AMERICAN DREAM COALTION Stimulus, Reauthorization and Mobility Alan E. Pisarski

1. AMERICAN DREAM COALTIONStimulus, Reauthorization and Mobility Alan E. Pisarski

2. WHAT’S IN OUR FUTURE? • STIMULUS PACKAGE • TRUST FUND INSOLVENCY– AGAIN • VMT DOWN 3.6% • FUELS DOWN 7.1% • HTF REVENUE DOWN 11.6% vs forecast • REAUTHORIZATION OF SURFACE TRANSPORTATION LEGISLATION

3. STIMULUS PACKAGE—ARRA • 789B$ TOTAL • 27.5B$ HIGHWAYS • 1.5B% DISCRETIONARY GRANTS • Corridors, TIFIA, Earmarks • 8.4B$ TRANSIT • 1.1 AIRPORT IMPROVEMENT GRANTS • 850m$ AMTRAK; 450M$ security • 8B$ HSR (plan due yesterday)

4. Transportation lost in the game • “We got rolled” John Mica Ranking Member House T&I • AASHTO had “5000 shovel ready projects” worth about 66B$ (hwys only) • Bill uses standard formulas; no St. match • States taking varied approaches • lots of small maintenance – paving, painting • or few big ones (KS 4) • Texas supporting toll road plans • 1,800 projects obligated ($5.6b) this week

5. Next Reauthorization • Due Oct 1, 2009 (6 years usually) • Highways and transit; HSR? • Congress always misses due date; 12 CRs last time • They say they will be ready this time • I doubt it – new Admin., no $$$$$

6. Next Reauthorization (2) • Who will be in charge? WH, DOT, Congress? • New Secretary Ray LaHood alone • No Senior staff– some announcements • DOT might prefer a CR so that they could be serious players next year • If meet September goal then DOT’s role limited

7. Next Reauthorization (3) • Finance, Finance, Finance • Stimulus package will affect decisions • Tolling, congestion pricing disliked by leadership but few options • More afraid of gas tax increases • Is private sector still ready with $$$ • Devolution by Default ??

8. Next Reauthorization (4) • Maybe reorg DOT away from modes to “functional structure” = intercity; metro • Metro mobility = transit, bikes, walking • Intercity; tourism weak • Watch private freight rail • New focus on land use policies

9. State of play in national legislation – Financial issues – • Not close to increase in last cycle (40%) • Needs put at 2x funding • Fed Gas tax at 18.4¢ doesn’t = 3¢ in 1956 • Fed share of capital about 40 % • Some opportunities regarding revenues • “Innovative Finance” as alternative INNOVATIVE FINANCE AIN’T MONEY

10. THREEWAY CONFLICTS • TRANSPORTATION LEGISLATION • ENERGY LEGISLATION • GHG LEGISLATION • Cap and Trade – rebate or spend? • Carbon Tax • Air could catch brunt of plans after roads ALL ANTAGONISTIC TO MOBILITY

11. EFFICIENCY VS EQUITY The Efficiency/Equity argument is fundamental to any regulatory process • EQUITY = your responsibility for share of solution should equal your share of the problem! • EFFICIENCY = do most cost-effective first and solve more of the problem per $

12. Options for alternate fuels in other sectors are greater. MOST COST EFFECTIVE Main focus should be electricity generation. WHY IS TRANSPORTATION SINGLED OUT AS ONLY SECTOR TO HAVE OUTPUT CUT? No one suggests farm output or industrial output should be cut by their share of GHG ! TRANSPORTATION VS OTHER GHG OPTIONS

13. Impacts on mobility • Energy; GHG = CUT VMT! • Metro Mobility = Walk, Bike, Transit • Coalition w/HUD = use Transportation $$ for land use coercion and subsidies • Emphasis on Tolling/Pricing but not market driven; pay-at-pump insurance • VMT tax = tax travel based on where, when and what you are doing GOAL IS TO SUPPRESS VMT – GHG IS JUST THIS YEAR’S EXCUSE

14. Neighborhood Shorter trips Walk/bike Land use solutions Design What’s freight? Accessibility Public Mass Behavior change Make it happen Globally Integrated Longer trips Broad “community” Choices Market forces Major role for freight Mobility Private Personalized Technological fix Let it happen The policy conflict = opposed thinking about the world

