Kathy Ruffalo Ruffalo and Associates, LLC

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Kathy Ruffalo Ruffalo and Associates, LLC
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TOPICS

• Status of Highway Trust Fund short and long
  term
• Interim report of Financing Commission
• Status of Reauthorization

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• Todays problems cannot be solved by thinking
  the way we thought when we created them.
• - Albert Einstein

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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

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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

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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

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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

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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

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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

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Preliminary observations

• System demands are outpacing investment

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Preliminary observations

• System maintenance costs can make capacity
  expansion difficult

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Preliminary observations

• Fuel tax, at current rates, is not sufficient

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Preliminary observations

• More direct user charges should be explored

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Preliminary observations

• Not only need more investment, need more
  intelligent investment

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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

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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.

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Evaluation criteria

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

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Evaluation criteria contd

• Promotes efficient use
• Promotes efficient investment
• Promotes safe and effective system
  operations/management
• Addresses externalities
• Minimizes distortions
• Promotes spatial equity

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Evaluation criteria contd

• Promotes social equity
• Promotes generational equity

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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?

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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

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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

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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

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Contd

• 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
  horses performance
• Study alternative uses for dead horses.and

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My personal favorite.

• Promote the dead horse to a supervisory position

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Reports

• http//financecommission.dot.gov/
• kathy_at_kruffalo.com