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.”

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.

Throwback Thursday: Back in the Winter of ’59

Today's venture back in the annals features a 1959 collection of research studies, titled "Spotlight on Legislative Issues," which was prepared by the Chamber and provided to state legislators of the day.

I'll list some of the interesting topics du jour, though one observation is that society was still working to define — and regulate — the woman's role in the workplace during that time. Debates centered around the merits of equal pay and how to regulate their hours.

It's also interesting to read that the Chamber was waging the battle for more efficient local government spending back then, as it's no secret we're no fans of the current township structure. One paragraph reads:

"There appears to be no assurance that the local government finance problem will correct itself in the immediate future if present practices and laws are unchanged. The continuing and growing desire of people to 'live out,' the construction of community shopping centers away from downtown areas, the rapid improvement in highway transportation and movement of traffic, and the decentralization trend in industry all point to further complications. These complications are the result of the shifting from one local government unit to another of responsibility  for administration and financing of specific governmental services while the taxable property which normally might be expected to bear a part of the cost of these services is in another taxing unit."

To paraphrase: "Something's askew here." Still how we feel today about local government.

County highway funding was also a major issue then. Legislators and the business community were considering the most efficient ways to keep Hoosiers moving:

"Need for improvement in the administration of county highways in Indiana will be one of the major problems confronting the 1959 Legislature. The importance of this issue cannot be discounted when it is realized that state-collected highway tax funds amounting to $40 million will be expended by the counties this year. Rural residents who use county roads as 'farm to market' or 'job to home' routes know and appreciate the fact that safer and more durable county roads are needed. County roads constitute approximately 77 per cent of the road and street milage in Indiana. This rural road milage is highly essential to the welfare of a large segment of the state's population."

Road Funding Day Organizers Hope to Pave Way for Transportation Movement

Properly funding Indiana's highway and road system is critical toward promoting a healthy infrastructure — a vital element of our state's business climate. There are a variety of related bills in the Indiana Legislature this session, though little clarity remains on how to pay for future needs. Advocates will gather at the Statehouse on February 19 to emphasize the importance of the issue . Experts will be on hand to offer talking points, answer questions and lead the effort. Details are as follows:

Schedule
9:45 a.m.   Registration
10:15 a.m.   Road Funding Legislative Briefing
11 a.m.   Depart for the Statehouse
11 a.m. to 3:00 p.m. Legislator Visits

Location
The Road Funding Legislative Briefing will be at the Build Indiana Council office located at One North Capitol Avenue, Suite 1005 in downtown Indianapolis. (This is just across the street from the Indiana Statehouse.)

Registration
While registration is not required for participation in Road Funding Day, it would be helpful for planning purposes. Also, if you pre-register, we will be able to notify you should the schedule change for any reason. There is no registration fee. For free online registration, please visit www.roadfundingday.eventbrite.com.

Reps. Bucshon, Carson to Host Transportation Jobs Fair in Indy

A nice opportunity here from two Indiana Congressmen. Rep. Larry Bucshon's office writes: As many of you know, in the 112th Congress we passed several bills that make it easier for Veterans to obtain a CDL and additional transportation related jobs. We’re hoping to have a large turnout from potential employers and those who are looking for a job in the transportation industry. Here are the details:

When: February 21, 2013, 2 – 6 p.m. EST
Where: Ivy Tech Corporate College Illinois Fall Creek Center – 2532 N. Capitol Ave, Indianapolis, IN 46208
Hosted by: U.S. Congressman André Carson (IN-07) & U.S. Congressman Larry Bucshon (IN-08)
Please Note: There is no charge for participating in this event.
Employer Setup is noon – 2 p.m. the day of the event.

*Employers can register for the jobs fair by filling out the Job Fair Registration Form.

**For more information, please contact Erin Pugh at (812) 232-0523 or at erin.pugh@mail.house.gov.
 

Business Movement Grows to Support Transportation Infrastructure

The U.S. Chamber of Commerce sent a letter to Congress on January 23 encouraging it to support investment in the nation’s surface transportation infrastructure. The letter had around 1,000 signatories from the business community, as most feel enhanced transportation infrastructure (better bridges, public transportation, etc.) will make America a better place to do business. Congress has until March 31 to reauthorize the current funding law: 

TO THE MEMBERS OF THE UNITED STATES HOUSE AND SENATE:

As Congress embarks on a new legislative session, we, the undersigned companies and organizations, urge you to Make Transportation Job #1 in 2012 and pass federal highway, transit and safety legislation before the current law expires on March 31. The long-delayed reauthorization of federal highway and public transportation programs is a major piece of unfinished business that can provide a meaningful boost to the U.S. economy and its workers and already has broad-based support.

To grow, the United States must invest. There are few federal efforts that rival the potential of critical transportation infrastructure investments for sustaining and creating jobs and economic activity over the short term.

Maintaining at 2011 levels—and ideally increasing—federal funding for road, bridge, public transportation and safety investments can sustain and create jobs and economic activity in the short-term, and improve America’s export and travel infrastructure, offer new economic growth opportunities, and make the nation more competitive over the long-term. Program reform would make the dollars stretch even further: reducing the time it takes transportation projects to get from start to finish, encouraging public-private partnerships and use of private capital, increasing accountability for using federal funds to address the highest priority needs, and spurring innovation and technology deployment.

