From there to here: A History of SURFACE Transportation in The U.S.

1. From there to here: A History of SURFACE Transportation in The U.S. October 12, 2011 Kenyon Gleason ARTBA National Field Director

2. Transportation Construction Is An Important Part Of The U.S. Economy … Source: ARTBA Transportation Construction Industry Profile; U.S. Census Bureau

3. The American Road and Transportation Builders Association … • 5,000 member trade association based in Washington, DC • Represent transportation construction industry before Congress & U.S. agencies • Members include contractors, design firms, materials suppliers, safety industry, public-private ventures, transportation officials, educators • Federation style association • Network of 35 State Chapter Affiliates – IRTBA

4. It Didn’t Happen Overnight “There is now pretty nearly universal agreement that no single public improvement has done in recent years, or will do in the coming years, more for the general good of the country, that the development of our highway system… [ARTBA] has been a chief contributor in this direction and it is with much pleasure that I extend to its members my best wishes for their continued success.” – President Warren G. Harding to ARTBA members, six weeks after passage of the Federal Highway Act of 1921. (Note, ARTBA was formerly known as ARBA – American Road Builders Association until 1977 when it added the “T.” - ARTBA began in 1902.)

5. Where does the money come from? The Federal Highway Trust Fund • Highway Trust Fund established in 1956 to finance Interstate Highway System on a “pay-as-you-go” basis as well as to provide federal support for state highway programs. • Revenue source – Excise taxes on highway users: • Excise taxes on motor fuels • Excise taxes on large trucks and tires • Finances two major federal transportation programs: • Federal-aid highway program – Highway Acct. • Mass transit program – Mass Transit Acct. (Since 1982)

6. Revenue Sources for the Federal Highway Trust Fund

7. HTF Revenues Total $35-$40 BillionPer Year

8. Gas Tax Required to Maintain 1993 Purchasing Power of 18.3 cents per gallon Source: ARTBA calculations from BLS data

9. Other Federal Support • General Fund revenues used to supplement Mass Transit Program spending: 9% • Federal incentives for leveraging federal aid for transportation projects • Federal Matching Flexibility: Management Tools • Advance Construction: Allows state to begin project even if state does not currently have sufficient fed ob authority… obligate in stages

10. Other Federal Support: Financing • TIFIA: Allows U.S. DOT to provide special credit assistance for the development of projects of national interest, provided that they have a dedicated revenue stream • Section 129 Loans: Allows states to lend apportioned Federal-aid highway funds to toll projects generating dedicated revenue streams

11. Other Federal Support: Financing • State Infrastructure Banks: Allows state to capitalize revolving loan funds using their regularly apportioned federal-aid highway funds. • GARVEE Bonds: Financing instruments backed by a pledge of future federal-aid from USDOT. States must enact enabling legislation. About 20 states.

12. The Big Problem: Crumbling Infrastructure • Most Interstates built during 1950s & 1960s with 40-year service life – must be substantially replaced • Over 161K miles federal-aid highways rated “unacceptable” • Over 153K bridges “structurally deficient” or “functionally obsolete” • U.S. DOT Conditions & Performance Report - $19 B required just to maintain current infrastructure

13. The Bigger Problem: The Reauthorization Challenge

14. $90 Billion Status Quo Shortfall

15. Where does the money come from? State surface transportation program revenue sources Source: FHWA Highway Statistics, Table SF-1, Average for 1999 to 2008 data.

16. Where does the money come from? Local surface transportation program revenue sources Source: FHWA Highway Statistics, Table LGF-1, Average for 1999 to 2008 data.

17. How is the Money Used?Revenue Source for All State Highway-Related Expenditures, Capital & Non-Capital Source: FHWA Highway Statistics, 2008, Table HF-10, Includes all revenues used for highways for all spending purposes

18. How is the Money Used?Revenue Source for State Highway Capital Investments Source: FHWA Highway Statistics, 2008, Table HF-10, Federal capital outlay expenditures are the transfers from HTF to state & local governments.. Other spending includes maintenance, operations, bond payments and interest, among other categories,

19. How is the Money Used?State Highway User Fee Revenue Use Source: FHWA Highway Statistics 2008, Table SDM, Highway user revenues are motor fuel taxes, motor vehicle related fees/taxes and tolls.

20. How is the Money Used?State Highway Program Spending Allocations Source: FHWA Highway Statistics Table SF-2, Average 1999 to 2008.

21. How is the Money Used?State Highway Capital Program Allocations Source: FHWA Highway Statistics Table SF-12A, Average 1999 to 2008.

22. How is the Money Used?Shift in State Use of Federal Funds Source: ARTBA Analysis of FHWA FIMS database. Total cost for FHWA projects. Does not include ongoing projects, therefore totals for the years 2004 and beyond will change as more projects are completed.

23. How is the Money Used?Local Government Highway Capital Program Allocations Source: FHWA Highway Statistics Table SF-2, Average 1999 to 2008.

24. Modal Capital Investments as a Percentage of Total Federal, State & Local Infrastructure Investment (In 2009 Dollars)

25. A Shift in Emphasis: Larger Share for Maintenance and Operations, Smaller Share for Capital Investment

26. Capital Tug-o-War

27. Surface Transportation Reauthorization • House Status • Senate Status • Comparison of Approaches • September 30 – March 31

28. Surface Transportation Reauthorization House Status • Six-year bill ($230 billion) • Timing • Priorities: • Streamlining • Private Sector Resources • Program Consolidation • State Flexibility

29. Surface Transportation Reauthorization Senate Status • Two-year bill ($109 billion) • Timing • Priorities: • Program Consolidation • New Freight Program • Private Sector Resources • Streamlining

30. Surface Transportation Reauthorization Major Differences Between Approaches • Money • Duration • Freight Program Major Similarities Between Approaches • Bill Structure • Policy Reform Areas • Leverage Private Resources

31. Surface Transportation Reauthorization September 30 – Deadline Met • Program Extension – 6-months (March 31) • HTF Excises Other Issues: • FY 2012 Appropriations • President Obama – Jobs Package • Senate Markup • House Markup

32. State Trends - Highway & Bridge Contract Awards, SFY 2011 vs. SFY 2010 (July to June) WA ID MT NH ME ND MN OR VT MA WI NY SD WY MI RI NV PA IA CT UT NE OH NJ IL CO MD IN DE VA MO CA WV KS KY AZ NC DC NM TN OK TX AR SC AL MS This state increased the value and number of contract awards This state increased the value of awards but decreased the number of awards This state decreased the value of their contract awards GA LA FL AK HI Source: ARTBA analysis of McGraw Hill Data; adjusted with ARTBA Price Index. Note some states are on a different fiscal year.

33. Conclusions • If Congress does not raise HTF revenues, this industry is in serious trouble. • Federal funds finance just under half of all highway construction expenditures. • State and local governments have serious surface transportation revenue constraints, very similar to those facing the federal government. • The many demands on state and local highway user revenues, and the growing cost of maintenance and operations, means a continued scarcity of funds for capital improvements. • The big question – how to increase revenues for transportation construction???

34. More with Less – Congress 2011

35. QUESTIONS?

36. Contact Information ARTBA 1219 28th Street NW Washington, DC 20007 202-289-4434 Kenyon Gleason, National Field Director kgleason@artba.org