Creating America's Future Transportation System - continued...
Future Funding
How to Increase Transportation Revenue
Investing in transportation is unlike any other federal government spending. In the short-term, enactment of an economic recovery bill can use transportation infrastructure investment to create and sustain thousands of family-wage jobs, in every part of the country, building “Made-in-America” infrastructure. In the long term, transportation dollars are converted to physical assets that will last 50 to 100 years to provide future generations with a modern, globally competitive system. At the same time, such investments can help sustain economic recovery, reduce congestion, and save lives.
What Is Needed
Surface transportation infrastructure investment must be substantially increased. According to the National Surface Transportation Policy and Revenue Study Commission 2008 Report, Transportation for Tomorrow, today the country is investing at less than 40 percent of what is needed. That report estimates that an investment of at least $225 billion per year is required for the next four decades in highways, transit, and rail to meet our national needs.
The Commission concluded that the only way investment could be increased to the levels needed is for all levels of government—federal, state and local—to continue to fund their historic shares. Over the past 20 years, the federal share of highway and transit capital investment has averaged 45 percent.
Three Steps to Investment
- Congress recognized the critical nature of this investment and took the first step by transferring $8 billion to the Highway Trust Fund to ensure its solvency. It will need to ensure that this funding is sufficient to carry us through fiscal year 2009 and take further action if funding again falls short.
- The next major step is to increase federal transportation revenues enough to restore the purchasing power of current highway and transit programs, which has steadily eroded in the 15 years since the last revenue adjustment.
- In the longer term, we must prepare to transition transportation revenue collection methods to alternatives capable of sustaining funding for the system for years to come.
The Immediate Federal Funding Crisis
Today federal transportation funding faces two crises:
HIGHWAY TRUST FUND INSOLVENCY
Spending from the Highway Trust Fund has exceeded the levels of revenue flowing into it. In September 2008, Congress transferred $8 billion back into the Trust Fund from the General Fund to enable U.S. DOT to honor the commitments made to states under the current highway and transit authorization (SAFETEA-LU) through October 2009.
By October 1, 2009, or just before, Congress will again have to provide interim funding to simply sustain current investment levels. Otherwise, based on current revenue projections, the highway program will face a cutback of $20 billion or more for FY 2010. The transit program will face similar drastic reductions one year later in FY 2011, unless additional revenue is provided.
Highway and Transit Programs, 2010–2015
Without Revenue Increase:
SKYROCKETING CONSTRUCTION COSTS
In addition to years of inflation, from 2004 to 2008 construction prices soared for steel, concrete, asphalt, and construction machinery. It is estimated that between 1993, the year in which federal fuel taxes were last adjusted, and 2015, construction costs will have increased by more than 80 percent.
To restore the purchasing power of the program to that of 1993, federal highway funding will have to be increased from $43 billion in 2009 to $75 billion by 2015, and federal transit funding would have to be increased from $10.3 billion in 2009 to $18.5 billion in 2015.
Purchasing Power of Transportation Dollars
Down 80 Percent:
Addressing Freight and Passenger Rail Investment
Surface transportation investment must also address the needs of the national freight network and intercity passenger rail.
Freight Funding Needed to Meet Capacity Crisis
The nation is entering the early stages of a freight transportation capacity crisis. Truck volumes are expected to double by 2035 and rail freight to increase by 60 percent. Highways, railroads, ports, waterways, and airports all require investment well beyond current levels to maintain, much less improve, their performance.
Investment is needed to fix freight bottlenecks, improve intermodal connections, build bridges to eliminate unsafe highway-rail crossings, and fund freight corridor improvements. AASHTO recommends that a freight program be funded at $42 billion per year, from resources outside the Highway Trust Fund.
Intercity Passenger Rail Network Overdue
AASHTO believes we are overdue for the United States to provide a robust intercity passenger rail network that provides competitive, reliable, and frequent passenger service, comparable to world-class systems in other countries. Current service should be brought up to a good state of repair. Ultimately service should expand to include high-speed rail corridors, regional corridors, and long-distance service. Federal funding of $35 billion over six years is needed to begin the capital investment required.
AASHTO Urges $545 Billion Investment
A Menu of Federal Revenue Options for Surface Transportation
There are several options to accomplish the dual objectives of sustaining the program at the levels currently authorized and then restoring the program’s purchasing power.
Listed on the next page are illustrative examples of revenue sources which together come to $1 trillion. It will be up to Congress to choose from these, and possibly other options, to generate revenues sufficient to fund the $545 billion program total recommended.
State and Local Governments
Must Also Invest
If the United States is to make the substantial increase in investment needed, state and local governments must do their part as well. The good news is that they have delivered increases at this scale before. In the 24-year period between 1981 and 2005, state and local governments increased their highway capital investment from $8 billion to $42 billion, an increase of over 400 percent. During the period between 1990 and 2005, state funding for transit increased by over 250 percent from $3.7 billion to $9.5 billion.
Tolls and Public–Private
Partnerships Can Play a Role
Toll-generated revenues nationally came to $7.75 billion in 2005, which represented about 5 percent of total highway revenues that year. Over the past 10 years, 30 percent to 40 percent of the new highway arterial capacity added in the United States has been financed through tolls. AASHTO believes this percentage could rise to as much as 50 percent in fast-growing urban states in the years ahead.
AASHTO believes every state should be given all options possible in the areas of tolling and public–private partnerships, so those states can determine for themselves what is in the best interests of their citizens. However, two key points need to be recognized: first, tolls are rarely an option other than in fast-growing metropolitan areas with high-traffic volumes; and second, toll revenues can, in no way, substitute for the highway and transit funding assistance needed from the federal government.
