governor’s task force on modernizing transportation funding december 2, 2009 thomas r. warne, pe...

Governor’s Task Force on Modernizing Transportation Funding

December 2, 2009

Thomas R. Warne, PETom Warne and

Associates

National and State Transportation

Funding Overview

National and State Transportation Funding Overview

National OverviewState Overview and PracticesUtah Case Study

Situation: Transportation Faces Historic Policy Issues

Financing the System

Climate Change

Situation: Demand for Transportation Mobility Will Continue to Grow

American Association of State Highway and Transportation Officials

Population will increase to 235 million by 2055

VMT will double by 2055Freight will double by 2035Transit needs will double by 2055

Situation: The Percentage of Roads in Poor Condition Grows

Urban Area PercentLos Angeles 64San Jose 61San Francisco/Oakland 61Honolulu 61Concord, CA 54New York/Newark 54San Diego 53

Situation: Capacity Improvements Don’t Meet Demands

Utah-from 1990 to 2007Population grew 47%Vehicle miles travelled grew by 71%Roadway capacity grew by 4%

Rough Roads Ahead Report, 2009

Situation: Capacity Improvements Don’t Meet Demands

Idaho-from 1990 to 2007Population grew 48.6%Vehicle miles travelled grew by 55%Roadway capacity grew by 3.3%

Source: ITD

Situation: The System is Over 50 Years Old and Wearing Out

Situation: The Purchasing Power of the 18.4¢ Federal Tax Lags

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

0

10

20

30

40

50

60

70

80

90

Percentage Reduction in Purchasing PowerBetween 1993 - 2015

Federal Aid – States with Highest Ratio

State Funding-Aid Ratio

National Avg

2005 Aid Ratio

2005 National Avg

Alaska 6.66 1.10 7.40 1.14Rhode Island 2.29 1.10 2.68 1.14North Dakota 2.10 1.10 2.60 1.14Montana 2.37 1.10 2.44 1.14Vermont 2.08 1.10 2.30 1.14

Ratio of Apportionments and Allocations to Payments

Date Range in “Funding-Aid Ratio” is 1957 - 2004

Federal Aid – States with Lowest Ratio Ratio of Apportionments and Allocations to

PaymentsDate Range in “Funding-Aid Ratio” is 1957 -

2004State Funding-Aid

RatioNational

Avg2005 Aid

Ratio2005 National

Avg

Minnesota 1.18 1.10 0.87 1.14Illinois 1.06 1.10 0.93 1.14Indiana 0.89 1.10 0.93 1.14Nevada 1.30 1.10 0.94 1.14Arizona 1.06 1.10 0.96 1.14New Jersey 0.99 1.10 0.96 1.14Texas 0.88 1.10 0.96 1.14South Carolina 0.91 1.10 0.96 1.14

Situation: EPA Finds GHGs as a Significant Public Threat

EPA finding that greenhouse gas emissions pose a significant threat to public health and safety

Includes CO2

Rulemaking would allow them to regulate CO2 emissions

Unknown but significant impacts on transportation projects-particularly capacity projects

Situation: FTA “New Starts” Program is Over Subscribed10 projects chosen for ARRA funding

Priority given to projects currently in construction or able to obligate funds within 150 days

Private sector operation requirement removed from application

Current pipeline of projects exceeds available funds by about 10:1

Situation: Federal Approach is Piecemeal

Situation: US DOT High Speed Rail Grant Program Is Over Subscribed

High-Speed/Intercity Passenger Rail Network Grant Program originally funded at $8 Billion

Federal Railroad Administration received 278 Applications

Applications totaled $102 Billion Region # of Applications Total $$

Northeast 79 $35 Billion

South/Southeast 44 $16 Billion

Midwest 47 $13 Billion

West 108 $38 Billion

Financing the System: ARRA Funding

$27 billion for highways$8.4 billion for transit$8.0 billion for High Speed RailFunds Awarded: 87.11%Pending Approval: 5.20%Funds Remaining: 7.69%

Situation: TIGER Discretionary Grants Are Over Subscribed

Team created to expedite $1.5 Billion in Discretionary Grants

Grants will range from $20 Million to $300 Million

Competitive application acceptance process

1,361 applications receivedTotal value of the applications-$57 billion

(38 times available funding)(Transportation Investment Generating Economic Recovery-TIGER)

Financing the System: National Initiatives

National Surface Transportation Policy and Revenue Study Commission

National Transportation Infrastructure Finance Commission

Financing the System-National Surface Transportation Policy and Revenue Study Commission

Reduce funding categories from over 108 to 10

Increase the motor fuels taxTransition to a vehicle-mileage taxStreamline environmental processesLeverage Public-Private-Partnerships

Financing the System

40¢

Financing the System – National Transportation Infrastructure Finance Commission

Consider implementation of multiple financing options

Transition to a vehicle mileage tax10¢ gas tax and 15¢ on dieselTolling provisions

Financing the System: 10¢ National Gas Tax Increase Impacts

½¢ per mile $5 a month per vehicle $9 a month per household

Situation: The Obama Administration Does Not Support Raising the Motor Fuels Tax

“Transportation Secretary Ray LaHood rejected increasing the gasoline tax to fix a worsening shortfall in funding for highways and mass-transit systems, saying the government should instead turn to ideas such as private investment and new tolls to raise money.”

