Status of Federal Transportation. Joung Lee Policy Director, American Association of State Highway & Transportation Officials (AASHTO) Programs

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2 Agenda Status of Federal Transportation Programs - Joung Lee, Policy Director, AASHTO Impact of Federal Uncertainty - John Schroer, Commissioner, Tennessee Department of Transportation South Dakota Transportation Funding - Sen. Mike Vehle (R-SD), Transportation Cmte. Chairman Vermont Transportation Funding - Rep. Diane Lanpher (D-VT) Your Questions

3 Status of Federal Transportation Joung Lee Policy Director, American Association of State Highway & Transportation Officials (AASHTO) Programs

4 TUESDAY 21 APRIL 2015 STATUS OF FEDERAL TRANSPORTATION PROGRAM, STATE IMPACTS, AND ACTIVITIES COUNCIL OF STATE GOVERNMENTS MAP-21 REAUTHORIZATION Highway Trust Fund and Impact for States Joung H. Lee Policy Director American Association of State Highway and Transportation Officials T R A N S P O R T A T I O N. O R G 4

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6 GAS TAX HEADWIND: SIGNIFICANT LOSS OF PURCHASING POWER Sample of Nominal Prices Relative to Federal Gas Tax, 1993 and 2010 ITEM UNIT/DESCRIPTION PERCENT CHANGE College Tuition Average Tuition and Required Fees $ 3,517 $ 9, % Gas Per Gallon $ 1.12 $ % Movie Ticket Average Ticket Price $ 4.14 $ % House Median Price $ 126,500 $ 221,800 75% Bread Per Pound $ 1.08 $ % Income Median Household $ 31,272 $ 49,167 57% Stamp One First-class Stamp $ 0.29 $ % Beef Per Pound of Ground Beef $ 1.57 $ % Car Average New Car $ 19,200 $ 26,850 40% Federal Gas Tax Per Gallon $ $ % Sources: U.S. Census Bureau, U.S. Department of Transportation, U.S. Postal Service, U.S.Department of Commerce, U.S. Department of Education, National Association of Theater Owners T R A N S P O R T A T I O N. O R G 6

7 (Year of Expenditure Dollars in Billions) HIGHWAY TRUST FUND: DISCREPANCIES IN RECEIPTS AND OUTLAYS T R A N S P O R T A T I O N. O R G Total HTF Outlays Total HTF Receipts Minus GF Transfers 7

8 CASH TRANSFERS FROM GENERAL FUND HAVE AVOIDED HIGHWAY TRUST FUND FISCAL CLIFF Sep 2008: $8 billion General Fund transfer to HTF Aug 2009: $7 billion General Fund transfer to HTF Mar 2010: $19.5 billion General Fund transfer to HTF July 2012: $2.4 billion Leaking Underground Storage Tank Trust Fund transfer to HTF* Nov 2012: $5.9 billion General Fund transfer to HTF** Oct 2013: $11.7 billion General Fund transfer to HTF** Aug 2014: $9.765 billion General Fund transfer to HTF Aug 2014: $1 billion Leaking Underground Storage Tank Trust Fund transfer to HTF* Total General Fund transfers to Highway Trust Fund: $61.9 billion since 2008 ($65.3 billion inclusive of LUST transfers) T R A N S P O R T A T I O N. O R G * This is not a transfer from General Fund as a portion of HTF receipts are normally deposited into Leaking Underground Storage Tank Trust Fund. ** Amount transferred after budgetary sequester. 8

9 Dollars in Billions 45 ESTIMATED FEDERAL HIGHWAY TRUST FUND OBLIGATIONS Highway Highway Safety Transit For illustrative purposes, this scenario assumes an additional deposit of $4.4 billion into the Highway Trust Fund in FY 2015 ($3.7 billion to Highway Account; $0.7 billion to Mass Transit Account) and maintenance of a minimum prudence balance of $4 billion for the Highway Account and $1 billion for the Mass Transit Account American Association of State Highway and Transportation Officials. All Rights Reserved.

