THE FEDERAL HIGHWAY TRUST FUND IN CRISIS THE IMPACT ON SURFACE TRANSPORTATION PROGRAMS Jack Basso Chair Mileage Based User Fee Alliance

Sources: Congressional Budget Office, Office of Management and Budget The national investment on roads and transit has gradually declined.

Source: American Society of Civil Engineers And infrastructure conditions continue to deteriorate.

Source: American Society of Civil Engineers Meantime, the public already bears additional costs indirectly.

Source: World Economic Forum, The Global Competitiveness Report Compared to our global peers, we’re falling further behind on the quality of infrastructure

In 2012, MAP-21 was able to provide a five-year policy bill— but with only two years of funding.

Like prior transportation bills, MAP-21 relies on the Highway Trust Fund—the backbone of Federal surface transportation funding since Source: Gary McCoy, CagleCartoons.com

In 2011, motor fuel taxes comprised 91% of Highway Trust Fund revenues. But they face an uncertain long-term future. Source: Federal Highway Administration, Highway Statistics, 2011

Highway Trust Fund Headwinds: #1. Americans aren’t driving as much. Source: Federal Highway Administration

Highway Trust Fund Headwinds: #2. Gas tax has lost its purchasing power.

Source: Congressional Budget Office $57B drop Highway Trust Fund Headwinds: #3. Alternative fuel vehicles will further erode future HTF receipts.

15 September 2008: $8.017 billion General Fund transfer to HTF 7 August 2009: $7 billion General Fund transfer to HTF 18 March 2010: $19.5 billion General Fund transfer to the Highway Trust Fund 6 July 2012: $2.4 billion Leaking Underground Storage Tank Trust Fund transfer to HTF FY 2013: $6.2 billion General Fund transfer to HTF FY 2014: $12.6 billion General Fund transfer to HTF (scheduled) Total General Fund transfers to Highway Trust Fund: $53.3 billion since 2008 In the meantime, cash transfers from the General Fund have avoided the Highway Trust Fund “fiscal cliff.”

But outlays will outpace receipts by about $15 billion per year and more for a foreseeable future.

If no new revenues are found, federal highway obligations will fall by almost 100% in FY 2015

So what can be done?

There is currently no shortage of technically feasible revenue options.

State revenue sources for roads, bridges, rail and transit:  Fuel taxes (all states + DC + PR); 6 index; largest single source of highway funds used by half the states  Sales taxes on fuel, or other taxes on distributors or suppliers (14 states + PR)  Motor vehicle or rental car sales taxes (29 states)  Vehicle registration, license or title fees (48 states + PR)  Vehicle or truck weight fees (37 states)  Tolls (24 states + PR, plus non-state toll entities)  General funds (34 states + DC; Vt. on occasion)  Interest income (37 states + DC + PR)  Other (40 states + DC + PR) Source: National Conference of State Legislatures. In fact, States have long relied on a variety of revenue sources to invest in transportation.

Tools that borrow against or leverage state revenues for surface transportation projects: o General obligation or revenue bonds (44 states + DC + PR) o GARVEE bonds (33 states + DC + PR) o Private Activity Bonds (PABs) (6 states) o TIFIA federal credit assistance (12 states + PR) o State infrastructure banks (SIBs) (34 states + PR) o Public-private partnerships (PPPs or P3s) (authorized in 33 states + PR) o Design-build (authorized in 38 states + PR) Source: National Conference of State Legislatures. In addition, States also utilize various financing tools to accelerate project delivery.

Recently, States have been leading the charge on meeting the transportation revenue challenge.

Raising fuel taxes: California, Idaho, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, Pennsylvania, Utah, Vermont, West Virginia, Wisconsin, Wyoming Directing gas tax proceeds to direct transportation uses: Indiana Reducing gas tax, but increasing other taxes for a net increase for transportation: Pennsylvania, Virginia Here is a list of transportation funding proposals under consideration, with successful initiatives underlined.

State sales tax toward transportation: Arkansas, Idaho, Virginia, West Virginia Sales taxes on fuel, or other variable taxes/fees: District of Columbia, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Pennsylvania, South Carolina, Utah, Virginia, West Virginia, Wisconsin Vehicle registration fees: Idaho, Michigan, New Hampshire, Pennsylvania, Virginia, West Virginia, Wisconsin Here is a list of transportation funding proposals under consideration, with successful initiatives underlined.

Vehicle Miles Traveled Fee (VMT) pilot projects: Oregon Framework to study a VMT fee: Arizona, Florida, Washington, Wisconsin Special fees or taxes for electric or alternative fuel vehicles: Arizona, Virginia, Washington, West Virginia Source: National Conference of State Legislatures. Here is a list of transportation funding proposals under consideration, with successful initiatives underlined.

Source: American Road and Transportation Builders Association Illustratively speaking, shoring up the Federal Highway Trust Fund would not present an unreasonable burden on Americans. The average household pays $46 in gas tax per month. This is less than per monthly cost of: – Electricity and gas: $160 – Cell phone: $161 – Cable and internet access: $124 For example, a 10-cent increase in the federal gas tax translates to $1.15 more for the average driver per week—this action alone would fix the Highway Trust Fund.

Why do we need strong Federal investment in transportation? Investment in transportation will save time and money, improve safety, and decrease congestion Investment in transportation will support economic development The transportation agencies spend their funds efficiently The transportation system has deteriorated, and current funding will not meet the needs Increased funding will be used to build specific projects

Concluding Quote “Together, the united forces of our communication and transportation systems are dynamic elements in the very name we bear—United States. Without them, we would be a mere alliance of many separate parts.” President Dwight D. Eisenhower February 22, 1955

Questions?