Current Challenges in Highway Funding

1
Future Economic Pressures Facing the American
Highways

• Gregory Cohen, P.E.
• American Highway Users Alliance
• American Society of Highway Engineers
• Hershey, PA
• June 13, 2008
• gregcohen_at_highways.org
• www.highways.org

2
Overview

• Congestion Impacts Future Economic Growth
• Trucking Freight Growth through 2035
• International Competition
• Funding Crisis Impacts
• Carbon Caps
• Long-Term Solutions Require Action Now

3
Economic Importance of Highways

• Highway Mobility Vital for 6 Major Economic
  Sectors that account for 84 of GNP
• Services
• Manufacturing
• Retail
• Agriculture
• Natural Resources
• Transportation

4
Congestion

• Hwy Stats 1980-2005
• 97 growth in travel 3 new capacity
• Trucking growth faster
• 78 billion in wasted fuel and time/yr.
• 1/10th of these costs at freight bottlenecks,
  from 243 million hours of truck delays
• Economic pricetag of congestion 200 B per year
  according to US DOT

5
Future Growth

• Population
• 2005 300 million
• 2035 380 million (27)
• Most growth in South, West, Urban Areas in
  General
• Economy
• 2005 13 trillion
• 2035 26.5 trillion (100)
• Truck VMT grows with economy
• What capacity increase will we have?

6
One Idea Strategic Congestion Reduction

• 20 year bottleneck reduction programs
• 40 billion gallons of fuel saved
• 77 reduction of carbon emissions onsite
• 50 reduction of CO and SOx pollution
• 1800 fewer fatalities
• 221,000 fewer injuries
• Enormous economic benefits

7
Trucking Growth 2002-2035

• 2002 gt4000 miles of NHS carry more than 10,000
  trucks/day where trucks are 25 of traffic
• 2035 gt14,000 miles of NHS (230)
• 2002 11 of NHS experienced peak-period
  congestion
• 2035 40 of NHS

8
Trucking Growth 2002-2035

• 2002 6300 NHS miles with gt10,000 trucks per day
  experience stop and go traffic
• 2035 28,000 NHS miles with gt10,000 trucks per
  day experience stop and go traffic
• This is a 400 increase!

9
International Competition

• China spending 3 of economy on highways
• US spending 0.65
• India adding capacity to 50,000 lane miles
• By 2020, China will have a significantly larger
  Interstate Highway System than U.S. (55,000
  miles vs. 41,000 miles)
• US logistics drives U.S. economy
• In 1980, 18 of GDP spent on trans. Logistics
• Dropped below 9 in early 2000s, back up to 10
  today (delays, unpredictability, fuel)

10
Funding Crisis

• Federal leadership is the reason highway funding
  has been stable
• 1998 highway bill (TEA 21) provided special
  budget treatment for highway programs
• This meant guaranteed annual funding increases
  for multi-year periods of time (1998-2003)
  (2005-2009)
• By 2009, all gasoline, diesel, and truck user
  fees have been spent and reserves are spent too!

11
Costs are Growing

• Worldwide demand for highway materials raising
  prices
• Flat gas tax has lost half of its purchasing
  power since 1993
• Project Planning Delays and Environmental Reviews
  double project costs for each 10 years of delay

12
A Perfect Storm is Brewing

• For the first time since 1956, the Highway Trust
  Fund could be empty by summer 09
• Widespread dissatisfaction with current TEA
  program major changes coming
• Baseline funding cuts in FY 09
• Without a higher federal user fee or other
  government intervention, more major cuts.

13
US DOT Diverting Attention to Tolling and PPPs

• US DOT policy envisions less federal assistance
  in National Transportation mobility
• Tolls/PPPs target high volume roads for revenue
• Diversion of revenue part of new model
• States under tremendous pressure due to lower
  federal state tax projections
• Tolls/PPPs good option for new capacity
• But NOT a panacea!

14
Major Wrinkle Carbon Caps

• Latest Senate bill failed last week but... It
  will be back
• Increases fuel prices 53 cents to 1.41
• Unlike gas tax or carbon tax, no hwy funds
• Diversion to non-hwys (transit, bikes, demand
  reduction)
• Incentives to constrain mobility/smart growth
• EPA takes over certain DOT planning approvals to
  ensure carbon reduction in TIP
• NEPA, ESA, 404, etc. require carbon analysis
• Plus States layer additional requirements

15
China, India, and Emerging Economies Exempt

• Increased fuel costs, VMT suppresion, and
  hostility to congestion relief problematic
• Economic competitors not bound by such restraints
  moving in opposite direction
• Tremendous refinery growth
• Encourage VMT growth
• Tremendous new highway capacity
• Engineering Profession Valued Supported

16
National Surface Transportation Policy and
Revenue Commission

• Funding
• Promoted fuel tax increase (5-8 cents / yr) as
  the dominant solution
• Also recommended congestion pricing in major
  metros, PPPs for new capacity, new user fees
• Suggested VMT tax for long-term
• Reform
• Reduced Number of DOT programs
• Introduced Performance Based Outcome Driven
  concept
• Generally removed modal stove pipes

17
National Surface Transportation Policy and
Revenue Commission

• Positives
• Clear recognition of increased funding needs
• Performance based program driven by data
• All user should pay (ticket taxes for non-hwy
  users)
• Streamlining project delivery critical
• Major Negatives
• Scope of eligible projects increased despite
  reduction in number of programs
• i.e. railroad, energy eligibilities
• Vague financing recommendations other than gas
  tax

18
Final Thoughts Will We Have The Highways That
Allow Us To Compete?

• Our View Major Reform is key to public support
  for a new highway bill
• Diversion and wasteful spending cannot be
  supported.
• Data-driven incentives for positive
  transportation outcomes critical.
• Public and Media Must Be Educated As To
  Economic/Quality-of-Life Stakes

19
Opportunities

• Lobbying. August Recess is important time for
  candidates to hear from you.
• Coalition Candidate Binder
• Town Hall meetings with candidates
• Fundraisers
• Media. Time to ramp up discussions with
  editorial boards, web logs, and local
  transportation and traffic reporters
• Grassroots. This is a critical time to create
  local action groups with diverse members.

20
Questions?
Gregory Cohen, P.E. American Highway Users
Alliance ASHE Annual Meeting Hershey, PA June
13, 2008 gregcohen_at_highways.org www.highways.o
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