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13 CURRENT CHALLENGES FACING FEDERAL SURFACE TRANSPORTATION FUNDING Infographic available at T R A N S P O R T A T I O N. O R G 13

14 EXAMPLE OF PROJECT DELAYS IN STATES DUE TO FEDERAL FUNDING UNCERTAINTY Georgia o 329 projects worth $715 million Wyoming o 18 projects worth $29 million Arkansas o 8 projects worth $57 million Tennessee o 33 projects worth $400 million T R A N S P O R T A T I O N. O R G 14

15 RECENT STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE) Raising fuel taxes: California, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, South Carolina, South Dakota, Utah, Vermont, Wisconsin, Wyoming Directing gas tax proceeds to direct transportation uses: Indiana Reducing gas tax, but increasing other taxes for a net increase for transportation: Pennsylvania, South Carolina, Virginia T R A N S P O R T A T I O N. O R G 15

16 RECENT STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE) General purpose funds toward transportation: Arkansas, Georgia, Idaho, Iowa, Michigan, Minnesota, Oregon, Pennsylvania, Texas, Virginia, Washington Sales taxes on fuel, or other variable taxes/fees: District of Columbia, Georgia, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Pennsylvania, Puerto Rico, South Carolina, South Dakota, Texas, Utah, Virginia, West Virginia, Wisconsin Vehicle registration fees: California, Idaho, Illinois, Michigan, Pennsylvania, South Dakota, Virginia, West Virginia, Wisconsin T R A N S P O R T A T I O N. O R G 16

17 STATE TRANSPORTATION REVENUE DISCUSSIONS (SUCCESSFUL STATES IN UNDERLINE) Vehicle Miles Traveled (VMT) Fee: Oregon Framework to study a VMT fee: Arizona, Florida, Nevada, Washington, West Virginia, Wisconsin Special fees or taxes for electric or alternative fuel vehicles: Arizona, Georgia, Michigan, South Dakota, Virginia, Washington T R A N S P O R T A T I O N. O R G Source: National Conference of State Legislatures. 17

18 STATE REVENUE ACTIONS SUPPLEMENT FEDERAL PROGRAM Devolution would mean: o Significant state fuel tax increases to simply stand still o Removing one of three funding legs from the stool o Removing the critical federal role in interstate commerce o Compromising the ability to meet national defense, emergency, and security needs T R A N S P O R T A T I O N. O R G 18

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20 RECENT MILESTONES AND FUTURE DECISION POINTS Oct 1, 2014: MAP-21 extension begins Dec 16, 2014: Continuing Resolution/Omnibus Appropriations for FY 2015 enacted February 2, 2015: President s budget for FY 2016 includes updated GROW AMERICA proposal March 5, 2015: House passes the Passenger Rail Reform and Investment Act of 2015 (PRRIA) Spring 2015: House and Senate developing air, surface, and passenger reauthorization proposals May 31, 2015: MAP-21 extension expires Summer 2015: Highway Trust Fund insolvency expected Fall 2015: Debt ceiling measure needed T R A N S P O R T A T I O N. O R G 20

21 REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS April 2015: Rep. Jim Renacci (R-OH), Bill Pascrell (D-NJ), Reid Ribble (R-WI), Dan Lipinski (D-IL) o Index fuel taxes to inflation starting in January 2016; bicameral transportation commission to provide recommendation by December 2016; if no action, fuel taxes will rise to meet HTF outlays February 2015: Rep. Earl Blumenauer (D-OR) o Raise fuel taxes by 15 cents over three years and index; set up a road usage fee pilot program to succeed motor fuel taxes February 2015: The Obama Administration o Raise $268 billion in revenue from a 14 percent one-time tax on previously untaxed foreign income; deposit $238 billion to Transportation Trust Fund as part of the six-year GROW AMERICA Act T R A N S P O R T A T I O N. O R G 21

22 REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS January 2015: Sen. Barbara Boxer (D-CA) and Sen. Rand Paul (R-KY) o Invest in Transportation Act of 2015 allows voluntary repatriation of foreign earnings by US corporations earned in 2015 or earlier at a rate of 6.5 percent; revenues would be deposited into the Highway Trust Fund January 2015: Rep. John Delaney (D-MD) and Rep. Richard Hanna (R-NY) o o Infrastructure 2.0 Act generates $170 billion in revenue from one-time 8.75 percent existing overseas profits accumulated by US corporations Provides $120 billion to HTF to support a six-year bill; $50 billion to capitalize American Infrastructure Fund T R A N S P O R T A T I O N. O R G 22