Focusing on Metropolitan Mobility and Congestion Reduction
Since the 1950s, the number of people living in metropolitan areas in this country has nearly tripled, growing from 85 million to 225 million. Over the next 50 years, another 125 million will be added. Keeping pace with the transportation needs of this growing population and their expanding economies has become an overwhelming challenge. The result is increased hours on the road, and decreased time with our families.
Metropolitan congestion is bad and getting worse as demand has outdistanced capacity. The federal government has a stake in helping metropolitan regions solve the congestion problems through improvements in highway system performance and capacity; transit and, in many areas, expansion of intercity passenger rail service. Congestion relief and system reliability should be a major focus of authorization.
To provide solutions for metropolitan mobility, AASHTO is proposing three strategies:
- Add more capacity to highways, transit, and intercity rail;
- Operate the system more efficiently; and
- Encourage travel and land use patterns that use the system in better ways.
Expand Capacity by Increasing Investment in Metropolitan Mobility
HIGHWAYS. A new, outcome-focused Transportation System Improvement and Congestion Reduction Program, to replace the current Surface Transportation Progrm, could measurably improve system performance and reduce congestion. Funding of approximate $12 billion annually for metropolitan areas and congestion relief projects will be made possible by increasing the overall highway program to $75 billion by 2015. These dollars should be systematically programmed by states and metropolitan planning organizations to meet community needs.
TRANSIT. Transit demand is steadily increasing and current systems are hard-pressed to keep pace. Transit ridership should double over the next 20 years. To begin to add the capacity needed to bring this about, AASHTO recommends that federal transit assistance increase by 80 percent by 2015 to $18.5 billion per year.
INTERCITY PASSENGER RAIL. The time has come for the United States to provide an intercity passenger rail network that provides competitive, reliable, and frequent passenger service, comparable to world-class systems in other countries. Current service should be brought up to a good state of repair. Ultimately service should expand to include high-speed rail corridors, regional corridors, and long-distance service. Federal funding of $35 billion over six years is needed to begin the capital investment required.
Operate the System More Efficiently
To provide low-cost, quick-turnaround relief for congestion, a new $3 billion core Operations and Management Program should be created to enhance travel reliability, reduce delay and improve overall system performance. Eligible activities would include incident management; emergency response; signal synchronization; intersection and street improvements; lane markings, and traveler information systems. States should be encouraged to program Operations and Management funds for low-cost, rapid deployment projects designed to reduce delay and improve reliability.
Encourage Travel and Land Use
Patterns that Use the System in
Better Ways
AASHTO supports policies and investments which encourage more trips to be taken by transit, by bike, or on foot, rather than by car. AASHTO also wants to see better coordination of transportation and land use policies between state DOTs and local governments. Transforming the current Transportation, Community, and System Preservation Program (TCSP) into a Transportation and Land Use Program, and funding it at $100 million per year can help provide land use technical assistance to counties and cities.
Intercity Passenger Rail Network Needed
It is time for the United States to provide a robust intercity passenger network that provides competitive, reliable and frequent passenger service, comparable to world-class systems in other countries. Passage of the Passenger Rail Investment and Improvement Act reauthorizing AMTRAK and providing much needed authorization for state DOTs to invest in intercity passenger rail infrastructure projects was a critical step forward.
The next two essential steps are passing a national rail policy and funding an intercity rail capital improvement program.
National Rail Policy:
A National Rail Policy should be enacted which provides a national intercity passenger rail system which includes:
- High-Speed Rail Corridors (110 mph and above)—Corridors under 500 miles with travel demand, population density and congestion on competing modes warrant high-speed rail service.
- Regional Corridors (79–110 mph)—Corridors under 500 miles, with frequent, reliable service competing successfully with auto and air travel.
- Long-Distance Service—Corridors greater than 500 miles in order to provide basic connectivity and a balanced national transportation system.
Capital Funding:
Congress should create an Intercity Passenger Rail Account, funded at $35 billion over six years from a diversified portfolio of new revenue, to provide dedicated, guaranteed funding (with budgetary treatment identical to the highway account, including firewalls, guaranteed spending and contract authority) to states to meet their needs for capital improvements.
Congress should:
- Authorize at least $5 billion annually for a state capital grant program for equipment and infrastructure projects;
- Provide $13 billion from General Fund Revenues to Amtrak for capital infrastructure improvements to bring the Northeast Corridor up to a state of good repair; and
- Authorize a High-Speed Rail Grade Crossing Elimination Program at $55 million per year ($5 million per federally-designated corridor).
AASHTO supports federal tax credits for freight rail infrastructure improvements with a clearly defined public benefit such as intercity passenger rail.
Addressing Transportation and Climate Change
Transportation accounts for 33 percent of greenhouse gas emissions in the United States, and transportation must be part of the solution to global climate change.Both federal climate change legislation and surface transportation authorizing legislation can help address this important issue.
Technological Breakthroughs
The greatest potential for greenhouse gas emission reductions may come from CAFÉ standards which require better vehicle fuel efficiency, and advances in technology such as plug-in electric hybrids or hydrogen fuel cell-powered vehicles with zero emissions. Comprehensive climate change legislation should include a major national research and development initiative—similar to the space program—to transition the entire transportation vehicle fleet to zero-carbon fuels. Such technological breakthroughs can help not only the United States, but countries around the world achieve greenhouse gas reductions.
Improved Operations
Improved operation of our highway system through the new $3 billion annual Operations and Management Program can help to improve mobility while reducing GHG emissions. Emissions are highest, on a per-mile basis, when vehicles are sitting in traffic congestion, or at stop-and-go speeds. Congress also should provide increased support for “intelligent vehicle” initiatives, which will complement efforts to communicate real-time traffic information directly to individual vehicles, and improve the flow of traffic.