15. The Right Answer Should At Least Be Among The Options Available! • This is A Real Problem even independent of global warming • Fuel costs • Energy Security • Economic Uncertainties • This Is A Real Problem With Little Resources • FOCUS ON EFFICIENCY Selling Bad Solutions To A Real Problem Should Be Out! • Research / Economic Analysis / Performance Measurement should be key

16. The focus on changing behavior diverts us from the real issues • Enhancing economic opportunities • Access to workers; access to jobs • Mainstreaming minorities • Safety • Serving an aging population • Greater freedom of mobility • Infrastructure Reconstruction • More!

17. A closing thought – TRB 2009 • The major challenge facing the new Secretary will be getting people to take transportation seriously—to recognize that the cost is not the benefit, and it is what happens after you build the road or the airport or transit system that matters to our future economic productivity and national well-being.”

18. Thank you Alan E. Pisarski alanpisarski@alanpisarski.com

19. Next Reauthorization (5) • Commissions are for cover or temporizing! • Two commissions said the same thing – more $$ needed • Commission mandated by SAFTEA-LU reported last month: • need 10c for inflation and plan for new non-petroleum based vehicle mileage tax

20. The Federal Highway Trust Fund becomes insolvent this year!

21. Next Reauthorization (5) • Next week AASHTO will release its Bottom Line estimates of investment needs for highways and transit on the hill (4th I have done)

22. State of play in national legislation – Context – • Difficult period – Economy, Policy Conflicts, New Admin. , etc. • Multiple transportation legislative issues • Aviation • Amtrak • Rail freight • Maritime • More temporizing actions likely

23. THE PRESENT LEGISLATIVE IMPASSE IS A SYMPTOM OF THE FUTURE! PREMISES • USER-PAY TRADITION AS GUIDE • FUNDING INADEQUATE –IN 2 WAYS • CONGRESS/ADMIN. RELUCTANT ON FUEL USER FEES BOOST • BUT NOT READY FOR THE NEXT STEP • ADVENT OF “POST GAS-TAX ERA” • SHIFT TO STATE AND LOCAL LEAD • WANT/NEED PRIVATE & PUB/PRIV. PARTICIPATION; BUT HOW?

24. As the Interstate Era Came to a Close • No new vision emerged • Nothing with the Interstate’s Power • A Rich Funding System without a goal • 1¢ = $1.7 Billion/yr • RESULT • Lack of Focus • Great Expansions of Eligibility • A Grant Program • Congressional “Earmarks”

25. Post-Interstate Era Legislation • THREE 6 YEAR CYCLES • 1992-ISTEA • 1998-TEA-21 • 2005-SAFTEA-LU (2 years 11 extensions) • A new cycle begins this year • Will the Congress continue to temporize or will it launch a new era? THE POST POST INTERSTATE ERA!

26. FINANCE INADEQUATE FUNDING OF HIGHWAY NEEDS FUEL EFFICIENCY SOME INFLATION NEW POWER SOURCES POLICY MANAGE SYSTEM USE “MARKET- PLACE” USE PRIVATE SECTOR USE ECONOMIC CONCEPTS CONTEXT has two elements

27. Transport is most dependent on high energy density fuels • “Cost effectiveness (cost per tonne of CO2) is the fundamental determinant of which abatement policies to adopt and how much the transport sector should contribute towards economy-wide CO2 abatement goals --- it is important to achieve the required emissions reductions at the lowest overall cost to avoid damaging welfare and economic growth.” • “Transport and other sectors are expected to contribute less to overall emissions reduction strategies.” ECMT Council of Ministers Transport and Environment ;Jun 2006

28. U.S. Greenhouse Gas Emissions 28 28

29. U. S. Transportation Carbon Emissions by Mode, 2003 (Million metric tons CO2) Pipeline/Other, 47 Internat'l./Bunker, 84 Waterborne, 58 Rail, 43 Air, 171 Light Vehicles, 1113 Heavy Vehicles, 350 Surface Transportation is the main issue for now