23 REVIEW OF CURRENT FEDERAL PROGRAM FUNDING PROPOSALS July 2014: Senate Finance Committee and House Ways and Means Committee o $10.8 billion Short-term Highway Trust Fund patch using pension smoothing, customs duties, mortgage reporting, clarification of statute of limitations on basis overstatement, 100% continuous levy on Medicare providers, and other offsets June 2014: Sen. Corker (R-TN) and Sen. Murphy (D-CT) o Increase gas tax by 12 cents per gallon and provide offsetting tax relief June 2014: Rep. DeFazio (D-OR) o Eliminate federal gas tax; implement per barrel tax on oil up to $6.75 T R A N S P O R T A T I O N. O R G 23

24 MAP-21 REAUTHORIZATION Highway Trust Fund and Impact for States Joung H. Lee Policy Director American Association of State Highway and Transportation Officials T R A N S P O R T A T I O N. O R G 24

25 Impact of Federal Uncertainty on State DOTs John Schroer Commissioner, Tennessee Department of Transportation CSG Transportation Public Policy Committee Vice Chair

26 South Dakota Transportation Funding Package (2015) Sen. Mike Vehle (R-SD) Senate Transportation Committee Chairman CSG Transportation Public Policy Committee Co-Chair

27 CSG WEBINAR: TRANSPORTATION FINANCE South Dakota Needs and Funding Challenges and Successes April 21, 2015

28 28 Road to Success Bipartisan Roads and Funding Task Force Alliance of interest groups Roads are Vital Coalition Governor and SD Dept. of Transportation Take it on the road Rotary, Lions, media outlets, etc.

29 29 Roads are Vital Coalition Membership AAA of South Dakota American Petroleum Institute SD Agri-Business Association SD Association of Cooperatives SD Grain & Feed Association SD Cattlemen s Association SD Wheat Association SD Engineering Society SD Auto Dealers Association Rapid City Chamber of Commerce Sioux Falls Chamber of commerce SD Ready Mixed Concrete Association Absolutely Aberdeen! Associated General Contractors of South Dakota Highway Heavy Utilities Chapter SD Trucking Association Associated General Contractors of South Dakota Building Chapter SD Municipal League Sioux Falls Contractors Association SD Chamber of Commerce and Industry Land Improvement Contractors of SD SD Association of County Commissioners SD Association of Towns and Townships SD Asphalt Paving Association American Council of Engineering Companies SD Association of Concrete Paving Portland Concrete Paving Association

30 Highway Needs Interim Committee $55 Billion worth of goods shipped to and from SD sites each year Provide vital support to SD s economy and top two industries Ag and Tourism Deteriorating current and future road conditions Rapid increases in road infrastructure costs Federal Highway Trust Fund solvency issues and uncertainty surrounding future funding TRIP (a national transportation research group) estimates that driving on roads in need of repair costs SD motorists $206 million a year in extra vehicle operating and repair costs - $339 per motorist. 5 Pierre Task Force Meeting Days, 6 Regional Meetings, 120 Testifiers (Yankton, Sioux Falls, Watertown, Aberdeen, Belle Fourche, Rapid City)

31 31 Functional Classification Mileage All South Dakota Jurisdictions Approximately 83,650 Miles State Highways Approximately 8,850 Miles

32 32 CY 2013 Miles of Travel By Jurisdiction Total VMT = billion Heavy Truck VMT = billion

33 33 Registration per Year by Vehicle Type Year Passenger Pickup/ SUV/ Van Trailer Motorcycle Moped, ATV Rec Vehicle (Motorhome) Commercial Non- Commercial Gross Weight Trucks Total Registrations , , ,503 75,669 10,528 40,996 33,372 1,193, , , ,166 73,310 10,485 40,229 32,903 1,173, , , ,053 69,660 10,590 39,375 33,455 1,156, , , ,841 65,686 10,767 38,774 32,696 1,134, , , ,658 62,735 10,603 38,468 33,163 1,117, , , ,108 58,508 10,459 40,268 31,148 1,094,112 Notes: -Passenger column includes cars only -Trailer column includes all trailers and pull campers -Rec Vehicle is a recreational vehicle with an engine -Non-commercial gross weight trucks is ag vehicles Number of hybrid and electric cars titled and licensed: -Hybrid vehicles: Electric vehicles: 203

