Update from the. Montana Infrastructure Coalition. Montana Chamber Annual Meeting Butte, Montana October 26, 2018

Transcription

1 Update from the Montana Infrastructure Coalition Montana Chamber Annual Meeting Butte, Montana October 26, 2018

2 Overview What is the Montana Infrastructure Coalition? How do we define infrastructure? What is the current state of our infrastructure? Why is it important to invest in infrastructure? What tools are available?

3 Background of the Coalition The Montana Infrastructure Coalition was born out of necessity.

4 Current Coalition Membership Over 100 public and private sector associations and individual entities representing engineering, design, construction, finance, operation and maintenance of public infrastructure.

5 Understanding and Call to Action Sound infrastructure provides the foundation for healthy communities and a robust state-wide and regional economy. Yet, Montana s aging infrastructure is approaching a critical state of disrepair. It is time for a systemic change in how we fund critical infrastructure to avoid saddling future generations with the mounting infrastructure funding deficit we see today.

6 Mission The Montana Infrastructure Coalition has been established to provide an inclusive, nonpartisan forum for the objective research and development of sustainable funding solutions for Montana's most pressing infrastructure needs.

7 What is infrastructure? Simply defined Infrastructure includes the tangible facilities and assets that provide the foundation of a healthy community and a vibrant economy.

8 Coalition-Derived List From June 2016 Billings Workshop Domestic drinking water Sanitary Sewer Roads (city and county) Highways (state and federal) Bridges Storm sewer Power Communication Irrigation Solid waste Dams and levies Oil & Gas Airports Schools Parks and recreation Fire hall / police Transit Hospitals Rail Detention/city hall/ libraries Bike/pedestrian facilities Senior living Inland waterways

9 Two basic kinds of Infrastructure: Economic basic facilities that help drive economic development like transportation, clean water, power and communications Social basic facilities and services necessary for human development like schools, hospitals and housing

10 How do we identify critical infrastructure? Where do we start? What are the most basic community needs that must be addressed? The deficit is too large to attempt to address with one solution or in one legislative cycle. How should Montana prioritize investments?

11 How do we define critical infrastructure? Maslow s Hierarchy of Needs: Realizing one s full potential Attributes or activities that give a sense of contribution or value prestige or attention Connectivity, friendship, family, intimacy Personal security, health and well-being Air, water, food, shelter, clothing

12 How do we identify critical infrastructure? Recreational Trails Parks, Transit, Senior Living Fiber Optic Airports, Rail facilities Schools, Libraries, City Hall, Detention Facilities Dams, Irrigation, and Inland Waterways Police, Fire, and Medical Care Power, Communications, Solid Waste Clean water, Sewer, Roads and Bridges

13 Defining the Problem We have a documented deficit in infrastructure investment. The deficit can be defined in terms of both physical and financial needs.

14 How do we articulate the Need? Physical The physical need for infrastructure investment comes from: age of the facilities (routine maintenance), capacity issues in growth areas, and new health and safety standards (new regulatory requirements).

15 How do we articulate the Need? Financial Federal, state and local governments have constructed assets that have continuing financial obligations. Revenues are not keeping up with expenses. Shortfalls are projected across the board.

16 Contributing Factors Federal dollars are not flowing down to state and local governments like they used to

17 Are we investing enough? Our public investment in infrastructure on a national basis is declining relative to GDP

18 When is the right time to invest? Cost of materials and labor continues to increase both in terms of real dollars and in relation to GDP

19 In sum... Why invest? Health and safety Connectivity to markets Short and long-term employment The need doesn t go away, and the cost only increases over time

20 What are the possible approaches? Reduce consumption Find efficiencies Generate new revenue

21 Criticisms: Not all infrastructure investment is created equal. The following are common criticisms: Investment is misallocated politics Infrastructure is utilized inefficiently not balanced with demand Investment is mismanaged little incentive for efficiencies Mistakes are replicated broad federal policies/funding for inappropriate locations Burdensome regulations constantly increasing

22 Coalition Focus The Coalition recognizes the policy and implementation challenges and will participate in those discussions The Coalition will focus on proactive financial tools for longterm, sustainable solutions.

