Investing in Transportation Infrastructure Government Research Association Annual Policy Conference Janet Oakley, AASHTO July 28, 2009

Presentation Provide a status on the Condition of Federal Highway Trust Fund Provide a view on the future of transportation infrastructure and the role of the Federal Government Discuss some of the critical issues that will affect the direction of programs and funding

The Future of Transportation We are at a critical crossroads in transportation history The nation as a whole has been investing only about forty percent of what is necessary to meet needs Available resources are at a low point Needs on all fronts are growing

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 Highway program faces insolvency in August Interim funding needed FY2009, FY 2010 $ 8.7 billion Rescission Construction costs have reduced purchasing power Need for New Revenue to Sustain Program for the next six years.

Source: The Fiscal Year 2010 Appendix of the Federal Budget

Funding Options Accept an 87% reduction in Federal Aid and reduce each state’s transportation program by amount of cutback. Accept 87% reduction in Federal Aid and increase state taxes to make up for Federal cutback. Reject Cutback and Tell Congress to Increase Revenues Enough to Sustain the Federal Program at Levels Needed.

In a nutshell We are in an unprecedented crisis Immediate action is necessary just to pay the bills The Highway Trust Fund is just about broke Inflation has dramatically eroded purchasing power The political climate for user fee increases is poisoned

Federal transportation program challenges  What needs to be done?  How much funding is needed?  For what?  What is the Federal Role in surface transportation for the future?  How do we best generate the necessary revenue?

What Needs to Be Done and What Will It Cost?

AASHTO Bottom Line Report: Trends VMT increase  2.4 trillion miles in 1993  3+ trillion miles in 2007  2.9 trillion miles currently Population increase  305 million in 2005  420+ million 2050 Truck freight expected to increase by 100% by 2030

AASHTO Bottom Line Report: Needs Highway Investment Requirements  Passenger vehicle demand parallels population growth (1% per year)  Truck freight demand parallels economic growth (2 to 3% per year)  Growth in VMT will at least equal population growth Current spending is $78 billion Growth Rate of VMT Per Year Cost to Improve Highways (2006 Dollars) 1.4 percent$166 billion 1.0 percent$132 billion

AASHTO Bottom Line Report: Needs Transit Investment Requirements  In 2006 Annual Passenger Miles reached billion  Between 1995 and 2007, ridership increased from 7.8 billion to 10.3 billion trips Current spending is $13.3 billion Annual Growth in RidershipCost to Improve System Performance and Condition (2006 Dollars) 2.4 percent$46 billion 3.5 percent$59 billion

What is the Federal Role in surface transportation for the future? And How do we best generate the necessary revenue?

The Future of Surface Transportation: The Current Environment Sea change in views on investments Some groups opposed to new highway investment Congress focusing on climate change\energy issues General view that the programs are broken and need much greater accountability

18 AASHTO Goals for the Next Authorization Major reforms Multimodal solutions Restructure Program to directly address 6 National Objectives Accountability for Results

19 Structure Reform: Highway Program Preservation and Renewal  Interstate Preservation  NHS Preservation  Bridge Preservation Safety Transportation System Improvement/ Congestion Reduction

20 Structure Reform: Highway Program Freight  Truck freight will double by 2040  Bottleneck improvements  Improve Trade Corridors  Truck only lanes

21 Structure Reform: Highway Program Operations and Management  Improve system performance in both rural and urban areas  Low-cost, quick turn- around improvements

22 Structure Reform: Highway Program Environment: Air Quality and Climate Change

Process Reform National Goals State and Metropolitan Performance Based Planning and Management Measuring and Reporting with Accountability for Results

Funding levels needed to restore program purchasing power Highways $375 billion Transit$ 93 billion Freight*$ 42 billion Intercity Passenger Rail*$ 35 billion Total$545 billion *(Sources outside Highway Trust Fund) Call for Top to Bottom Reform

Question Number 1: Where to get the revenue needed? $250 billion from current revenues $220 billion needed in new revenues Raise gas and diesel taxes? Build America Bonds? Freight Fees? Tolls and Public Private Partnerships? Bake Sales?

Political Challenges Ahead NAAH! Never Again Another New Highway: Pressure from Environmental Groups to say “no” to any new highway capacity in next bill Pressure to decrease the highway component share from 80% to 70% of program Pressure to shift funds from rural areas and states to metropolitan areas and urban states Pressure to shift decision making away from the States to MPOs Pressure to shift from a federally-funded, state- administered program to a federally-funded and administered program

The future of Surface Transportation Questions? Janet Oakley