Congress Seeks Short-Term Fix to Highway Trust Fund Dilemma

The U.S. Congress voted last week to provide $10.9 billion to the U.S. Department of Transportation to fund the Highway Trust Fund in order to reimburse states for repairs and infrastructure improvements for roads, rails and airports.

The nearly $11 billion was cobbled together from general fund revenues by any number of budgetary gimmicks not rationally tied to the fuel (gasoline and diesel) excise taxes that normally go into the trust fund (e.g., an extension of customs fees as well as so-called “pension smoothing”).

Few lawmakers in the Indiana delegation (and the entire Congress for that matter) are happy that it is not a longer-term solution; those we spoke with were frustrated by the delay and the funding mechanisms. The Indiana Chamber agrees this is no way to conduct the people’s business, but it is better than the alternative of the highway fund going broke, work stoppages and the idling of hundreds of thousands of construction workers across the country. We will work with the delegation to secure a more rational bill and reauthorization of the multi-year surface transportation bill in coming months.

Foreign Investment Pays Off in Jobs

The Indiana Chamber has touted the advantages of foreign-owned establishments numerous times over the years. A new study looks at jobs generated by the foreign investment in the largest U.S. metro areas over the past 20 years.

In 1991, Indianapolis ranked 36th nationally with 21,190 jobs tied to foreign direct investment. In 2011, those numbers improved to a 22nd-place ranking and 49,910 jobs.

How about industries and locations? Aircraft products and parts topped the 2011 list (thanks largely to Rolls Royce), accounting for 7,600 jobs. Motor vehicle parts followed with 4,800 jobs. In line with those numbers, London and Tokyo, respectively, were the leading global cities serving as home for the Indianapolis-area investment.

The Brookings Institutions and JPMorgan Chase combined efforts on the research.

Chamber Comments on State’s Blue Ribbon Panel on Transportation Infrastructure

Indiana Chamber of Commerce President and CEO Kevin Brinegar on the release of the report from the state’s Blue Ribbon Panel on Transportation Infrastructure:

“The recommendations of the Blue Ribbon Panel on Transportation Infrastructure are an important first step. The group has identified priority projects and clearly defined the funding challenges. Equally important will be the work called for in HEA 1104 (2014), legislation outlining an Indiana Department of Transportation study of financing alternatives that will help meet future funding needs.

“In addition, it’s time for Washington to get its act together and assure that federal funding shortfalls are addressed. Some states are already cutting back on important projects in fear of Highway Trust Fund deficiencies as soon as August 1. What is truly needed – instead of short-term, crisis-avoiding extensions – is a multi-year renewal of the federal transportation plan.

“Superior infrastructure is one of the four drivers of the Indiana Chamber-led Indiana Vision 2025 and strong transportation via road, rail, air and water is critical to our state’s economic future.”

Electric Vehicle Charging Station Program Begins in Northwest Indiana

In an effort to encourage more use of alternative fuels in Northwest Indiana, the Northern Indiana Public Service Company (NIPSCO) has partnered with South Shore Clean Cities to launch a pilot program making electric vehicle charging stations available to more public entities.

South Shore Clean Cities is a Crown Point-based public/private organization that promotes the use of alternative fuels and technology.

Through the end of January 2015, the IN-Charge Around Town Electric Vehicle Program offers financial incentives to help defray the costs of putting in charging stations on public buildings. NIPSCO is offering up to $1 million in incentives for the program, according to a press release.

This program is the second part of NIPSCO’s recent alternative fuel push; the IN-Charge at Home Program gave an instant credit for residents to install a charging station on their property. Additionally, NIPSCO will buy an equal amount of renewable energy certificates for every unit of electricity used through the program.

“Electric vehicles are becoming an increasingly popular alternative to gasoline-powered cars,” explains Carl Lisek, executive director of South Shore Clean Cities, in a press release. “They offer fuel cost savings, produce no tailpipe emissions and help reduce reliance on imported oil.”

Charging station owners can choose to charge for using the station, but will operate free of charge for the owners.

Indy Still Miles Behind on Mass Transit Compared to Other Cities

While mass transit in Central Indiana finally received a somewhat-limiting go-ahead from the Indiana General Assembly in the recently completed session, others with long-established systems are moving forward.

A recent Governing article noted:

  • Boston plans to extend weekend transit service until 3 a.m. Young professionals gave an enthusiastic thumbs-up to the longer hours for subways, light rail, streetcars and buses.

