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 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) 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 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 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 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 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. 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 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! 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 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 nation’s needed funding for highways. 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 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 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. Addressing Federal Funding Shortfall a KEY Issue for NCSL • NCSL’s 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 State’s interest • A federal user fee increase will be politically difficult. Removal of embarrassments and diversions key to garnering strong bipartisan support. Leadership Needed • We need a minimum of 4 elected official leaders from NCSL to champion the federal reauthorization in 2009. • Volunteers? • THANK YOU!!!