30. A little Perspective Here!How much are we really talking about? 3.6% drop for year = • Last year I drove 300 miles a week [15,000 miles/yr] • This year I drove 290 miles a week = 1 five mile trip lost per week

31. VMT trend is not just gas prices • WEAK ECONOMY • Discretionary trips in Vacation Season • DEMOGRAPHY - a long term trend

32. IS FUEL CHEAP AT 4$? PLUS WE ARE 20% RICHER THAN THEN!

33. Would 5$ or 6$ gas change America? • LIFE STYLE PREFERENCES WILL DETERMINE GOALS; AND TECHNOLOGY WILL RESPOND • The consumer benefit of automobility is colossal – think of toll costs = $4/gal • Europe at $9/gal; still has traffic jams • SERIOUS EFFECTS • slower access to automobility of minorities and lower income populations • Rural stress • Less access to broader worker pool • Depresses auto sales • FLEET TURNOVER RATE WILL BE KEY

34. THE GHG TRENDS ARE LARGELY POSITIVE • CO2 Is Almost Self-stabilizing • Energy Intensity/GDP Declining about 2%/yr • Energy Intensity/Capita will decline .5%/yr • Transportation VMT Slow Growth • Vehicle Fuel Efficiency • Demography • Price Will Be Key Factor

35. Backgrounder #2Energy, Environment and EconomyInstitute of Transportation Engineers • Requested by ITE Board of Directors • A WIN, WIN, WIN Opportunity • Traced fuel issues and travel trends • Its all about efficiency

36. VMT Trends • US decline in VMT in 2008 about 3.6% • Still low now that Economy is driver • Rural areas hit hardest around 9%

38. VMT trend is not just gas prices • NOW WEAK ECONOMY • Discretionary trips in Vacation Season • DEMOGRAPHY - a long term trend

39. A little Perspective Here!How much are we really talking about? 3.6% drop for year = • Last year I drove 300 miles a week [15,000 miles/yr] • This year I drove 290 miles a week = 1 five mile trip lost per week

40. TRIP CHAINING– Big payoffs CARPOOLING Work – some gains Non-work – more CUTS IN TRIP LENGTH CUTS IN TRIPS MADE SHIFTS TO TRANSIT? Maybe 2% FREIGHT Local Distribution opportunities Load changes Big Fleet gains VMT Response: Where did it go?

41. WAS FUEL CHEAP AT 4$? PLUS WE ARE/WERE 20% RICHER THAN THEN!

42. Would 5$ or 6$ gas change America? • LIFE STYLE PREFERENCES WILL DETERMINE GOALS; AND TECHNOLOGY WILL RESPOND • The consumer benefit of automobility is colossal – think of toll costs = $4/gal • Europe at $9/gal; still has traffic jams • SERIOUS EFFECTS • slower access to automobility of minorities and lower income populations • Rural stress • Less access to broader worker pool • Depresses auto sales • FLEET TURNOVER RATE WILL BE KEY

43. What Part Of Gains In Air Quality In The Past 20 Years Have Come From: Technology 95% to 105% Changed Behavior +5% to -5% What Part Of Gains In Green House Gases In The Next 20 Years Will Come From: Technology? Changed Behavior? A Question!

44. Potential impacts on new and existing transportation infrastructure? Permanent inundation of roads, bridge approaches Weakening of land, substructure supporting roads, bridges Temporary flooding of roads Coastal Interior Increased stream flow, erosion and bridge scour Pavement cracking, deformation; King Gee, FHWA 44

45. REGULATION • SAFETYof growing interest • Major decline last year; why? • CAFÉ – raised standard from current 27.5 miles per gallon standard to 35.7 miles per gallon by 2015. light trucks, from 23.5 miles per gallon in 2010 to 28.6 miles per gallon in 2015 • GHG – BIG ISSUE • Cap and Trade – rebate or spend? • Carbon Tax • Air could catch brunt of plans after roads

46. TRANSPORTATION VS OTHER OPTIONS • Options for alternate fuels in other sectors are greater. MOST COST EFFECTIVE • Main focus is, and should be, electricity generation. • WHY IS TRANSPORTATION SINGLED OUT AS ONLY SECTOR TO HAVE OUTPUT CUT? • No one suggests farm output or industrial output should be cut by 25%