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Transportation Directions: Where Are We Heading? (Jack Basso) - ULI Fall Meeting 102611
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Transportation Directions: Where Are We Heading? (Jack Basso) - ULI Fall Meeting 102611


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Authorization of the next surface transportation bill has …

Authorization of the next surface transportation bill has
languished in Congress. Learn about prospects for a
breakthrough and how states are dealing with continued
uncertainty and planning for a future with diminished federal

Published in: Business

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  • Good afternoon. It is a pleasure to be here to talk with you about the outlook for Federal surface transportation funding and programs. We are at a crossroads for the Federal transportation programs. The decisions that must come will have far reaching implications for that nation’s future. These programs impact the economy, safety, the environment and generally the nation’s quality of life.
  • Let me address the overall climate for surface transportation reauthorization and funding. As I said, we are at a crossroad in transportation’s future direction. To provide a context, I have divided my presentation into a series of segments to give you a prospective on how the future direction may take shape. I say may because the whole direction is fluid. I will attempt to address the current climate that will affect future funding. Than discuss key questions on Federal funding followed by facts, figures and a discussion of what we all face as the Federal government proceeds to set a future course.
  • Let’s begin with the issues.
  • The latest news on the Federal front is: Highway and transit programs are being funded in short-term extensions at current levels. The Administration has said it will send up a proposal for reauthorization and funding in February with the Federal budget. The current extension expires September30th. As does the authority to collect Federal gas tax and pay the States. The Federal Highway Trust Fund has had to get transfers from the Federal General Fund to pay the bills.
  • There is no clear path forward. The House has developed a major redirection of the programs. The Senate has shown no inclination to move forward. Funding is clearly shot. The future direction is very unclear. We face other priorities.
  • Discuss the possible outcomes
  • Everything needs a context. Nationally we are meeting about 33 percent of needs at all levels of government and given current revenue we face a massive funding gap and possible program funding reductions.
  • Let me take you through a set of illustrative revenue sources starting with the traditional gas tax and other state type user fees. You can see from the chart than tags tax is the main fee followed by motor vehicle registration fees and truck sales tax at the federal level. But there are other ideas such s VMT fees, carbon taxes, sales taxes, freight charges and custom fees just to name a few. The list in fact extends to revenue totaling $1.3 trillion dollars. However, the politics of each of these potential sources tend to mitigate against adopting them. So the question becomes what to do.
  • Given the magnitude and diversity of needs, states and local governments should be provided with maximum flexibility to use federal revenues from existing core sources to meet systemic transportation needs.
  • Transcript

    • 1.
      • Jack Basso
      • American Association of State Highway and Transportation Officials
    • 2. AGENDA
      • The status and expectations for reauthorization
      • Status of the House and Senate progress on reauthorization
      • U.S. DOT: where would the Administration like to go?
      • Funding issues
      • P3s who and what?
    • 3. Discussion Topics
      • America at a crossroads in transportation
      • The current climate
        • Status of reauthorization
        • The Federal budget and revenue is a driving force in future decisions on transportation funding
        • The financial backbone of the Federal highway and transit programs is in critical condition
      • Key questions affecting funding:
      • What is the Federal government’s role going to be in the future?
      • How will the Federal government best generate the required revenue for investment?
    • 4.
      • The Current Climate:
      • Discussing the Issues
    • 5. The Current Climate
      • Currently the Federal Highway and Transit programs are operating on a short-term extension
      • The Administration has outlined a long-term reauthorization proposal with the budget release in February 2011
      • However, they have no revenue options identified
      • The Highway Trust Fund has required Federal General Fund supplements
      • The President called for immediate action to extend the surface transportation programs and has offered a jobs proposal including funding for infrastructure for job creation
      • There is no support for increasing user fees (gas tax)
    • 6. The View From Congress
      • Facing difficult choices
        • Transportation and Infrastructure Committee of the House of Representatives has developed an outline of the new legislation
        • The Senate counterpart (EPW) has also released an outline but continues to look for additional revenue
        • Budget cuts are the order of the day
        • The road ahead is at best unclear
    • 7. The Administration’s Views
      • The Administration called for a $550 billion program in the budget released last February
        • However, no revenue options were forthcoming
        • No bill has been sent to Congress
        • The Secretary ahs just called for action on a long-term bill and the next few months will be critical
    • 8. The Scenarios
        • The Dooms day option
            • Fund the program long-term for six years 35 percent cut in funding
          • The Two year Fix
            • Authorize the program for two years at current funding levels: requires $12 billion in new revenue
          • The Big Deal
            • Do a full blown bill at current funding with major policy changes: requires $75 billion in new revenue
    • 9. Where We Are Now
      • Congress acted to keep the Trust Fund Solvent
        • September 2008: $8.017 billion General Fund transfer to the Highway Trust Fund
        • August 2009: $7 billion General Fund transfer to the Highway Trust Fund
        • September 30, 2009: SAFETEA-LU expired
        • March 1, 2010: Highway Trust Fund shutdown for two days
        • March 18, 2010 : $19.5 billion in foregone interest payments credited to the Highway Trust Fund
        • December 31, 2010 : Current SAFETEA-LU extension expires
        • Fiscal Year 2012 : Highway Trust Fund projected to become insolvent
    • 10. Actual Estimated
    • 11.  
    • 12.  
    • 13.  
    • 14. Future Needs and Funding Options
    • 15. Needs
        • Nationally, meeting only about 1/3 of roughly $200 billion required each year to maintain and improve the system
        • At federal level, also meeting only about 1/3 of needs – we face a $400 billion federal funding gap over next 6 years under current policies and revenues
    • 16. Some Possible Revenue Sources
      • Categories
        • Direct revenue-user fees and general tax revenue
          • Includes a variety of transportation related fees
        • Bonding and credit programs
          • Includes tolls and special taxes
        • PublicPrivate partnerships
    • 17.  
      • The States are operating on an extension at current funding levels
      • The Congress is moving on the appropriations front and a cut of 35 percent could happen
      • This uncertainty will cause the States to act more carefully
      • This could slow things down in the spring when the numbers are settled.
    • 19. Future Revenue Collection
      • The current U.S system relies on fuel taxes
      • We have seen a marked decline in revenues
      • Two National Commissions have called for short and long-term solutions
      • VMT collection systems have come to the forefront of options to consider
    • 20. Legislative Principles
      • Maintain the current federal and state shares for highway and transit capital programs.
      • Eliminate or drastically limit earmarking in federal transportation programs.
      • Develop policies that support maximum flexibility to allow for use of both conventional and innovative funding and financing tools.
    • 21. PublicPrivate Partnerships
      • Innovative Financing is playing a major funding gap role
        • Tolling and concessions
        • TIFIA Funding
        • GARVEE Bonds
        • Private Activity Bonds
        • State Infrastructure Banks
    • 22. Summary Considerations
      • We are at a crossroad
      • Congress and the Administration face difficult choices
      • State and local governments will be affected by funding choices
      • The nation will either benefit from our actions, or be changed in negative ways
      • The future is really now
    • 23.
      • QUESTIONS ?
      • Jack Basso
      • Email:
      • Phone: +1-202-624-3508