34 34 Revenue: The 6 Legged Stool FY 2013 Federal Funding (18.4 cpg gasoline & 24.4 cpg diesel) $275.5 million County Wheel Tax $11.9 million Vehicle License Fees $96.5 million State Motor Fuel Tax (22 cpg) $131.2 million Vehicle Excise Tax (3%) $73.6 million County & Township Property Taxes Est. $81.6 million

35 Source: FHWA Est. as of 11/28/15 35

36 Cents per gallon 36 SD Gas Tax Purchasing Power Calendar Year

37 37 Size of State Highway System Compared to Number of DOT Personnel

38 Roadway Maintenance Cost Per Mile 38

39 39 Current and Future State Pavement Condition 2014 Condition 2024 Projected Condition (Poor indicates it needs to be dug up and rebuilt at $1.4 million a two-lane mile)

40 GOAL Dashboard Indicator 40

41 $85M (pavement) + $16M (bridges) = $101 M $22M (expansion) + $20M (safety) = $42 M 41 State Highway Funding Needs

42 42 Pavement Maintenance Costs $2, $2, $1, $1, $ $- Excellent Good Fair Poor

43 Future Pavement Conditions 43

44 44 57 County Self-Assessed Surveys Overall Condition of Paved Roads: 4.86 of 10 Overall Condition of Gravel Roads: 6.2 of 10 In addition, federally mandated bridge inspections show 28% of county structures are structurally deficient.

45 45 Bridge Needs Structurally Deficient, 28% Structurally Deficient - an indicator of when certain elements of a bridge need replacement or repair Functionally Obsolete - substandard feature within a structure relative to its design

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47 47 County Bridge Needs 1045 Structures to be replaced Average cost of $230,000 $240,350,000 to replace Current bridge construction money for 2014 is $5.9 million 26 bridges could be replaced yearly Equates to 2.5% of deficient bridges 47

48 48 Road and Bridge Needs vs. Revenue Annual Needs Determined SB1 Estimated Revenue State $143.2 M* County $84.6 M Township $30.5 M Subtotal $258.3 M Plus Additional County Bridge Replacement Needs $22.4 M Total $280.7 M State Local Total $68.45 M $19.80 M** $88.25 M **Local Gov Options ability to raise additional $85 M in Wheel and Property Taxes *Represents a state road condition less than current state road condition 48

49 49 SB1: Comprehensive Solution Sections Revenue Source and Explanation 1-2 Local Bridge Improvement Grant Fund 3 County Highway and Bridge Improvement Plan (Annually Updated) 4 Annually Allocates $7 million of Motor Vehicle Registration Fees to the Bridge Grant Fund 5-6 Motor Vehicle Excise Tax (1% increase, from 3% to 4%) 7-8 Motor Fuel Tax (6 cents per gallon increase) 9 Ethyl Alcohol and Methyl Alcohol (6 cents per gallon increase) Biodiesel and Biodiesel Blends (move incentive from Session Laws to Codified Laws) Motor Vehicle Registration Fees (20% increase) 16 Noncommercial Motor Vehicle Registration Fees (over 10 Ton - Assessed 70%/80% of Commercial Rate) Property Taxation - amend SDCL (graduated levies $1.20, $.90, & $.60 per thousand dollars of taxable valuation) Township Capital Outlay Levy ($.50 per thousand dollars of taxable valuation) 24 Wheel Tax ($1.00 increase per wheel) 24 Wheel Tax (provides additional wheels to be taxed - maximum of 12 wheels) 25 Move speed limit on interstate from 75 mph to 80 mph Repeal the Provisions regarding an Inventory Tax on Motor Fuel when the Rate is Adjusted 30 Emergency Clause

