Kathy RuffaloRuffalo and Associates, LLC

TOPICS

Status of Highway Trust Fund – short and long term

Interim report of Financing Commission

Status of Reauthorization

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

- Albert Einstein

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

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

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

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

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

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

Preliminary observations

System demands are outpacing investment

Preliminary observations

System maintenance costs can make capacity expansion difficult

Preliminary observations

Fuel tax, at current rates, is not sufficient

Preliminary observations

More direct user charges should be explored

Preliminary observations

Not only need more investment, need more intelligent investment

Funding vs. Financing

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

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.

Evaluation criteria

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

Evaluation criteria – cont’d

Promotes efficient use Promotes efficient investment Promotes safe and effective system

operations/management Addresses externalities Minimizes distortions Promotes spatial equity

Evaluation criteria – cont’d

Promotes social equity Promotes generational equity

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?

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

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

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

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…….

Promote the dead horse to a supervisory position

Reports

http://financecommission.dot.gov/

kathy@kruffalo.com