Wall Street Journal, March 4, 2009

Situation: The Administration Does Not Support a VMT Tax

"We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled.” US Secretary of Transportation Ray LaHood

FoxNEWS, February 20, 2009

Situation: The Administration Does Not Support a VMT Tax

"We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled.” US Secretary of Transportation Ray LaHood

"The policy of taxing motorists based on how many miles they have traveled is not and will not be Obama administration policy.” Lori Irving, US DOT Spokesperson FoxNEWS, February 20, 2009

Situation: Proposed Funding Solutions

Toll Roads and Private Investment Smart Growth Livability Congestion Pricing Carbon Taxes to Limit Vehicle Miles

Traveled Land Use Planning

Situation: Earmarks Will Continue Divert Funding from the Approved Program - History

History of Transportation Earmarking Bill Number Value

1982 10 $362 million1987 152 $1.4 billionISTEA 538 $6.2 billionTEA 21 1851 $10.3 billionSAFETEA-LU 5716 $21.3 billion

“Demonstration Projects”, “High Priority Projects” or “Earmarks”

Situation: Earmarks – Idaho StatisticsAverage $$ of Earmarks per Congressional member:Idaho - $34,250,000National - $27,492,026

Average # of Earmarks per Congressional member:

Idaho - 5.4

National - 9.4

Situation: Idaho’s Revenue Sources

Federal Aid-52%

State fuel tax-26%

State Registrations-13%

State fees and misc. (D.L., titles, etc.)-8%

Local Match for federal aid projects-1%

Reimbursements-0%

Total-100%

Idaho State Funding SourcesIdaho is 12th from the top in relying on federal aid

to fund their program•Montan

a – 76%

•Rhode Island – 71%

•S. Dakota – 66%

•Alaska – 65%

•Georgia – 59%

States relying the most on Federal Aid

•Wyoming – 13%

•Oregon – 17%

•Maryland – 18%

•Iowa, Illinois, Arizona – 20%

States relying the least on Federal Aid

Situation: The Highway Trust Fund is Out of Balance

$8 billion infusion in September 2008Another $7 billion required for FY 2009FY 2010 will require at least $10 billion more

Obama’s 18 month extension will require at least $20 billion in additional funds

The Situation: Another Extension is a Given

Senate working on a six month extension

President Obama proposes an 18 month extension

Chairman Oberstar (House T&I Committee Chair) is pushing for the new bill and a shorter extension

Situation: SAFETEA:LU Reauthorization will be Late

1982-STAA, 3 months late

1987-STURRA, 6 months late

1992-ISTEA, 2 months late

1998-TEA 21, 8 months late

2005-SAFETEA:LU, 23 months late

2011-”STAA,” at least 18 months late

Situation: Late Authorizations Create Programming Problems

States have no idea about future funding levels and are unable to plan ahead

States cannot embark on large projects due to uncertainty of funding levels

Capacity demands continue to increase. Funds are diverted from

maintenance to capacity projects

Situation: Addressing the Environment

• Global warming• Carbon

impacts/footprint• Greenhouse Gas

emissions• Per capita fossil fuel

consumption• Air quality health

impacts• Efforts to decrease

dependence on fossil fuels

Situation: Probable Outcomes of the New Transportation Bill

No significant increase in Federal funding

More regulation and oversight

Climate change impacts

EPA with a greater role in transportation

Less flexibility on how money is spent

May not be a six-year bill

Summary: Federal Funding Implications for Idaho

Idaho cannot solely rely on the federal

government or programs to solve their

funding problems

Idaho should be engaged in the climate

change debate

ITD will have to respond to more federal

regulation

State Overview and Practices

Situation: State Economies and Budgets Are Struggling

Over half of all states experienced negative budget growth in FY2009.

General fund expenditures estimated to decline 17% from FY2008

Tax collections estimated down 6.1% from actual FY2008 collections.

Situation: State Economies and Budgets Are Struggling

Projections for FY2010 are for closer to three quarters of states to experience negative growth.

General fund expenditures estimated to decline 23% compared to FY2009

NGA reports an estimated 1.7% growth for FY2010 compared to FY2009.