And here, it took three years to get state permission to have a local referendum to approve a system that would likely only include some faster buses (light rail not allowed). Just saying that despite Indiana being a great place to live, we’re way, way behind on this amenity.

  • London plans 24-hour weekend service on some subway lines in 2015. Chicago, New York and Philadelphia already do the same.

Why is this so important? The article notes: “As young professionals, many of whom are car-free, seek out vibrant cities in which to live and work, this is seen as a way to attract them. … Transit at all times ensures that mobility is available to everyone.”

Park in One Country, Fly Out of Another

Fascinating facts while scanning a New York Times article on efforts to build a bridge in San Diego that would serve as a direct pedestrian border crossing to Tijuana International Airport:

  • At three other airports, passengers can park their car in one country for a flight out of another country. They are two airports on the Swiss-French border and a shuttle that runs passengers between airports in Hong Kong and Shenzhen, China.
  • Annually, 2.4 million U.S. travelers use the Tijuana airport, nearly 60% of the airport’s traffic. Why? Fees are up to 50% less to fly throughout Mexico.
  • Mexico widened the San Ysidro crossing to 34 lanes in 2012; yet, substanial delays await those traveling between the two countries and at the five other border crossings in California.

The story notes that funding delays in Congress must still be overcome for development on the U.S. side of the border. Although not finalized, bridge fees are expected to range from $13 to $17. Passengers would park on the U.S. side and walk across an enclosed 325-foot passageway directly to the airport.

We’ll keep an eye on what could be an innovative solution to what is described as a too small, landlocked Lindbergh Field in San Diego.

Help Get I-69 Into National Freight Network

The U.S. Department of Transportation (DOT) is currently seeking comments on the Primary Freight Network and National Freight Network designations. The Indiana Chamber believes that I-69 should be included as part of the National Freight Network and is asking DOT to support this effort.

As part of the National Freight Network designation, DOT has the opportunity to identify an additional 3,000 miles of highways that are critical to the future efficient movement of goods; this represents a strategic opportunity for the nation to enhance its freight transportation network.

A national priority over the past 20 years, I-69’s significance as a major freight route will increase as states along the corridor continue making progress toward its completion.

I-69 provides the most direct interstate access to principle international border crossings between the U.S., Canada and Mexico, as well as multiple Gulf Coast ports; the volume of traffic on I-69 is anticipated to dramatically rise as the interstate progresses. For all these reasons, I-69 should be included in the Primary Freight Network.

We urge you to show your support for including I-69 as part of the Primary Freight Network by signing this petition.

Transportation Funding: Current Taxes, Fees Not Paying for Highways

Transportation funding is a topic that is getting more traction (tire pun completely intended), and we recently explored the Chamber’s position on this blog, which includes comments from our own VP Cam Carter.

In fact, one of the Indiana Chamber’s legislative priorities for 2014 is development of a vehicle miles traveled pilot program. The need for such initiatives is illustrated in a new Tax Foundation study that finds just over half of state and local expenses on roads in 2011 came from highway user taxes and fees. Indiana falls below the national average.

Despite being dedicated to fund transportation projects, revenues from gas taxes and tolls pay for only about half of state and local spending on roads, according to the nonpartisan Tax Foundation. Alaska and South Dakota come last in transportation funding derived from gas taxes and tolls—10.5 percent and 21.5 percent, respectively—while Delaware and Hawaii rank the highest—78.6 percent and 77.3 percent, respectively.

State and local governments spent $153.0 billion on highway, road, and street expenses, but raised only $77.1 billion in user fees and user taxes ($12.7 billion in tolls and user fees, $41.2 billion in fuel taxes, and $23.2 billion in vehicle license taxes). The rest was funded by $30 billion in general state and local revenues and $46 billion in federal aid.

“The lion’s share of transportation funding should be coming from user taxes and fees, such as tolls, gasoline taxes, and other user-related charges,” said Tax Foundation Tax Foundation Vice President of State Projects Joseph Henchman. “When road funding comes from a mix of tolls and gasoline taxes, the people that use the roads bear a sizeable portion of the cost. By contrast, funding transportation out of general revenue makes roads “free,” and consequently, overused or congested—often the precise problem transportation spending programs are meant to solve.”

