Legislative Update Chris Hundt Michigan Department of Transportation July 15, 2011

Overview State Issues –Fiscal & political environment Federal Issues –Fiscal & political environment –Reauthorization proposals

State Transportation Revenue

MDOT Match Issue FY Annual Shortfall State Revenue Shortfall$120-$160 million/yr Federal Aid Lost to MDOT Highway Capital Program $700 - $800 million/yr

Match Problems Not Exclusive to MDOT “Sadly, there are county road commissions in Michigan that are being forced to turn down millions of dollars in federal road funds for which they are eligible, because they simply cannot provide the required local match.” Michigan’s Roads in Crisis – Highway, Roads and Bridges CAC Report July 2008

MDOT Reinvented 15% reduction in staff since 2009 Closing or consolidating eight facilities Organizational changes and process improvements Debt restructuring Better, faster, cheaper, safer, smarter

Legislative Activity FY 2012 state budget NITC Match Issue –SB 351/HB 4521 – sales tax diversion Consolidation of government services

Other Planned Legislative Activity Special message to the legislature on infrastructure in October Transportation funding continues to be inadequate for state’s needs Structural problem that directly affects Michigan’s economic vitality Permanent solution for matching federal transportation funding is needed

Recalls Add Uncertainty Approved recall language –Representatives Damrow, Johnson, Jenkins, Potvin, Pscholka, and Speaker Bolger –Senators Booher, Emmons, Green, Jansen, Marleau, Nofs, and Major Leader Richardville Awaiting clarity hearing –Representatives Cotter, Jacobsen, Scott, Shirkey –Senators Caswell, Kahn, Meekhof, Moolnaar, Proos, Schuitmaker, Warren

Federal Reauthorization 2011 SAFETEA-LU extended through 9/30/11 –Originally expired 9/30/09 –Currently on 7 th extension

History of Overdue Bills Number of Days Authorizing Legislation Was Overdue

Recap of Key Milestones August 2005 – SAFETEA-LU signed September $8.017 B GF to HTF transfer August $7 B GF to HTF transfer September 2009 – SAFETEA-LU expires March 2010 – HTF shuts down for two days March $19 B transferred from GF to HTF September 2011 – 7 th extension of SAFETEA- LU expires

Federal Fiscal Environment

Little/no apparent support for increasing user fees

Infrastructure Needs Are Dramatic Source: Report of the National Surface Transportation Infrastructure Financing Commission Maintain ScenarioImprove Scenario

Infrastructure Needs Dramatic in Michigan Business as Usual Estimated System % of Needs Met MI Transportation Plan $37 billion$81 billion46% TF2$2.3 billion$7.2 billion32%

Administration’s Proposal Obama Administration released broad outline of reauthorization in February –$551 billion over six years ( ) This includes $50 billion in up front funding –Assumes $231 billion in new revenue

Administration’s Proposal SAFETEA-LU Admin Proposal Percent Increase Highways$228 B$336 B48% Transit$53 B$119 B126% Safety$7 B$12 B87% Rail-$53 B- Infrastructure Bank -$30 B- Total$286 B$551 B93% Administration also proposed one-time funding of $2 billion for TIGER grants and $3 billion for airports

Significant program consolidation to result in: –6 highway programs –6 transit programs –2 rail programs Expands HTF to TTF and include passenger rail Administration’s Proposal

Administration’s Highway Proposal Annual Avg. National Highway $253.3$37.6* Safety $17.5$2.9 Livable Communities $27.5$4.6 Research, Tech, and Ed. $4.5$0.8 Federal Allocation $8.9$1.5 Transportation Leadership $17.1$2.9 TOTAL $328.9$50.2 (Billions)

Administration’s Transit Proposal Annual Avg. Formula Grants $43.1$7.2* Bus & Rail State of Good Repair $28.0$4.7* Expansion & Livable Communities $19.6$3.3* Research & Technology Deployment $1.2$0.2 Transportation Leadership $14.7$2.4 Operations & Safety $1.1$0.2 TOTAL $107.7$17.9 (Billions)

Proposed Planning Changes ?

House Rule Change House procedural rules “Cut-as-you-go” instead of PAYGO Easier to reduce transportation spending More difficult to increase revenue Impact on firewalls and funding guarantees

House Budget Resolution Fiscal year 2012 budget resolution calls for big cuts $30B per year from transportation Does not allow for a “reserve fund” to bring in additional revenue for reauthorization

House Reauthorization Proposal Chairman Mica’s priorities: –Stabilizing the HTF (spending w/in its means) $230 billion over six years –Reform federal program –Increase flexibility and accountability –Maximize private funds leveraged –Accelerate project delivery – 437 day plan

Senate Activity Agreement among transportation leaders –Fund program at current levels –Eliminate earmarks –Consolidate programs –Strengthen TIFIA –Expedite project delivery Likely to be a two year bill

Alternative Scenarios HTF Investments in Highways, Transit, and Safety Six Year Total ( ) Annual Average Administration Proposal$467 billion$77.8 billion Senate Transportation Leaders (current funding) $339 billion$56.5 billion House Budget Resolution$230 billion$38.3 billion

Immediate Concern is FY 2012 House budget and reauthorization plan could: –Reduce highway program by 30% –Eliminate transit new starts –Cut funding for Amtrak Impact to Michigan’s highway funding depends on where reductions are made, but estimated reduction ranges from $175 million to $360 million per year

Other Complicating Factors Congress has not been willing to juggle transportation with other priorities –Federal budget deficit –Trade Deals & TAA –Appropriation bills

Questions?