Kathy Ruffalo Ruffalo and Associates, LLC

1. Kathy Ruffalo Ruffalo and Associates, LLC

2. TOPICS Status of Highway Trust Fund – short and long term Interim report of Financing Commission Status of Reauthorization

3. “Today’s problems cannot be solved by thinking the way we thought when we created them.” - Albert Einstein

4. Transportation today • Steady increase in congestion rates • Continued loss of life on our highways • Freight tonnage moving by truck and rail increasing • Transit ridership is increasing • Global competitors have aggressive transportation policies • Continued need to balance economic development, environmental, social and consumer demands

5. Short-term funding shortfall • CBO and Treasury estimate a shortfall to the Highway Trust Fund in FY 2009 • Shortfall means federal highway obligation limitations will be reduced if steps are not taken soon

6. Short-term solutions • Senate Finance Committee has passed “fixes” for the short-term – but only through 2009 • House has yet to pass • 2010 remains a real concern

7. Congress created two commissions • Congress is searching for long-term solutions to the growing funding gap and its consequences • National Surface Transportation Policy and Revenue Study Commission • National Surface Transportation Infrastructure Financing Commission

8. National Surface Transportation Infrastructure Financing Commission • 15 Commissioners- appointed by Congress or Secretary of Transportation • Began work in April 2007 • Recently released interim report • Two years to release final report

9. Commission required to examine: • Current Highway Trust Fund (HTF) revenues • Project how HTF revenues may change • Alternatives for funding the HTF • Highway and transit needs for HTF funds • State “opt-out” program

10. Preliminary observations • System demands are outpacing investment

11. Preliminary observations • System maintenance costs can make capacity expansion difficult

12. Preliminary observations • Fuel tax, at current rates, is not sufficient

13. Preliminary observations • More direct user charges should be explored

14. Preliminary observations • Not only need more investment, need more intelligent investment

15. Fuel tax Vehicle fees Direct user fees Indirect user fees General Fund or other sources General obligation debt Grant anticipation borrowing User fee revenue bonds Federal credit assistance Toll road concessions Asset leases Funding vs. Financing

16. Format for evaluating funding and financing mechanisms • Use of criteria to make objective observations • Provide Congress with “pros” and “cons” for each mechanism • If possible, make recommendations on the type of funding or financing that can best meet particular transportation objectives – emissions, congestion, freight needs, transit, etc.

17. Evaluation criteria • Revenue potential • Sustainability • Political viability • Ease/cost of implementation • Ease of compliance • Ease/cost of administration • Level of government

18. Evaluation criteria – cont’d • Promotes efficient use • Promotes efficient investment • Promotes safe and effective system operations/management • Addresses externalities • Minimizes distortions • Promotes spatial equity

19. Evaluation criteria – cont’d • Promotes social equity • Promotes generational equity

20. Status of reauthorization • Hearings held on commission report • House and Senate authorizing committees have begun hearing process • “Top-tier” issues – congestion, freight movement, public transportation, safety, project delivery and environment • Finance – Ways and Means will be more engaged • What to do with earmarks?

21. Timetable • House and Senate hope to have draft bills ready by Spring of 2009 • House wants to complete floor action by May • Senate will take longer • New Administration will want to weigh in • Extensions will be painful

22. So…….what do we do? • Need a national transportation policy • Need a bi-partisan solution • Modal fights will only ensure failure • Historic opportunity to revolutionize federal transportation programs • Cannot wait for someone else to fix the problem – need to address head-on • Business as usual is not going to work and doing nothing is not an option

23. Conclusion Ancient wisdom says that when you discover you are riding a dead horse, the best strategy is to dismount. Too often, in government, we try other strategies – such as:

24. Cont’d • Buy a stronger whip • Change riders • Appoint a committee to study the horse • Arrange a visit to other sites to see how they ride dead horses • Provide additional funding to increase the horse’s performance • Study alternative uses for dead horses….and

25. My personal favorite……. • Promote the dead horse to a supervisory position

26. Reports • http://financecommission.dot.gov/ • kathy@kruffalo.com