The story is much the same even when adding other transportation options to the mix. In 2011, state and local governments spent $58.7 billion on mass transit, $22.7 billion on air transportation facilities, $1.6 billion on parking facilities, and $5.2 billion in ports and water transportation, in turn raising $13.2 billion in mass transit fares, $18.8 billion in air transportation fees, $2.2 billion in parking fees and fines, and $4.2 billion in water transportation taxes and fees. Altogether, states raised about 48 percent of their transportation spending from user taxes, fees, and other charges.

Expanding tolls and indexing gasoline taxes for inflation may not be politically popular even though transportation facilities and services are highly popular. Given that transportation spending exists, states should aim to fund as much of it as possible from user fees and user taxes. Subsidizing road spending from general revenues creates pressure to increase income or sales taxes, which can be unfair to non-users and undermine economic growth for the state as a whole.

Indy/San Francisco Flight Ready for Takeoff; Needs Support from Business Travelers

Hoosier business leaders and Indiana travelers will soon be privy to a non-stop flight from Indianapolis to San Francisco on January 8 (and a direct flight already exists en route to Los Angeles). United Flights 317 and 500 (named for Indianapolis’ area code and the Indy 500) will be incredibly convenient to those in many industries.

The Indiana Economic Development Corporation (IEDC) recently wrote:

With over 4,900 seats already reserved, we’re off to a great start, but it’s important to keep that momentum going.  The best way is to simply buy tickets and show your support.

It’s an incredible holiday gift that will certainly bring new opportunities and investment to the Hoosier State, and yet another reason Indiana is a state that works for business.

Indiana Chamber board member Michael Wells, who also serves as president of REI Investments and on the Indianapolis Airport Authority Board, explains the benefits of the flight.

“This will be very helpful for the tech community, like SalesForce.com (which recently acquired Indy-based ExactTarget) and others,” he notes. “It also will allow (venture capital groups) to fly into Indy in the evening, conduct business during the next day and catch a good connection back to the West Coast, leaving around 5 p.m. and still arriving at a decent hour due to the time zone.”

Wells adds that the San Francisco flight will serve as a connection to Asia, and connections are set up for convenient transfers for passengers.

TAKE NOTE: However, it’s critical that Indiana travelers and the business community use the flight if it’s to be continued beyond the next year, and the local market will need to prove it can support it. A release from IEDC reports:

The Indiana Economic Development Corporation (IEDC) will provide United Airlines with a minimum revenue guarantee, consistent with industry standards and United’s business model, during the term of the one-year agreement. To accomplish this, the IEDC allocated $1.5 million in a reserve fund, which represents the state’s maximum financial exposure. No payments from the reserve fund will occur as long as the market’s support for the nonstop route equals or exceeds the minimum revenue guarantee.

Are Americans Still Kings of the Road? If So, We’ll Need to Pay for Them

Transportation funding is a topic that has been more or less buried in the news as of late. Between government shutdowns, ACA roll-out challenges, foreign riots and the like, the American public isn’t really discussing this issue — though it’s an important one. This article from the Los Angeles Times outlines the concept of taxing car mileage, and the inherent benefits and challenges of such a system. Below, Cam Carter, our VP of small business and economic development, writes more on the subject.

Carter elaborates:

“There are three scenarios that policy-makers must consider:

  1. Do nothing and have both federal and state highway funds remain insufficient to maintain today’s roads & highways, let alone expand our transportation system to accommodate future economic needs and job creation.
  2. Raise both federal and state fuel taxes to make up for decades of not indexing them to inflation and then index them for future years. This is politically difficult and would likely result in some form of consumer/voter “sticker shock.”
  3. Explore a vehicle miles travelled tax (VMT) as a potential new way to fund critical infrastructure while addressing and managing privacy concerns.

With regard to privacy concerns and VMT, anyone with a cell phone is already carrying tracking technology in his/her back pocket today. Millions voluntarily provide location data, knowingly or unknowingly, to government and commercial interests today. Privacy and “Big Brother” concerns can be managed with technology and transparent public policy.  

In Indiana, the VMT legislation the Indiana Chamber supported and will continue to seek sets up a voluntary program to study the issue. It would examine replacing current fuel taxes with a VMT fee, not be tacked onto existing taxes.  

We must at least study alternatives to today’s broken system. Key question: Who pays for the roads when we are all driving all-electric vehicles? Clearly, technology has outpaced public policy in this arena;  we need to catch-up.”