Situation: State Transportation Funding Shortfalls

A sampling of states reporting transportation budget shortfall numbers:

Virginia: $2.6 Billion through 2015Texas $3.6 Billion through 2015Iowa: $27.7 Billion through 2029Colorado: $149 Billion through 2035Minnesota: $50 Billion through 2029Massachusetts: $20 Billion through 2029

Financing the System-State and Local Initiatives

Rental car fees Lodging tax Impact fees Special

Improvement Districts

Tolls Vehicle tax State Gas tax

Local Gas tax General Sales

tax Transportation

Related Sales tax

Property tax Employment

tax

Transportation Ballot Initiatives - 2006

Ballot Initiatives Defeated

Ballot Initiatives Approved

Ballot Initiatives with Split Results

Transportation Ballot Initiatives - 2007

Ballot Initiatives Defeated

Ballot Initiatives Approved

Ballot Initiatives with Split Results

Transportation Ballot Initiatives - 2008

Ballot Initiatives Defeated

Ballot Initiatives Approved

Ballot Initiatives with Split Results

Transportation Ballot Initiatives - 2009

Ballot Initiatives Defeated

Ballot Initiatives Approved

Ballot Initiatives with Split Results

Ballot Initiatives-Trends

The average approval rate for all of the measures tracked in 2006 and 2009 is 63%.

Successful measure have the following:› Specific projects› Specific timetable for project delivery› Sunset provision on revenue

mechanism

Utah Case Study

Utah’s Growth Summit – 1995

“There is a time in the life of every problem when it is big enough to see and small enough to solve.”Governor Michael O. Leavitt

Utah’s Growth Summit – 1995

Growth Focus Areas Water Open Space Transportation

Utah’s Growth Summit – 1995

By the Numbers60 - # of proposals submitted suggesting ways to manage growth

48 - % who agree “Roads are Utah’s No.1 growth problem.” (Dec. 17, 1995)

65 - % who believe Leavitt was right in calling the summit

Utah’s Growth Summit – 1995

By the Numbers-continued600 – # of people in attendance at the 1st Growth Summit meeting

500,000 – estimated Utah citizens – (about a fourth of the state's

population) participated in the Utah Growth Summit

Utah’s Growth Summit – 1995

By the Numbers-continued100 - % of the state's commercial and public television stations broadcast a "roadblock" one-hour town meeting on the first of the summit

2 - # of pages donated by the Deseret News Newspaper for full spread info on the Growth Summit

Utah’s Growth Summit – 1995 - 2009

1997 - Coalition for Utah’s Future launches Envision Utah 1999 - Envision Utah Regional Growth Preference Scenario published

Utah’s Growth Summit – 2000 - 2008

2000 - Envision Utah Quality Growth Strategy published

2002 - Planning Tools for Quality Growth published

2003 - Transit Oriented

Development Guidelines

published

2006 - 2040 Regional

Transportation Plan

2008 - Jordan River Blueprint

and Governance Strategy

Utah’s Growth Summit – 1995 - 20092009 - 3% Regional Development Strategy, on-

going training, support and advocacy

Utah’s State Leadership

Speaker of the House Mel Brown• Utah Legislature Service 1987-2000; 2007

President Lane Beattie• Utah Senate President 1994 - 2000

Governor Michael O. Leavitt• Utah Governor 1993 - 2003

Utah’s Centennial Highway Fund

Utah’s Centennial Highway Fund 41 projects located statewide Urban and rural political support Included I-15 Reconstruction Project Variety of revenue streams

5 cent fuel tax increase Incremental increase in Federal funds

(from TEA-21) General Fund contribution Sale of General Obligation bonds

10 year program

Utah’s Centennial Highway Fund

41 projects

Statewide

I-15 first

Utah Centennial Highway Fund, 1997

General Funds $410 billion New Transportation Funds $814

million Federal Funds (TEA-21) $450 million Local Contributions $119 million Other $168

million Bonds $563

million

Utah Centennial Highway – Fund, 2002

General Funds $127 billion New Transportation Funds $883

million Federal Funds (TEA-21) $450 million Local Contributions $ 7 million Other $135

million Bonds $1.8 billion

Utah Centennial Highway Fund

Lessons Learned Demonstrate compelling need Political support Statewide program Variety of revenue streams Clean and straightforward program

Utah Centennial Highway Fund

Lessons Learned-continued Innovative contract delivery pays off Review every year and adjust Be mindful of the debt load Preserve AAA rating

Summary

Federal Aid will not substantially increase and will be fraught with more regulation

States are taking the initiative in solving their own transportation funding challenges

Citizens are willing to pay for transportation if there is a plan that includes projects, a schedule and a limit on the tax increase

Governor’s Task Force on Modernizing Transportation Funding

December 2, 2009

Thomas R. Warne, PETom Warne and

Associates

National and State Transportation

Funding Overview