Kathy Ruffalo and Associates LLC TOPICS l

Kathy Ruffalo and Associates, LLC

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

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

Transportation today l l l 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

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

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

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

Policy and Revenue Study Commission l l 12 members Appointed by the President or Congressional leaders Began work in late 2005 Just completed and released their final report

Highlights l l l Agreed there is a short and long-term crisis Called for a continued strong federal role Advocated for a 25 – 40 cent fuel tax increase over the next 5 years Called for program consolidation Recommended streamlining of the program delivery process

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

Commission required to examine: l l l 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

Preliminary observations l System demands are outpacing investment

Preliminary observations l System maintenance costs can make capacity expansion difficult

Preliminary observations l Fuel tax, at current rates, is not sufficient

Preliminary observations l More direct user charges should be explored

Preliminary observations l Not only need more investment, need more intelligent investment

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

Format for evaluating funding and financing mechanisms l l 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. Recommend the level of government most appropriate to implement the mechanism

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

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

Evaluation criteria – cont’d l l Promotes social equity Promotes generational equity

Status of reauthorization l l l 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?

Timetable l l l 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

So……. what do we do? l Need a national transportation policy l Need a bi-partisan solution l Need to recognize intergovernmental relationships l Modal fights will only ensure failure

So……. what do we do? l Historic opportunity to revolutionize federal transportation programs l Cannot wait for someone else to fix the problem – need to address head-on l Business as usual is not going to work and doing nothing is not an option

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:

Cont’d l l l 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

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

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