Credibility Vision Plan Finance

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Credibility Vision Plan Finance

• Nov. 12, 2007 Alan E. Pisarski

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The Starting Point what is the goal?

• My goal for transportation is to reduce the
  effects of distance as an inhibiting force in our
  societys ability to realize its economic and
  social aspirations

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ITS ALL ABOUT FINANCE TODAY !

• FINANCE
• FINANCE
• FINANCE
• FINANCE

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• FINANCE

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• A PLAN
• FINANCE

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• VISION
• A PLAN
• FINANCE

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• CREDIBILITY
• VISION
• A PLAN
• FINANCE

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• CREDIBILITY
• VISION
• A PLAN
• FINANCE

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Maybe it was easier then !

• CREDIBILITY
• VISION
• A PLAN
• FINANCE

• MacDonald, Fairbank, Turner
• Toll Roads and Free Roads
• Interregional Hwys 1944 Act
• 1956 Act

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Ike, The Clay Commission and Frank Turner
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1996 HAPPY 40TH
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How did they do that?
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As the Interstate Era Came to a Close

• No new vision emerged
• Nothing with the Interstates Power
• A Rich Funding System without a goal
• 1 1.7 Billion/yr
• RESULT
• Lack of Focus
• Great Expansions of Eligibility
• A Grant Program
• Congressional Earmarks

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Post-Interstate Era Legislation

• THREE 6 YEAR CYCLES
• 1992-ISTEA
• 1998-TEA-21
• 2005-SAFTEA-LU (2 years 11 extensions)
• Next year a new cycle begins
• Will the Congress continue to temporize or will
  it launch a new era?
• THE POST POST INTERSTATE ERA!

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THE NEXT INTERSTATE
Despite 80 increase in VMT -- user costs stable
with 40 lane mile increase
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The Federal Highway Trust Fund becomes insolvent
next year!
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Infrastructure Issues

• A relatively more operable future but
• Immense Backlog
• Retrofitting the System
• Interstate Reconstruction
• Federal Gov - an Unreliable Partner
• No interest in mobility

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THE LEGISLATIVE IMPASSE IS A GUIDE TO THE
FUTURE!

• THE 40 SOLUTION
• FUNDING INADEQUATE IN 2 WAYS
• NEEDS - THE BACKLOG
• DONOR/DONEE HOLD HARMLESS
• CONGRESS/ADMIN. RELUCTANT TO ADD NEW FUEL USER
  FEES
• BUT NOT READY FOR THE POST GAS-TAX ERA
• DEVOLUTION BY DEFAULT SHIFT TO STATE AND LOCAL
  LEADERSHIP
• WANT/NEED PRIVATE ROLE BUT HOW?
• HAVE CREATED A STUDY COMMISSION TO ANSWER THIS
  YEAR

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The grass is always greener on the other horn of
the dilemma
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Context has two elements

• FINANCE
• INADEQUATE FUNDING OF NEEDS
• INFLATION EFFECTS
• FUEL EFFICIENCY
• NEW POWER SOURCES

• POLICY
• MANAGE SYSTEM
• USE MARKET- PLACE SIGNALS
• USE PRIVATE SECTOR
• USE ECONOMIC CONCEPTS

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THE TWO VIEWS IN TOWN

• THE CREEPING
• INCREMENTALISTS
• Where is this all leading?

• THE TABULA RASA SCHOOL OF PUBLIC POLICY
• Isnt it great that we can start over?

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THE CONFLICT

• TR School sees an oppty to get things
  right!
• HOT Lanes
• Leased Facilities
• Tolls Variable Pricing
• System-wide tolling

• CI School sees a lot more proof needed!
• A complement not replacement what ?
• Protect present tax base
• Cash cow-ification of tolling

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A national conflict Colossal issues remain

• What role for tolling?
• Who plans? How?
• How determine new capacity needs?
• Who sets prices? With what intent?
• Who gets the money? For what?
• Dedication vs general revenue
• Solvency of Trust Fund
• What Fed program scale 40-60

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WHY CANT THERE BE AN END TO ALL THIS
KILLIN?WHY CANT THERE BE PEACE IN THE VALLEY?

• Walter Brennan
• in a scene from all of his pictures!

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Tolling

• 1. Toll Roads have a long and effective history
  in America we are in the third wave of toll road
  development today.
• 2. The great strength of the toll road is that
  users pay and non-users dont thus they can
  serve as a high quality, premium service option.
  
• 3. Toll roads can provide a quicker response to
  user needs, with an independent funding path than
  the usual long range programming option.
• 4. The use of private actors can introduce more
  capital into transportation infrastructure than
  might otherwise exist.
• 5. There is a natural three-way virtuous circle
  between toll road operators, their bond-holders
  or other financial backers, and users each
  keeping the others in check.
• 6. Many taxpayers dont like toll roads any
  better than they like gas taxes.