50 50 Regional Comparison Montana Excise Tax: 0%-7%* Gas Tax: 27 cpg License Fee: $1,046 North Dakota Excise Tax: 5% Gas Tax: 23 cpg License Fee: $142 Minnesota Excise Tax: 6.5% Gas Tax: 28.5 cpg License Fee: $366 Wyoming Excise Tax: 4%-7%* Gas Tax: 23 cpg License Fee: $570 South Dakota Excise Tax: 3% Gas Tax: 22 cpg License Fee: $92 Nebraska Excise Tax: 5.5% + local tax Gas Tax: 25.6 cpg License Fee: $519 Iowa Excise Tax: 5% Gas Tax: 31 cpg License Fee: $320 *Varies by county **Gas tax is straight gasoline; does not include other fees such as tank inspection or cleanup fees ***License fee based on 2013 Ford F150, 12 month registration for standard plates, 5,000 lbs, and $30,000 MSRP.

51 51 If you got it, a road brought it. Not much is parachuted in! 51

52 Vermont Gas Tax Increase (2013) Rep. Diane Lanpher (D- VT) CSG Transportation Public Policy Committee Co-Chair

53 Vermont Rep. Diane Lanpher April 21, 2015 Vermont s 2013 transportation funding

54 Vermont Transportation Funding Funding Challenge Gasoline consumption and revenue in Vermont have been in decline since By 2012, the state transportation fund was unable to fully match federal funds. The State faced the risk of having to return up $56 million in federal funds. The Vermont Legislature appointed a study committee to examine the issue. The committee consisted of legislators, and municipal and state transportation stakeholders. The study concluded that Vermont faced an annual $240 million gap, from a base budget of approximately $550 million, to maintain its highway, transit, rail, and aviation systems in a state of good repair, the vast majority of which is needed to reconstruct and rehabilitate roadway and bridge infrastructure.

55 Vermont Transportation Funding Legislative Response to the Issue The Legislature understood the magnitude of the problem and devised a modification to the gas tax in order to ensure a more stable revenue source. The two year phased in change resulted in a new 4 percent assessment on the price of gasoline while decreasing the per-gallon tax by 6.9 cents. Also included was a price floor to ensure that revenues would not fall substantially if the price of gasoline dropped and a ceiling to protect consumers if the price of fuel dramatically escalated. Changes to the gas tax stabilized, to some degree, the variation in revenue that was based solely on the pennies on the gallon.

56 Vermont Transportation Funding Gas status in FY-13 before changes Levy Gasoline Tax Petroleum Clean-Up Fee TIB Assessment Total State levies Federal gasoline tax Total State & Federal levies Amount 19 cents-per-gallon 1 cent-per-gallon 2% of the retail price of regular gasoline in the prior fiscal quarter excluding all state and federal levies 20 cents-per-gallon + the 2% quarterly TIB assessment 18.4 cents-per-gallon 38.4 cents-per-gallon + the 2% quarterly TIB assessment Gas as of 7/1/14 Levy Gasoline Tax Petroleum Clean-Up Fee New TFund Assessment TIB Assessment Total State levies Federal gasoline tax Total State & Federal levies Amount 12.1 cents-per-gallon 1 cent-per-gallon 4% of the retail price excluding all state and federal levies with floor of 13.4 CPG and ceiling of 18 CPG 2% of the retail price excluding all state and federal levies 13.1 cents-per-gallon + the 4% TFund assessment + the 2% TIB assessment 18.4 cents-per-gallon 31.5 cents-per-gallon + the 4% TFund assessment + the 2% TIB assessment

57 Vermont Transportation Funding Diesel status in FY-13 before changes Levy Diesel Tax Petroleum Clean-Up Fee TIB Assessment Total State levies Federal diesel tax Total State & Federal levies Amount 25 cents-per-gallon 1 cent-per-gallon 3 cents-per-gallon 29 cents-per-gallon 24.4 cents-per-gallon 53.4 cents-per-gallon Diesel as of 7/1/14 Levy Diesel Tax Petroleum Clean-Up Fee TIB Assessment Total State levies Federal diesel tax Total State & Federal levies Amount 28 cents-per-gallon 1 cent-per-gallon 3 cents-per-gallon 32 cents-per-gallon 24.4 cents-per-gallon 56.4 cents-per-gallon

58 Your Questions & Comments Status of Federal Transportation Programs, State Impacts & Activities