Reauthorization of Federal Transportation Programs: Impact on the States CSG 2009 Annual Conference La Quinta, California Janet Oakley, AASHTO November 12, 2009

Presentation Overview Provide a status update on today’s “crisis environment” and the extension of current surface transportation programs Offer views on the future of transportation infrastructure, the role of the Federal Government, and the House T & I Committee authorization bill Discuss some of the critical issues that will affect the direction of programs and funding

Crisis Today’s Crisis In Transportation Funding FY 2008 Highway Trust Fund shortfall = $8 billion transfer of general funds FY 2009FY 2009 Highway Trust Fund shortfall = $7 billion transfer of general funds FY 2009FY 2009 Contract Authority Rescissions = $8.7 billion + $3.15 billion FY 2010FY 2010 Continuing Resolution = FY 2009 levels FY 2010FY 2010 Program Extension = new contract authority, extension of HTF + ARRA FY 2010FY 2010 Highway Trust Fund shortfall = $6 billion FY 2011FY 2011 = Need for Additional/New Revenue to Sustain Program for the next six years.

Continuing Resolution Program Extension  1st CR extended Highway and Transit Program 31 days – but 33% below current levels  2nd CR extends Highway and Transit Program through December 18 – also at the reduced level  Next extension –3 months, 6 months, 18 months, 2 years??  Funding options – front-load with general funds, index gas tax, increase gas tax, bonds??

Transportation and ARRA Delivered on Jobs, jobs, jobs Bids – 5% - 40% under estimates Periodic Reporting of economic impact of spending Maintenance of effort Equity – geographic, economic, DBE Local public agency project delivery

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

Note: Baseline projection from FY 2010 Budget using CBO Summer 2009 baseline receipts estimates

Funding Options Accept an 54% reduction in Federal Aid and reduce each state’s transportation program by amount of cutback. Accept 54% 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 a crisis mode and immediate actions are required The Highway Trust Fund – both the Highway and Transit Accounts – are running out of money Needs continue to grow while inflation has dramatically eroded purchasing power The need for job creation may help change the political climate for user fees increases

The Big Picture Federal Transportation Program  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

Surface Transportation Critical Issues Sea change in views on investments Some groups opposed to new highway investment General view that the programs are broken and need much greater accountability Climate Change & Energy Preservation Congestion Sustainability Livability/“Choice”

19 AASHTO Goals for the Next Authorization Program Structure and Process Reform Restructure Program to directly address National Objectives Accountability for Results Multimodal solutions

AASHTO: Program 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)

House Surface Transportation Authorization Act of Areas of Agreement Overall Funding Intercity Passenger Rail Funding Increase Transit Funding Increase Safety Funding Refocus, consolidate & Streamline Highway Programs Freight Corridor Coalitions Projects of National Significance Establish National Objectives & Collaboratively Determine Performance Measures States and MPOs set GHG Reduction Targets

STAA Reform Focus New Program Eligibility and Performance Requirements + New Distribution Formulas and Criteria?? (Maybe) + New Plans, Models, Methodologies + Performance Targets, Monitoring, Measuring, Reporting = New and Expanded Data Collection, Monitoring, Analyses, Reporting

STAA of 2009 Formula Critical Asset Investment Program Highway Safety Improvement Program Surface Transportation Program CMAQ Freight Improvement Program Discretionary Metropolitan Mobility Projects of National Significance

STAA of 2009 Specific authorizations are not included in the bill nor are the apportionment formulas While the top line numbers are in the bill there is no specific breakdown by category and no formulas or runs that would show state shares or return on contributions There is no revenue title to be bill yet

STAA of 2009: Funding $500 Billion $337.4 billion for Highways  $100 billion for Capital Asset Improvement (NHS, IM, Bridge)  $50 billion for Metropolitan Mobility and Access (MMA)  $25 billion for Projects of National Significance  $162.4 billion for other FHWA-administered programs (e.g. Highway Safety Improvement, Surface Transportation, CMAQ, Freight, etc) $99.8 billion transit  $87.6 billion from HTF  HTF share was 15.2% in SAFETEA-LU; it is increased to 19.5% in STAA  $12.2 billion from GF  $50 billion high speed rail corridors  $12.6 billion Motor Carrier Safety  $50 billion High Speed Rail

FUNDING Category SAFETEA-LU (6 Years) STAA (6 Years)Increase Safety$6.2 billion$12.6 billion100% Metro Mobility (Mode Neutral)n/a$50 billionn/a Transit$52.7 billion$99.8 billion89% If 50% for Transitn/a$124.8 billion137% Highways (Assumes 100% of PNS fund highways) $227.5 billion $287.4 billion26% If 50% for Highwaysn/a$312.5 billion37% If 100% for Highwaysn/a$337.5 billion48% TOTAL $286.4 billion $450 billion57%

Issues STAA of 2009 Issues Proportionate Funding Increases in Highway and Transit Address Capacity in Addition to Preservation Distribution of funds to Rural and Urban Areas Increased Revenues Performance – Objectives, Measures and Targets

Issues STAA of 2009 Issues Shifts Decision making from States to MPOs Shifts the Program from a federally-funded, state-administered program to a federally- funded and administered program Creates New Planning Requirements Creates New Climate Change Planning Requirements Requires the Planning and Programming Process to become Performance-Based and Outcome-Driven

How do we best generate the necessary revenue?

Where to get the revenue needed? Current revenue would not even support the SAFETEA-LU program level To support a $450 billion Program $250 billion from current revenue sources At least another $140 billion needed in new revenues Options  Increase fuel taxes  Consider an oil per barrel tax (opposed by such groups as the U.S. Chamber)  Bond for the interim period to enhance revenue or use some other borrowing method  Freight Fees  Tolls & Public Private Partnerships  Front Loading Option

Current State of Play House Extension (HR 3617)  Duration: 3 months (to 31 December 2009)  Maintains FY 2009 pre- rescission spending level - $ billion; $ billion for FHWA  No repeal of $8.708 billion rescission of contract authority  Passed House Senate Extension  Duration: 6 months (to 30 April 2010)  Maintains FY 2009 pre- rescission spending level  Restores $8.708 billion in contract authority  “Hot lining” for unanimous consent failed

Current State of Play Now Operating under a 2 nd Continuing Resolution (HR 2996) Duration: 1 ½ months (to 18 December 2009) Provides FY 2009 POST-rescission spending level – 33 percent below current levels or $1.02 billion per month and $2.6 billion to date No restoration of rescinded $8.708 billion contract authority

Current State of Play: Administration From Down Payment on Reform to Jobs Bill  Duration: From 18 months to 2 years, 3 years  From $20 billion General Fund transfer to Front Loaded General Funds ($80 billion??)  Policy Quid Pro Quos  Down Payment on Reform  Sustainability/Livability Fund  Contract Authority/Firewalls !!!

Current State of Play There is great uncertainty right now It is important to pass the six-year authorization bill soon, as state DOTs and contractors depend on long-term investment time horizons Any action should not reverse the progress made through the stimulus legislation

Political Roadblocks Ahead? No New Taxes “NAAH” = Never Again Another New Highway Proportionately less funding for highways Program shift from rural areas and states to metropolitan areas and urban states Management shift from a federally-funded, state- administered program to a federally-funded and administered program Need for a practical and workable approach to reform and accountability

The future of Surface Transportation Questions? Janet Oakley