Presentation by Kathy Ruffalo, Ruffalo & Associates, at the 2014 National Rural Transportation Conference. Ruffallo discussed outlook for funding of the federal surface transportation program and state innovations in funding and financing.

1. National Rural Transportation
Conference
Kathy Ruffalo
December 5, 2014

2. Topics
• Election results
• Lame duck session
• Key dates in 2015
• Authorization efforts
• Funding and financing update

3. Know your audience……….
• Or at least know what people think of your
audience………..

4. Opinion of Congress*
Favorable - 13%
Unfavorable – 83%
*Gallup – March 2013

5. Congress MORE popular than*
- Fidel Castro
- North Korea
- Meth labs
- The Kardashians/Lindsey Lohan
- Lobbyists
*Public Policy Polling

6. Things MORE popular than Congress*
- Lice
- Used car salesman
- Root canals
- Carnies
- Cockroaches
- Colonoscopies
- NFL replacement refs
*Public Policy Polling

7. Election results

8. Most expensive election in US history
• Estimated that $4 billion was spent
• NC Senate race was $100 million
• Low voter turnout nationwide – 36.6%
• What will this mean for 2016?

9. Republicans Win Record Majority in House
Analysis
Control of the 113th House (2012-2014)
188 244
199 233
• Republicans won a total of at least 244 seats in the House, their largest majority since 1928
• An expanded GOP majority in the House means that Speaker Boehner will have an easier time passing legislation in the House without
Democratic support, and Republicans will also have an easier time holding on to their majority in future elections
Source: National Journal Research; CNN Election Center; New York Times.
Democratic
Republican
Vacant
Undecided*
Control of the 114th House (2014-2016)
AK
Total Seats
Democrats: 188
Republicans: 244
Undecided: 3
* Races not called as of 11/13/2014; includes runoff elections to be held in LA-5 and LA-6
3
AK
Total Seats
Democrats: 199
Republicans: 233
Vacancies: 3

10. Demographic Profiles of the 113th and 114th Congresses
113th Congress 114th Congress
House Senate House Senate
D R All D R All D R All D R All
40 and
Under 7% 9% 8% 0% 0% 1% 10% 9% 9% 0% 4% 2%
Women 30% 8% 18% 30% 9% 20% 34% 8% 19% 33% 11% 22%
Black 20% 0% 9% 2% 2% 2% 23% 1% 10% 2% 2% 2%
Latino 13% 3% 7% 2% 7% 4% 13% 4% 8% 2% 6% 4%
Analysis
The share of members age 40 and under, as well as the share of women and members who identify as black or Latino
all increased in the 114th Congress
*Results calculated with Senate races still pending in Louisiana and Alaska, as well as 7 House races; projected winners in pending races not accounted for in
tShoius rtcael:l yNational Journal Research
Source:

11. Republicans Win Solid Majority in Senate
OH
WV VA
Control of the 114th Senate (2015-2017)
MI
OK
MT ND
WY
CO
MO
Source: National Journal Research; CNN Election Center; Associated Press; NBC News.
PA
NY
ME
NC
SC
GA
TN
KY
IN
WI
MN
IL
TX LA
ID
NV
OR
WA
CA
AZ
NM
SD
IA
UT
FL
AR
MS AL
NE
KS
VT
NH
MA
RI
CT
NJ
DE
MD
AK
HI
AK
2 Democrats
2 Republicans
1 Democrat + 1 Republican
1 Democrat + 1 Independent
1 Republican + 1
Independent
Undecided/Runoff
Democrats: 44
Republicans:
53
Independents: 2
Undecided: 1
Runoff election will be
held on December 6,
2014

12. Senate changes
Current Senate
- 55 Democrats*
- 45 Republicans
* Includes 2 Independents
New Senate*
- 53 Republicans
- 46 Democrats**
* LA set for run-off on
12/6
** Includes 2
Independents

13. New Senators
Alaska – Dan Sullivan
Arkansas – Tom Cotton
Colorado – Corey Gardner
Iowa – Joni Ernst
Georgia – David Perdue
Michigan – Gary Peters
Montana – Steve Daines
Nebraska – Ben Sasse
North Carolina – Thom Tillis
Oklahoma – James Lankford
South Dakota – Mike Rounds
West Virginia – Shelley Moore Capito

14. Control of Senate May Seesaw Back to
Control of Senate
After 2014 Elections
Democrats in 2016
Projected Control of the Senate, 2016 and Beyond
Projected Control of Senate
After 2016 Elections
Projected Control of Senate
After 2018 Elections
2016 Senate Races by 2012
Presidential Performance1
Obama +5 or
greater
Obama +4.9 to
Romney +4.9
Romney +5 or
greater
Senate
?
2014 Senate Races by 2012
Presidential Performance1
Obama +5 or
greater
Obama +4.9 to
Romney +4.9
Romney +15
or greater
Democrat
Senator (21)
Republican
Senator (15)
Democrat
Senator (10)
Republican
Senator (24)
2018 Senate Races by 2012
Presidential Performance1
Obama +5 or
greater
Obama +4.9 to
Romney +4.9
Romney +5 or
greater
Independen
t
Senator (2)
Democrat
Senator (23)
Republican
Senator (8)
1”Presidential performance” is a candidate’s margin of victory in a particular state’s popular vote results, and is a useful indicator for measuring state party leanings in 2014 and 2016 Senate elections
Source: National Journal Research analysis.

