October 10 , 2013 Federal Transportation Revenue Options Discussion

1. October 10, 2013 Federal Transportation Revenue Options Discussion

2. Discussion: First Steps Current Federal Resources – MAP-21 Federal Transportation Cliff Viability of Fuel Tax Revenue Long Term View Short/Medium Term View

3. Current Federal Resources – MAP-21

11. Federal Transportation Cliff MAP-21 Program Expires September 30, 2014

14. Congressional Budget Office, April, 2013

15. Viability of Fuel Tax Revenue Inflation Fuel Efficiency Standards

16. Viability of Fuel Tax Revenue • Inflation • Federal Fuel Tax unchanged at 18.4 cents per gallon • To have same purchasing power, it would be 29 cents per gallon.

17. Viability of Fuel Tax Revenue • Fuel Efficiency Standards • CAFÉ Standard: • Requires 54.5 mpg by 2025 • 21% erosion in fuel tax revenues by 2040

19. Viability of Fuel Tax Revenue

20. Long Term View Mileage-Based User Fee (MBUF) or Vehicle Miles Traveled (VMT) Other????

21. Mileage-Based User Fee (MBUF) or Vehicle Miles Traveled (VMT) Opportunities: Preserve or augment transportation revenue, as the fees would not diminish with the adoption of more fuel-efficient conventional vehicles or alternative fuel options.

22. Mileage-Based User Fee (MBUF) or Vehicle Miles Traveled (VMT) Opportunities: • Address other challenging transportation policy goals, such as • reducing traffic congestion or harmful pollutant emissions, • varying the per-mile charge based on relevant vehicle characteristics (e.g., size, weight, emissions class) or the time and location of travel (thus creating financial incentives to, for example, purchase less polluting cars or avoid peak hour travel when possible).

23. Mileage-Based User Fee (MBUF) or Vehicle Miles Traveled (VMT) Obstacles: It is not apparent that initial efforts to institute MBUF fees, or subsequent efforts to increase MBUF fees to keep pace with inflation, will face less opposition than increasing fuel taxes. The administration of MBUF fees will almost certainly be more costly and burdensome than fuel tax collection.

24. Mileage-Based User Fee (MBUF) or Vehicle Miles Traveled (VMT) Obstacles: • Unfair to Rural Residents • Big Brother • Evasion Opportunities • How is it used? • Who determines price and location?

25. Other??? • Public - Private Partnerships • Public - Public Partnerships • Federal Excise Tax • Heavy Vehicle Use Tax • Registration Fees • Container Fee • Share Customs Revenue • Royalties on Petroleum Drilling

26. Other??? • General Sales Tax • Additional Bonding Options • Exceptions to Federal Prohibition on Tolling Interstates • Heavy Vehicle Use Tax • Sales Tax on Fuel • Oil Barrel Fee (on all fuels including RR) • Devolution • ???

27. Short/Medium Term View National Transportation Commissions National Commission on Fiscal Responsibility and Reform Other Organizations

28. National Surface Transportation Policy and Revenue Study Commission “To keep America competitive, we are recommending a significant increase in investment in our national surface transportation system. The projected funding shortfalls — to maintain our existing systems and expand capacity where necessary to meet the challenges of the 21st century — are enormous and ominous. To close this investment gap, we will need increased public funding. We will also need increased private investment. More tolling will need to be implemented and new and innovative ways of funding our future system will need to be employed. And we will need to price for the use of our system, which will help reduce investment needs.”

29. National Surface Transportation Policy and Revenue Study Commission “To address this investment target by providing the traditional federal share of 40 percent of total transportation capital funding, the federal fuel tax needs to be raised by 25–40 cents per gallon. This increase should be phased in over a period of five years (5–8 cents per gallon per year). This rate increase should be indexed to the construction cost index.”

30. National Surface Transportation Infrastructure Financing Commission “Meanwhile, the federal Highway Trust Fund faces a near-term insolvency crisis, exacerbated by recent reductions in federal motor fuel tax revenues and truck–related user fee receipts. This problem will only worsen until Congress addresses the fundamental fact that current HTF revenues are inadequate to support current federal program spending levels. Comparing estimates of surface transportation investment needs with baseline revenue projections developed by the Commission shows a federal highway and transit funding gap that totals nearly $400 billion in 2010-15 and grows dramatically to about $2.3 trillion through 2035.”

31. National Commission on Fiscal Responsibility and Reform (2010) “The Commission plan reclassifies pending from the Transportation Trust Fund to make both contract authority and outlays mandatory, and then limits spending to actual revenues collected by the trust fund in the prior year once the gas tax is fully phased in. Shortfalls up until that point would be financed by the general fund.”

32. National Commission on Fiscal Responsibility and Reform (2010) RECOMMENDATION 1.7: FULLY FUND THE TRANSPORTATION TRUST FUND INSTEAD OF RELYING ON DEFICIT SPENDING. Dedicate a 15 - cent per gallon increase in the gas tax to transportation funding, and limit spending if necessary to match the revenues the trust fund collects each year.

33. U.S. Chamber of Commerce • How Can the Business Community Step UP? • You can help modernize our infrastructure and grow the economy: • Paying more in user fees and taxes • Investing up to $250 billion in public-private partnership capital • Bring together the latest technology and management practices • Build support for smart investment

34. U.S. Chamber of Commerce Messaging (Reuters, 02/13/13) "The Chamber (of Commerce) supports reasonable increases in gas taxes that are phased in and indexed to inflation," the group's president, Thomas Donohue, told the House of Representatives Committee on Transportation. "From a business standpoint, if you need something that's going to provide a good return, you have to go out and invest in it and buy it," he said, referring to highways and other infrastructure that make it possible to produce and move goods.

35. National Association of Manufacturers • The NAM supports transportation policies that: • Ensure U.S. manufacturing competitiveness by providing increased federal, state and local funding for maintaining, improving and expanding public infrastructure. Excise taxes and other fees charged directly for transportation-related development should be used for transportation-related infrastructure expenses. Alternative financing mechanisms including public-private partnerships, where appropriate, should be encouraged.

36. National Association of Manufacturers Messaging (Letter to US House Budget Committee, 04/24/13) The National Association of Manufacturers (NAM) believes increased funding for the nation's transportation infrastructure is a critical priority which will help keep manufacturing competitive and grow the nation's economy… …In spite of these significant challenges, the motor fuel tax for gas and diesel remains the foundation for all of our current and future federal highway and transit investments…

37. Joe Kiely Vice President of Operations P.O. Box 9 Limon, CO 80828 P: 719-775-2346 C: 719-740-2240 joe.kiely@portstoplains.com www.portstoplains.com www.ptpblog.com