Road Users Perspectives on Highway Funding

1
Road Users Perspectives on Highway Funding

• Greg Cohen
• President and CEO
• American Highway Users Alliance
• Founding Member, Americans for A Strong National
  Highway Network Coalition

2
Americans for a Strong National Highway Network

• AAA
• American Highway Users Alliance
• American Motorcyclist Association
• American Trucking Associations
• Owner-Operator Indep. Drivers Assn.
• Recreational Vehicle Industry Assn.
• NATSO (truck stops and travel plazas)

3
About The Highway Users

• National federal of 270 associations and
  businesses including AAA clubs, bus companies,
  truckers, motorcyclists, and a variety of
  industries that rely on safe and efficient roads
  for personal or business needs.
• Many states have State Highway Users federations
  or Better Transportation groups who are our
  affiliates

4
Our Highways Have Reached A Mid-Life Crisis

• The problem is bigger than 70,000 bridges
• Unsafe roads a contributing cause in 40 deaths
  per day
• 4 new highway capacity since 1980, despite more
  than 100 travel growth
• Under investment by all levels of government in
  capital improvements.
• 70B in annual investment, despite 78B cost to
  maintain, and 131B cost to improve

5
Special Federal Problems

• No gas tax increase since 1993 (18.4/24.4 cents)
• 2005 Bridges to Nowhere debacle
• Trust fund cash reserves being fully spent
• Bankruptcy and funding cuts projected for 2009

6
Funding Options

• User fee increases or new user fees
• Bonding against future revenue
• Devolution of program to States
• Loosening Rules for more traditional tolling or
  pricing
• PPPs

7
Highway Users Will Pay Under All Options

• Fuel taxes are broadly applied and well
  distributed among all drivers
• Bonds require guaranteed future revenue streams
  and push the problem to the next generation.
  Easiest politically.
• Devolution removes federal funding, leadership,
  and national consistencies in road quality.
  States unprepared.

8
Highway Users Will Pay Under All Options

• Tolling and pricing existing free roads means a
  small segment of road users pay while others do
  not. Particularly regressive approach for middle
  class and working class drivers.
• Most PPPs rely on tolls that rise faster than
  traditional toll roads

9
Broad User Fees Are Fairest Approach

• But politically difficult approach with
  caution, bipartisanship, and prepare your
  constituencies well in advance!
• What makes a user fee and why does it gain more
  support than a tax.
• User fee programs are transparent
• Users must fully benefit from their fees no
  diversions!
• More than 90 of Americans support a gas tax if
  the money is spent exclusively on roads and
  bridges (Andres McKenna survey 2002)
• A true user fee is the right response to bridges
  falling down and the motoring public can
  understand that!

10
Garnering Support from Motorists for higher user
fees

• Bipartisan leadership must be above politics
• No embarrassing projects earmarked
• No diversions of user fees from bridges and roads
• Key support from user groups state highway
  users federation, AAA clubs, taxpayer groups,
  trucking companies and drivers, business
  community tourism, restaurants, manufacturers,
  etc.
• Our support will work for you in the press and
  with your colleagues

11
Toll Roads and PPPs

• Traditionally, publicly owned toll roads with
  political oversight are designed to maximize
  public benefits and minimize costs.
• Under private leasing, the goal is to maximize
  profit and minimize competition.
• Yet both traditional toll roads and PPPs can be
  reasonable approaches for NEW road construction.
• According to AASHTO, the most aggressive tolling
  efforts would only provide 5 of the nations
  needed funding for highways.

12
Toll Roads and PPPs (continued)

• What makes a good toll road or PPP project?
• New construction / benefits to those paying
• For public toll road, all toll money can be used
  to pay for the construction (no diversion)
• For private owners/leasers, assumption of risk
  may yield rewards (or it may not)
• Diverse community of local, regional, and
  interstate road users must be actively in
  support, particularly for a PPP project
• Reasonable anti-gouging provisions through toll
  increase caps significantly below inflation and
  profit caps.
• Keep leases short - no more than 20 years to
  incentivize leaser to work toward lease renewal
• High maintenance, congestion, and safety standards

13
The Case Against Leasing Existing Road Capacity

• Leasing existing public road capacity does not
  usually meet the public interest test because
• Financial mission must change from maximizing
  public benefit to maximizing allowable profit
• Toll increases more aggressive than they would be
  under public structure
• An existing base of motorists will be essentially
  forced to patronize the private road (esp. under
  non-compete)
• Like many toll roads, the pricing will likely be
  discriminatory against certain road users.
• A trend of leased roads will result in a pre-1956
  quilt of roads rather than the current National
  Highway System -- pitting State against State
  with aggressive pricing of outsiders

14
Diversion More Tempting with Leasing

• Unlike traditional user fees and tolls, leasing
  (and bonding) allows a State or City to receive
  cash up front.
• In the case of Chicago, the cash was nearly
  completely diverted from transportation
• In the case of Indiana, the cash is currently
  being spent on roads
• The defunct proposal in New Jersey involved
  diversion of funds to non-road purposes
• This problem already exists with gas taxes but
  the temptation to appropriate is greater under
  leases because of the sudden influx of cash.

15
Addressing Federal Funding Shortfall a KEY Issue
for NCSL

• NCSLs Transportation Committee has taken a
  courageous step in calling for a federal user fee
  increase.
• As we have in the past, we want to work with you
  and other key groups (NGA, League of Cities,
  Conf. of Mayors, etc) to press Congress.
• Without a strong federal program, the financial
  problems facing the States will be many times
  greater.
• A strong, national response to aging
  infrastructure, safety, congestion, and
  interstate freight mobility is in every States
  interest
• A federal user fee increase will be politically
  difficult. Removal of embarrassments and
  diversions key to garnering strong bipartisan
  support.

16
Leadership Needed

• We need a minimum of 4 elected official leaders
  from NCSL to champion the federal reauthorization
  in 2009.
• Volunteers?
• THANK YOU!!!