Reauthorization of Federal Transportation Programs: Impact on the States CSG 2009 Annual Conference La Quinta, Califor

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

2. 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

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

4. Continuing ResolutionProgram 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??

5. 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

6. 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

7. 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.”

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

11. 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.

12. 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

13. 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? The Big PictureFederal Transportation Program

14. What Needs to Be Done and What Will It Cost?

15. 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

16. 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

17. AASHTO Bottom Line Report:Needs • Transit Investment Requirements • In 2006 Annual Passenger Miles reached 52.15 billion • Between 1995 and 2007, ridership increased from 7.8 billion to 10.3 billion trips • Current spending is $13.3 billion

18. 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” Surface Transportation Critical Issues

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

20. AASHTO: Program levels needed to restore program purchasing power 2010-2015 • Highways $375 billion • Transit $ 93 billion • Freight* $ 42 billion • Intercity Passenger Rail* $ 35 billion • Total $545 billion *(Sources outside Highway Trust Fund)

21. 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 House Surface TransportationAuthorization Act of 200920 Areas of Agreement

22. 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 Reform Focus

23. 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

24. 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

25. $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 STAA of 2009: Funding$500 Billion

26. FUNDING

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

28. STAA of 2009Issues • 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

29. How do we best generate the necessary revenue?

30. 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

31. House Extension (HR 3617) Duration: 3 months (to 31 December 2009) Maintains FY 2009 pre-rescission spending level - $13.144 billion; $10.735 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

32. Current State of Play Now Operating under a 2nd 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

33. 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 !!!

34. 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

35. 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

36. The future of Surface TransportationQuestions? Janet Oakley joakley@aashto.org 202-624-3698