1. Federal Surface Transportation Program FUNDING AND FINANCING OUTLOOK FOR MAP-21 AND BEYOND Joung H. Lee Associate Director for Finance and Business Development American Association of State Highway and Transportation Officials TRANSPO 2012 BONITA SPRINGS, FL WEDNESDAY 31 OCTOBER 2012

2. 2 PRESENTATION OUTLINE MAP-21 Highlights and Funding Levels Highway Trust Fund condition and estimates Revenue Options for Surface Transportation Financing Options for Consideration

3. HIGHLIGHTS AND FUNDING LEVELS Moving Ahead for Progress in the 21st Century Act (MAP-21)

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5. 5 HIGHLIGHTS Strong bipartisan support for passage of HR 4348 in Congress House 373-52; Senate 74-19 Became PL 112-141 on 6 July 2012 Key provisions Stable current-level funding through end of FY 2014 Program consolidation Expedited program delivery

6. 6 Source: Transportation Weekly STRONG HIGHWAY FORMULA PROGRAM Source: Transportation Weekly

7. 7 FY 2013 APPROPRIATIONS AND SEQUESTRATION FY 2013 Continuing Resolution 6 months through 27 March 2013 Flat obligation limit for Highways 0.612% increase for transit Continued 6-month funding for USDOT, TIGER, Amtrak Sequestration Gramm-Rudman-Hollings Balanced Budget and Deficit Control Act of 1985 exempts contract authority programs (e.g., Federal- aid Highway Program) 8.2% reduction in non-exempt, non-defense, discretionary funding

8. HIGHWAY TRUST FUND CONDITION AND ESTIMATES

11. 11 IMPACT OF REDUCED HTF RECEIPTS FROM CAFE STANDARDS Source: Congressional Budget Office $57B drop

14. REVENUE OPTIONS FOR SURFACE TRANSPORTATION

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16. 16 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) States provide about half of all surface transportation funding STATE TRANSPORTATION FUNDING OPTIONS

17. 17 Overall, the Real Value of State Gas Taxes Has Fallen… 14 states have not raised gas taxes in more than 20 years Only 8 states and D.C. legislatively increased gas taxes since 2008 After adjusting to account for growth in construction costs, the average states gas tax has fallen by 20 percent since last increase State gas taxes have fallen by a combined $10 billion each year Often small increases lag behind funding needs Sources: CSG, 2011; Institute on Taxation and Economic Policy, 2011; American Petroleum Institute, 2012.

18. 18 STATE TRANSPORTATION FUNDING IN 2012 LEGISLATIVE SESSIONS At least these state legislatures have looked at transportation funding options in 2012: Raising fuel taxes: Hawaii; Iowa; Md.; Neb.; Pa.; Va. Indexing fuel tax to inflation: Md.; Va. Sales taxes on fuel, or other variable taxes: Md.; Mich. Tolling: Hawaii; Mich.; Minn.; Mo.; Wash. Fees: Hawaii; Iowa; Md.; Mass.; Pa.; Wash. But states also have looked at reducing, suspending or caps on fuel taxes: Alaska; Conn.; (Hawaii); N.H.; N.Y.; N.C.; S.C. For bill details and links, see http://www.ncsl.org/default.aspx?tabid=13597 and http://www.ncsl.org/default.aspx?tabid=13012 Source: National Conference of State Legislatures

19. 19 VMTS AND ALTERNATIVE FUELS IN 2012 LEGISLATIVE SESSIONS VMT pilot projects: Hawaii; Ind.; Mass; Wash. Special fees or taxes for electric or alternative fuel vehicles: Alaska; Ariz.; Iowa; Mass.; Va.; Wash. Studies on the taxation of alternative fuel vehicles and electric vehicles: Iowa; N.H.; Okla. Studies on feasibility of relying on gas tax: Kan. Taxes on alternative fuels for transportation: None known But many states have also looked at tax incentives or credits for alternative fuels For bill details and links, see http://www.ncsl.org/default.aspx?tabid=13597 and http://www.ncsl.org/default.aspx?tabid=13012 Source: National Conference of State Legislatures

20. 20 Thank You Joung H. Lee Associate Director for Finance and Business Development American Association of State Highway and Transportation Officials 202-624-5818 / jlee@aashto.org / www.transportation-finance.orgjlee@aashto.orgwww.transportation-finance.org