Topics of Discussion

1. Need and Prospects for a National Freight Policy, Program and Funding JayEtta HeckerDirector of Transportation AdvocacyBipartisan Policy CenterNational Transportation Policy ProjectCalifornia State LegislatureSub-committee on California Ports & Goods Movement HearingNATIONAL FREIGHT POLICY: A STRATEGIC AND VITAL NEEDMarch 1, 2011

3. Topics of Discussion • Importance of well performing freight networks • Compelling national interests in freight sector performance • NTPP panel emphasizing need for comprehensive program reform – even without new revenues • Impediments to timely and constructive progress • Prospects for development of a national freight policy, plan, program, and revenue

4. Basis for Remarks • Personal observation of environment • Incorporate experience directing GAO infrastructure work for over a decade • Integrate recent experience with Bipartisan Policy Center’s National Transportation Policy Project

5. Importance of Well Performing Freight Networks Efficiency of Freight Flows is Critical for National Economic Growth Efficiency of logistics supports economic growth, productivity, and quality of life. Congestion and bottlenecks impair efficiency of labor markets and flow.

6. Compelling National Interests in Freight Sector Interstate character of freight requires federal leadership and action • Need for planning (already heavily supported with federal funds) and investments that span both state and MPO boundaries • Need for national strategies to address energy/national security issues and environmental concerns.

7. Many Dimensions of Federal Interests • Congestion(especially unreliability) increases costs and lowers US competitiveness • National measures required to effectively address energy and environmental costs • System vulnerability to disruption present serious risk to economy • Increasingpopulation, growth and demand require longer term and strategic national focus

8. Absence of Coherent National Freight Policies and Programs Has Costs • Lack of national freight plan and priorities contributes to weak planning by states and MPOs; particularly across borders • Federal program with out of date apportionments, modal stove-pipes, and endless categories impede problem-focused planning, strategies and investments • Earmarking AND distributing funds to “guaranteed return” result in no national focus or investments based on factual analysis of needs and returns • Current policies both distort markets and affect competitive positions • trucking concerns with diversion of TF revenue from highways • rail concerns that heavy trucks not paying full costs, especially congestion, emissions and fuel use • port interests penalized and disenchanted with failure to spend Harbor tax; waterways concerned with continuous deterioration of infrastructure

9. NTPP Recommends Comprehensive New Federal Approach • Clear federal goals focused on national interests in transportation (e.g. economic growth, national connectivity, metropolitan accessibility, energy independence and environmental sustainability ,and safety) • Align programs and link funding to progressively refined and validated outcome-oriented performance metrics • Emphasize mode-neutral funding and programming • Maximum state/local flexibility on strategies to advance national goals • Redefine core national system (e.g. narrower for highways but broader to include other modes and nodes) • Aggressive support for improved performance data, analytical tools, and metrics

10. NTPP Funding Recommendations Enhance and expand user-based funding of transportation • Support in short term for increase in fuel taxes to support sustainable program and end GF bailouts • Institute new mode-neutral freight fee to support new freight programs • Implement and apply carbon pricing • Plan now for transition to new national user fee by a date certain Support expanded state funding flexibilities Absent agreement on new revenue, restructure current program to focus on national priorities WITHIN existing revenue levels

11. But Political Process Has Broken Down – Absence of Self-Correcting Measures • No post Interstate vision/national interests • Successive “freight-friendly” programs all politicized/earmarked • Continued dominance of donor-donee battles in authorization debates • No wake up call for federal program with bridge collapse; bankruptcy of Trust Fund, evidence of decaying infrastructure/long deferred maintenance • No urgency to respond to documented economic losses associated with declining system performance • Repeated unsustainable GF transfers in face of Trust Fund bankruptcy • Public not generally receptive to leaders advocating tax increases and acknowledging need for strategic choices even WITH increased revenue

12. Is There a Way to Get Off Our Unsustainable Path? • Recognize status quo presents high risks to economy, individuals, and even Members. • Acknowledge political consensus is not possible on either “big” new bill or devolution. • Build compelling case for implementing core reforms EVEN at existing revenue sources approximately $40billion/year • Introduce carefully targeted reforms of formula programs to focus on system preservation • Streamline programs and eligibility to focus on compelling national priorities (core system) • Establish competitive program(s) to address critical growth and competitiveness bottlenecks • Introduce strategic planning improvements and incentives to support more comprehensive, integrated plans and priorities for outcome-based investment programs BPC is now preparing an update to our 2009 report to lay out the merits and key elements of such a strategy as well as options for restoring a sustainable funding foundation

13. But Impediments to Timely and Constructive Progress are Significant Eroding Bi-Partisanship • Traditional bipartisan support for transportation legislation eroding • Path for political consensus at national level at historically low level • Chilling effect of severe mistrust across parties, House and Senate, and Congress and White House • Extreme divisiveness of Administration’s “livability” agenda and HSR proposal Limited Willingness to Pay • Zero appetite for increasing revenue or scaling program to best utilize available resources • Historic user fee foundation disintegrating; few political advocates for restoring • National carbon pricing appears to be off the agenda for some time Persistence of Parochial Politics as Zero-Sum Game • Limited interest in cohesive reforms to advance more sustainable investment strategies to achieve well defined national interests Allure of Voo-Doo Economics • Unfocused calls for “harnessing private capital”, empowering states, and establishing new “banks” while skepticism of tolling and PPPs persist • Persistent misconstruction of jobs/infrastructure/economic growth links • Simplistic calls for increasing “private investment” • Calls for federal “bank” with no revenue source and no clear focus on true returns

14. Prospects for Needed National Freight Policy, Plan, Program, and Funding If scarce resources drive move to well-defined and targeted national interests… If freight goals, policy and program can be recognized as serving interests of red and blue, urban and rural, donor and donee, energy producers and consumers… If consensus achieved around objective and meaningful goals and selection criteria sufficient to foster confidence in merit-based competitive program and allocation of significant share of federal revenue… If program structure is developed to effectively parse distinct private, public, and level of government costs and benefits in various projects… If advocacy by more diverse interests and coalitions coalesce around broad goals and outcomes more than a priori “solutions” to guide national reauthorization policies and reforms… If…

15. Thank you ! JayEtta Hecker - jhecker@bipartisanpolicy.org NTPP Reports: “Performance-Driven: A New Vision for U.S. Transportation Policy”, “Strengthening Connections Between Transportation Investments and Economic Growth “ and others available at bipartisanpolicy.org