15. Lame Duck

16. Only Urgent Issues Likely to be Addressed in
Lame Duck Session
Potential Lame Duck Session Legislative Productivity (113th Congress)
House Senate
White House
Analysis
•Expect legislators to pass only
necessary, short-term bills and an
omnibus budget bill in the lame duck
session
•The lame duck session will likely be
more productive than the September
session; necessary legislation that was
not passed before the election may be
taken up in the lame duck session, and
controversial votes are easier for
members to take without electoral
pressure
•Because Dems will lose control of the
Senate in January, they may attempt to
push legislation and appointments
through while they still have control;
•However, the limited duration of the
lame duck available, and the fact that
several major issues (government
funding, tax extenders, TRIA) will
expire in December, may mean that
there will be no opportunity for non-essential
legislation
Congress most likely
to focus on must-pass
legislation in the lame
duck
Sources: National Journal Research, 2014; Billy House, “Election Uncertainty Complicates Budget Decisions,” National Journal, August 20, 2014; Robert Longley, “Lame Duck Sessions of the U.S. Congress,” About News,
2014; Billy House, “As Bills Pile Up, Congress Starts Contemplating a Lame Duck Session,” Government Executive, June 18, 2014;

17. Once Republicans Control the Senate, Expect More Bills
(and More Vetoes)
Potential Post-Election Legislative Productivity With Republican Senate (114th Congress)
House Senate
Analysis
•When Republicans formally take
control of the Senate in January,
expect legislative productivity to
go up, since Congressional
gridlock will be less of an obstacle
to lawmaking
•However, there could still be
disagreements within and
between chambers: Senate
Republicans will still have to
address concerns of moderate
Democrats in order to pass
legislation, so Senate bills are
likely to be more moderate than
House versions
•Even if Congress does pass more
Republican-backed bills, Obama
will likely veto highly partisan
White House legislation
Republican-controlled
congress will likely be
highly productive
White House will
veto highly
partisan bills
Sources: National Journal Research, 2014; Rebecca Kaplan, “3 big issues Congress will likely punt for now,” CBS News, July 29, 2014; Billy House, “Election Uncertainty Complicates Budget Decisions,” National Journal,
August 20, 2014; Phillip Bump, “Yes, the Senate is ignoring hundreds of bills passed by the GOP House. But it’s always been that way,” The Washington Post, August 8, 2014.

18. Lame Duck Session
• Leadership priorities:
– NSA surveillance (failed)
– Terrorism Risk Insurance Act
– Defense Authorization bill
– Tax Extenders (transportation funding vehicle?)
– “Cromnibus?” – combination of an omnibus for some
agencies; CR for others
– For Dems - nominations
- Want to recess for Thanksgiving – and “hopefully” finish
close to 12/11 date

19. Key dates for 2015
• February – President’s budget released
• March/April – Budget resolutions and budget
reconciliation
• March (with possible extension) – debt ceiling
• May 31st – MAP-21 extension expires –
funding at the same time – Earlier? Later?
• June/July – Appropriations (don’t forget
sequester!)

20. Authorization Status
• “New” Senate Chairman of EPW Committee
• “New” Ranking Member of T&I
• Key policy issues
– Local input
– Freight/goods movement
– Implementation issues
• House and Senate Committee leaders express
desire to move a bill in early Spring
• Despite will to move quickly and before May 31st
– funding shortfall will remain obstacle

21. Funding
• May 31st is key date – but understand it could
be sooner (or later)
• Will authorization bill be constrained to “flat
funding plus inflation”?
• Will tax reform be the vehicle?
– Both sides still have different goals
– Repatriation getting attention – not necessarily
support
• Same list of options being discussed*

22. Transportation’s fiscal cliff

23. Just five months ago……..
• Congress extended MAP-21 policies through
May 31, 2015
• Congress also transferred $10.8 billion into the
Highway Trust Fund to maintain current
funding levels – “estimated” to last until May
31, 2015

24. Two problems
• What happens after May 31st next year?
• “Longer” term shortfall

25. Fuel Taxes Power Fund
Analysis
• 90% of the Highway Trust Fund’s revenue comes from fuel taxes (imposed at the federal level but collected by state retailers), and gas
taxes comprise 75% of fuel tax income
• The fund’s relative dependence on a small number of sources makes it vulnerable to revenue and consumption fluctuations
Joseph Kile, “The Highway Trust Fund and Paying for Highways,” Congressional Budget Office, May 17, 2011.
25

26. History
• Since 2000, Congress has spent more from the
Highway Trust Fund than revenue collected
• Congress has transferred funds from the
General Fund to the HTF to keep spending at
current levels
– Approximately $65 billion transferred
– Some transfers “paid” for

27. HTF outlook
• In order to keep current funding levels, need
revenue from “somewhere”……….
• Current funding gap – roughly $15 - $18 billion
needed annually to maintain current funding
levels

28. Funding vs. Financing
Funding
• Collection of taxes, fees,
and other charges and the
allocation of these
revenues for
transportation purposes
Financing
• Leveraging or upfront
monetization of revenue
streams

31. Choices
• Reduce spending
• Go to the General Fund – again
• Raise current taxes or fees
• Create new funding mechanism

32. Examples of financing methods
– National Infrastructure Bank or Fund
– TIFIA Expansion
– Private Activity Bonds
– Tax credit bonds
– Tax exempt bonds

33. States taking the lead
• Sales taxes
• Indexing transit fares
and fuel taxes
• Moving taxation to
wholesale level
• Internet sales tax
revenue
• Oil and gas impact fees
• Vehicle miles traveled
• Tolling, managed lanes
• Lottery proceeds
• Raising DL fees, titling,
registration, emission
• Alternative fuel vehicle
fee
• Regional congestion
relief fees for real estate
• Rest stop sponsorship

34. Patience and Wisdom

35. Kathy Ruffalo
kathy@kruffalo.com
202-997-4136