 billion TBD $100 billion TBD Reforms: Reforms: 6-year targets for 4 major programs6-year targets for 4 major programs Annual benchmarksAnnual benchmarks Annual Reports on progress to DOT, CongressAnnual Reports on progress to DOT, Congress FHWA: Office of Expediting Project DeliveryFHWA: Office of Expediting Project Delivery Office of Livability, Office of Public Benefit Office of Livability, Office of Public Benefit

T&I Proposal (continued) 70% apportioned to states, 30% through national programs 70% apportioned to states, 30% through national programs 30% of program to transit 30% of program to transit STP suballocations 80% STP suballocations 80% Federally-driven targets, performance measurement Federally-driven targets, performance measurement Rural districts and states get less, Metropolitan areas more Rural districts and states get less, Metropolitan areas more Restrictions on new highway capacity Restrictions on new highway capacity

Climate Change Requirement to add goals for greenhouse gas reduction in transportation planning process Requirement to add goals for greenhouse gas reduction in transportation planning process EPA to issue rulemaking to guide planning process EPA to issue rulemaking to guide planning process May or may not allow increases in highway capacity in future May or may not allow increases in highway capacity in future

Interim Funding U.S. DOT June 24 letter, Trust Fund Shortfall by early August U.S. DOT June 24 letter, Trust Fund Shortfall by early August Administration has proposed 18-month extension funded at $20 billion, plus reforms Administration has proposed 18-month extension funded at $20 billion, plus reforms Senate Finance and EPW, House Ways and Means working on timely solution Senate Finance and EPW, House Ways and Means working on timely solution House T&I prefers focus on Authorization Now! House T&I prefers focus on Authorization Now!

The Next Steps Keep the Highway Trust Fund solvent Keep the Highway Trust Fund solvent Cancel $8.7 billion rescission Cancel $8.7 billion rescission Restore the purchasing power of the transportation dollar Restore the purchasing power of the transportation dollar Enact 6-year bill as soon as possible. Enact 6-year bill as soon as possible. Timing depends on Congress and Administration agreeing on revenue solution Timing depends on Congress and Administration agreeing on revenue solution