23 What investment tools are available? From June 2016 Billings Workshop Statewide sales tax Local Option sales tax Fuel tax Ending fund balance General Obligation Bonds Vehicle Miles Traveled Coal Severance Tied to TSEP TSEP increase Leveraging local dollars Leverage state match Income tax Cap coal trust Toll roads Vehicle registration fees Public-Private Partnerships (P3) One Time Infusion Bed Tax

24 Local Government Tools: Local government services and infrastructure are heavily reliant upon property tax receipts

25 Concepts for Further Consideration Local Option Infrastructure Tax Statewide Sales Tax Fuel Tax / User Fee Bonds Vehicle Registration Fees Cap the Trust P3 s Audits

26 Overriding Theme: Membership appetite for connecting the cost to the cost causer User fees as opposed to broad taxes Tap the Tourism Economy Provide assistance to areas with declining tax base Give local authority tools to growth areas Understand regulatory burdens DEFEND what s working!

27 2017 Success Story Fuel Tax HB 473 Bridge and Road Safety and Accountability Act (BRSA) $0.045 increase in gas tax in 2017 Increase incrementally to $0.06 by 2023 Approx. $21 million to MDT, remainder to Cities and Counties

28 Fuel Tax: A Case Study Cost to the consumer: The fuel tax is a direct user fee Prices at the pump fluctuate regularly Fuel tax update went into effect July 1, 2017 Price trend follows neighbors and US Average

29 Fuel Tax: A Case Study Fuel tax increase Harvey

30 Fuel tax increase Hurricane Harvey

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32 Fuel Tax: A case study 2017 Partial-Year Revenues : $11.3 million deposited in BaRSAA $6.2 million allocated to local governments 2018 Revenues through June: $13 million deposited in BaRSAA $3.3 million allocated to local governments Go to the ROAD & BRIDGE $ tab on MDT s website for more information. Estimated $24.4 million by 2023

33 Roads and Bridges still a gap? What is the future of the fuel tax? Beyond HB 473, is there still a funding gap? Do we consider VMT in the future? What about other licensing or user fees? Need to defend the fuel tax from raids.

34 Local Option Infrastructure Tax Intent: Provide local citizens the opportunity to decide for themselves whether to adopt essential new tools to address critical infrastructure needs and provide property tax relief. Specific Elements A maximum of 4% tax on narrowly defined luxury items to capture impacts from tourism An automatic sunset / reauthorization schedule Property tax relief for Class 4 property owners, by rebating a minimum of 25% of the revenue generated from the tax Revenue to be expended only on water, wastewater, stormwater, road and bridge projects within the taxing jurisdiction

35 Local Option Implications... versus Local option should consider impacts to outlying rural areas within market area (revenue sharing?) Should consider taxing disparity between online and brick-and-mortar (consumer use tax?) Regressive tax impacts? How do we define luxury? Should we be considering a statewide sales tax?

36 Public Private Partnerships (P3s) The Basics: Public-Private Partnerships (P3s) are contractual arrangements between public agencies and the private sector to provide infrastructure for the public 32 states have some form of public-private partnerships in place. In most every case, the private sector is responsible for the project design and construction while the public sector maintains its traditional role of identifying the infrastructure need, arranging the financing terms, and owning, operating and maintaining the final asset after construction is complete.

37 Cap the Coal Trust Trust currently exceeds $1 billion Constitutionally established for future generations Only tapping interest today Proposal to divert new severance tax revenues to back bonds Potential to create a $300 million bonding capacity beyond existing (Also need to protect/enhance TSEP funding)

38 Bonding Bonding bills have failed to pass the Legislature or the Governor s office for the past three cycles (six years) Hopefully moved beyond the cash versus bond debate and recognize that bonding is a legitimate tool Still need to distinguish between critical infrastructure and lower-priority/higher-cost projects Need to spur broader discussion about how to fund other infrastructure needs

39 Next Steps: Renew your membership or join the Coalition Participate in upcoming all-member meeting to identify 2019 legislative priorities Help advance the discussion around responsible infrastructure investment

40 Tell your story... Share your local project needs with the Infrastructure Coalition Share your success stories (newly funded projects, creative approaches) Share your funding and regulatory challenges The Coalition will coordinate and push those stories on social media

41 Contact Info: mtinfrastructure.org