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The Gas Tax

• 1. The gas tax generates a colossal amount of
  money.
• 2. The gas tax currently is diminished by fuel
  efficiency gains, shifts to other fuels, but most
  of all by inflation.
• 3. The public and their elected officials seem
  to have a dramatic aversion to increasing the gas
  tax.
• 3. The gas tax will continue to produce very
  valuable revenues for at least two or three
  decades to come.
• 4. Some adjustment mechanisms like an
  inflation adjustment perhaps a fuel efficiency
  adjustment, could keep the tax going as the
  fundamental highway financial tool for a long
  time.
• 5. To lose the gas tax to have it diverted to
  some other federal/state interest would be a
  disaster of exceptional order for transportation
  not just in revenues but in the potential that
  others would obtain to manipulate ground
  transportation.

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There could be peace in the valley if we agreed

• 1. The gas tax and tolling concepts are
  complementary.
• 2. The basic gas tax approach can
  significantly benefit from greater emphasis on
  tolling where the opportunities exist, often on
  major high level long distance facilities or
  where congestion is most serious.
• 3. Toll roads cannot do it alone. They are a
  very useful supplement in the road system but
  cannot approach meeting the basic needs of the
  system.
• 4. Protecting toll roads revenue from
  diversion is as important as protecting the gas
  tax.
• 5. Mechanisms need to be put in place that
  support the continued effectiveness and strengths
  of these two fundamental revenue sources.

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My financial agendaVision Plan Finance

• Defend the highway trust funds role
• Defend the program from further diffusion of
  goals and funding
• Defend the program from other budget wants
• Assure a supportive, rational tolling policy
• Assure tolls are dedicated to facility
• Assure tolls are revenue tools not social
  engineering and not a general purpose bail-out
  tool that mortgages the future
• Restore confidence in State and Federal Programs
• Not the first time that sound economic theory was
  corrupted by the political process

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Remember The Path to Finance starts at
credibility

• CREDIBILITY
• VISION
• A PLAN
• FINANCE

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The right next stepsCredibility, Vision, Plan,
Finance

• Win public respect and support
• Demonstrate a real dedication to solving
  congestion
• Adopt measurable performance results
• Accept public consumer sovereignty

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THE TIME FOR ACTION IS PAST!
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THE TIME FOR ACTION IS PAST!

• Now
• is the time
• for
• senseless bickering.
• With a thank you to the demotivators

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Thank you

• ALANPISARSKI
• _at_
• ALANPISARSKI.C0M
• 703 941-4257

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The great loss from congestion is not the extra
three minutes it takes to get home

• HOUSEHOLDS
• Its the decline in the number of jobs I could
  reach in ½ hr!
• Its the decline in the number of affordable
  homes accessible to my work!
• Its the decline in the assurance of arriving on
  time!

• BUSINESSES
• Its the decline in the number of workers within
  ½ hr of my employment site!
• Its the decline in the number of suppliers
  customers within ½ hr of my business!
• Its the decline in ship- ment reliability!

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Transportation services should not impede, but
maybe actually abet/enhance, the prospect of that
wealth occurring.
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Location, Amenities, Flexibility

• The increases in services in the economy will
  permit more population to act on location
  preferences as workers and employers are less
  tied to resources and more attracted by
  amenities.
• Areas of the country will compete for workers on
  the basis of life-style, climate, and ease of
  living. Good transportation will be one of the
  competitive amenities.
• Employers will be forced to be more flexible in
  schedules and benefits to attract workers.

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THE COMPETITIVE ENVIRONMENTLocation, Amenities,
Flexibility

• The increases in services in the economy will
  permit more population to act on location
  preferences as workers and employers are less
  tied to resources and more attracted by
  amenities.
• Areas of the country will compete for workers on
  the basis of life-style, climate, and ease of
  living. Good transportation will be one of the
  competitive amenities.
• Employers will be forced to be more flexible in
  schedules and benefits to attract workers.

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A VERY POSITIVE FUTURE

• Problems More Operable Today
• The Resources to Respond are there
• People, Technology, Political Financial
• MUST RECOGNIZE CENTRAL ROLE OF MOBILITY IN OUR
  SOCIETY
• MUST BE WILLING TO ACT TO FOCUS RESOURCES

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The Demographic Story a New Phase in American
Commuting

• The Commuting in America series has been the
  history of the working years of the baby boom
  generation
• The Boomers are now moving off stage creating a
  new phase in American commuting.
• The key will be where will the new workers come
  from?
• Advent of the immigrant workforce will be just
  one of the challenging concerns

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An Affluent Society

• Population growing at 1 and GDP at circa 3
  means that GDP per capita will grow as
  dramatically as the last 50 years.
• The affluence of the emerging society and the
  resulting immense value of time, will drive most
  decisions, including those related to
  transportation.
• Increased value of goods will make similar
  demands on the freight side of the transportation
  system.
• Both passengers and freight will demand and be
  able to pay for high quality, reliable,
  amenity-based, personalized transportation.
• A large segment of society will have the time and
  resources for extensive recreation and leisure
  travel.

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Annual Trips Per Household by Household Income
NHTS 2001
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ratio top 20/middle 20
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WHAT IS CONGESTION ?

• Congestion is
• People with the economic means to act on their
  social and economic interests - getting in the
  way of other people with the means to act on
  theirs!

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MY VISION 3 Trends will define the future

• Replacing the Baby-boomers where will our
  workforce come from?
• Expanding metro areas with focus on the suburbs
  the doughnut metro
• An affluent time-focused society 50/hour and
  tripling of average value of goods moved