We recognize there are challenges in finding the resources necessary to adequately fund such a measure. However, with the economic opportunities that a well-crafted measure could afford and emerging political consensus for advancing such an effort, we believe it is time for all involved parties to come together and craft a final product.

In 2011, political leaders—Republican and Democrat, House, Senate and the Administration — stated a multi-year surface transportation bill is important for job creation and economic recovery. We urge you to follow words with action: Make Transportation Job #1 and move legislation immediately in the House and Senate to invest in the roads, bridges, transit systems that are the backbone of the U.S. economy, its businesses large and small, and communities of all sizes.

 

A New Way to Pay for Highways

How to pay for current and future road repairs is a challenge for nearly all states. The federal Highway Trust Fund is not the answer, at least not in its current form. Governing magazine asked a Tax Foundation expert for his perspective on some alternatives. Governing reports:

Commute to work is a bit on the bumpy side, then you know the answer is road repairs. The follow up question is: Given how long this downturn has afflicted state and local budgets, who’s going to pay to repair potholes and the like?

Well, it’s not going to be the feds. The Highway Trust Fund, which finances an average 45 percent of a state’s highway and transit capital costs, is shrinking. One reason for that shrinkage is that the federal gas tax has been stuck at its current rate (18.4 cents per gallon) since 1993, which means it is not keeping up with inflation, to say nothing of state needs. Congress is not likely to raise the federal gas tax rate this year or next, so that leaves the states. In theory, they have a little room to raise or tinker with their gas tax formula — something most states have not done in years.

Given the importance of a healthy road system to economic development, what approaches could states take to raise revenue for road repair and building? I put that question to Mark Robyn, an economist with the Tax Foundation. Here’s an edited version of our conversation:

Is this a good time for states to raise their motor fuel taxes?

It’s difficult to raise most taxes. The gas tax — an excise tax — is interesting because it’s one of the few that states levy that really looks like a user fee. You pay it when you use a specific service, and the rate is set at a level to pay for the service you consume. It’s like an entrance charge to a state park. You wouldn’t call that a tax as long as that revenue is used to pay for upkeep of the park and the charge reflects what the costs are.

The gas tax, though not perfect, is an approximation of that relationship. Revenue received from gas taxes usually is used for road and highway maintenance; the fee you pay approximates how much road you consume. But different cars get different gas mileages; electric cars don’t even use gas but they also don’t cause less damage to the road. So the gas tax is not perfect but it is similar to a user fee. If states want to structure the gas tax like a user fee and if the state is not getting the money it needs for roads and repair, the next logical step would be to increase the gas tax. But people have to believe the money is being spent wisely. Not all states do that, and people say, "Well, I see this waste of money. If you increase my taxes, you’ll waste a portion of it." When I say states are wasting money, I mean they are using it for road projects that people don’t see as valuable — the "bridge to nowhere." If there are no "bridges to nowhere" and people are driving over potholes, they’ll be more willing to accept gas taxes to avoid potholes.

Surface Funds Go Far Beyond the Surface

When is federal transportation funding not really transportation funding? According to the Heritage Foundation, it’s when 35% of the allotted funds that come from our gasoline taxes are "diverted to high-cost, underutilized programs like trolley cars, transit, covered bridges, hiking trails, earmarks, administrative overhead, streetscapes, flower planting, hiking and bicycle paths, museums, transportation enhancements, tourist attractions and archaeology."

I don’t think Heritage or anyone else is questioning the need for at least some of the initiatives identified above. The concern, a legitimate one, is where should the money come from. Interested to hear your perspective on this one?

Below is an explanation from Heritage about the requirement to divert funds, the 12 categories eligible for diversion and how one state has used its funding:  

Under current law, each state is required to devote 10 percent of the Surface Transportation Program (STP) funds it receives each year from the federal highway trust fund to eligible enhancement projects as defined in existing statutes. Under legislation extended by SAFETEA-LU (P.L. 109-59), fiscal year 2012 spending authorizations for the STP will total $9.3 billion, implying that enhancement spending would then total $930 million that year.

According to current law, enhancement program spending must be limited to the following 12 purposes:

  • Provision of facilities for pedestrians and bicycles;

  • Provision of safety and educational activities for pedestrians and bicyclists;

  • Acquisition of scenic easements and scenic or historic sites (including historic battlefields);

  • Scenic or historic highway programs (including the provision of tourist and welcome center facilities);

  • Landscaping and other scenic beautification;

  • Historic preservation;

  • Rehabilitation and operation of historic transportation buildings, structures, or facilities;

  • Preservation of abandoned railway corridors;

  • Inventory, control, and removal of outdoor advertising;

  • Archaeological planning and research;

  • Environmental mitigation; and

  • Establishment of transportation museums. 

The Virginia Department of Transportation provides detailed information on its enhancement projects, and its annual list illustrates just how silly the program can get, as measured by the misspending on approved projects using scarce federal transportation dollars. Among the 82 approved projects costing $30.2 million for FY 2012 are the restoration of the historic Bull Mill in Scott County, a hiking trail on an abandoned rail bed in Buchanan County, renovation of a former rail passenger waiting area in Danville, renovation of the LaCrosse Hotel, restoration of the Assateague and Cape Henry lighthouses, construction of a pilot schooner for a Norfolk museum, smartphone-based battlefield tours, and gateway signs to various Virginia wine regions.