Future of Highways, Ports on the Agenda at SLC Meeting in Charleston

The future of transportation was very much on the minds of participants at the annual meeting of the Southern Legislative Conference held earlier this month in Charleston, South Carolina. The role of transportation in economic development, the status of a new federal highway bill, state funding of infrastructure improvements and efforts to prepare southern ports for the expansion of the Panama Canal all received attention from various speakers over the course of the five-day meeting. Here is just some of what I heard on those topics.

On Transportation & Economic Development:
Ben Bernanke, Chairman, Federal Reserve

“Of course healthy economic growth can ease state and local fiscal problems and federal fiscal problems for that matter. Notwithstanding the very difficult near term budget issues that you face, I urge you not to take your eye off the important goal of promoting economic growth. A basic economic principle is that growth requires investment. Investment includes fiscal investment such as infrastructure development and surely adequate transportation networks and the like are necessary for economic growth.”

Larry L. “Butch” Brown Sr., Executive Director, Mississippi Department of Transportation and President, American Association of State Highway and Transportation Officials
“Without transportation, there is no economic development.”

Larry L. "Butch" Brown speaks to the SLC's Economic Development, Transportation & Cultural Affairs Committee on August 2nd.

On the Status of a new highway bill, the successor to SAFETEA-LU.
Gene Conti, Secretary, North Carolina Department of Transportation

“We don’t have a long term authorization bill from the federal government. That expired last September and we’ve had three short-term extensions in the meantime—really band-aids to keep us going but it makes it very difficult to plan for the future and you all know in this room that infrastructure is not a year-to-year thing. You’ve got to have a solid long-term plan of what you’re going to invest in and how you’re going to fund all this. So we really need help from the federal government to get a stable and reliable funding source in place that we can supplement.”

Gene Conti speaks to the Transportation Committee

Brown: “We don’t expect to have anything done on reauthorization until after the midterm elections. Let’s be very candid—until after the presidential election. We think we’re going to be stuck where we are. Hopefully we can keep a level of funding through extensions rather than continuing resolutions because continuing resolutions just do not work.”

Brown and Conti respond to questions from meeting participants.

U.S. Rep. James Clyburn (D-SC), House Majority Whip
“The traditional way of funding the Highway Bill is just a non-starter. What we’ve done in the past…we would add another nickel or another dime or something to the gasoline tax. That’s not going to fly anytime soon… There has been a transaction tax that has been proposed. The transaction tax would deal with Wall Street and some of its activities. One tenth of one percent on the transaction would produce billions of dollars—almost immeasurable—out into the future. Of course people on Wall Street are fighting that. Another thing that’s been proposed by a good friend of mine from Oregon, (U.S. Rep. Peter) DeFazio, has been to put a penny on every barrel of crude oil that comes into this country from abroad. That would not (impact) domestic development but all that’s coming in from abroad. That (would) provide billions of dollars that could fund the program. We’ve not been able to get either one of those agreed upon yet…”

“None of us in this room believe that we are going to be able to fund the highway program that we need by clipping coupons out of the Sunday papers. That’s not going to happen. We have got to get together to decide how we can…do what is necessary… We cannot continue to kick the can down the road.”

On State Funding Mechanisms for Infrastructure Improvements
Conti:
“Legislative action (in North Carolina) last year created something called an intermodal fund, which would be funded by either a quarter cent or half cent sales tax passed by referendum of the voters in those local areas but would be matched with state dollars to create transit and rail options for those local governments. That particular mechanism has not been used as yet but a number of the local areas are looking at putting that on the ballot probably fall of 2011 (at the earliest). That would help…jumpstart a plan in the (Research Triangle) area that calls for 300 new buses and potentially more than 50 miles of electric-powered light rail.”

“North Carolina was not in the toll business up until a year ago. We let our first toll project around Raleigh as part of the Raleigh Loop Triangle Expressway. That project is under construction. It’s scheduled for completion in 2012. And we will have no tollbooths on that road. That will be done all electronically.”

“We’re also pursuing a public-private partnership for a toll road out on the Outer Banks of North Carolina. It’s not a project that we would do purely with public money because the traffic’s just not there. But it’s a project that’s very heavily supported for economic development purposes in that region…”

Transportation Committee members listen to presenters.

Vance Smith, Commissioner, Georgia Department of Transportation
“The (Georgia) General Assembly this past year… passed a funding bill. It is a regional bill. We have 12 regions in the state of Georgia. The regions are allowed to go and work and pick projects, working with our planning director. They can tax themselves with a one cent sales tax and work on the projects in their region and the money will stay in their region. It’s a very important bill. It will be voted on in those regions in 2012. That’s a couple of years out. We’re like everybody else. We’re just trying to get to that point. Hopefully these citizens in these areas will vote on these regional taxes and we can help them move forward.”

“Our motor fuel (tax) revenue… was $1.027 billion in 2007. This year, June 30th, (it was) $833 million. So you can see that motor fuel tax is declining. And then we emphasize for people to ride transit and ride rail. We have cars that are hybrid, electric and probably the federal government may emphasize better fuel mileage on cars in the future. It’s pretty much a diminishing return as far as motor fuel revenues in Georgia. We’re having to think of alternative ways such as the funding bill that the General Assembly passed. And we’ve got to look at other ways. We can’t pat ourselves on the back and say that’s the bill that solved all the problems. We’ve got to continue to work toward other funding mechanisms.”

The Mediterranean Shipping Company's MSC Rita container ship docked at the Port of Charleston's Wando Welch Terminal.

On U.S. Ports and the Expansion of the Panama Canal
Brown:
“The future of freight coming in and out of our country has never been (brighter) than it is today and in 2014 when the Panama Canal (expands) there’s going to be an influx of freight like you’ve never seen before. We’ve got problems folks. How are we going to move the goods that are coming in and those that will be shipping out hopefully to balance this trade deficit figure? There is no port available to handle the Panamax vessel that will be coming to us through the Panama Canal. What are we doing? What are we waiting for? The only port that can receive and handle the cargo in a Panamax vessel if we were opening tomorrow and the Panama Canal widened and lengthened with all these thousands and thousands of containers per ship is Cuba… It’s time to wake up. If we’re going to be globally competitive and be a part of our global infrastructure and transportation infrastructure, we’ve got to be prepared for that.”

Cranes at Port of Charleston's Wando Welch terminal.

Conti: “Expansion of the Panama Canal will put an even greater demand on our southern ports to move goods effectively and efficiently from Europe and Asia. And so it’s important that we coordinate and emphasize coordination among all of our transportation partners both public and private, in the rail industry and the air industry and in our ports. We’ve got to move goods more seamlessly. We’ve got to reduce congestion on our roadways and in our airways. And we’ve got to continue to build new highways to accommodate some of this as well. We’ve got to operate all of our systems much more efficiently than we have in the past and that continues to be a challenge for many of us in the South…”

Meeting particpants board a bus August 3rd for a tour of the Port of Charleston.

Jim Newsome addresses meeting participants prior to the port tour.

Jim Newsome, President & CEO, South Carolina State Ports Authority
“We’ve got very, very serious infrastructure demands in the port business today. Ships are getting a lot bigger and nobody really planned on that several years ago. So we have a rather chaotic way of funding all these infrastructure projects. When you talk about doubling export volumes in five years which the current administration is talking about, then one needs to find a way to deal with port infrastructure.”

Newsome: “Just yesterday (August 2nd) the largest (shipping) line in the world, Maersk line, announced that they were going to build 16,000 TEU (20-foot equivalent unit) ships. Those ships when built would draw about 52 feet of water. Only Norfolk (Virginia) today can handle 50 foot ships on an unimpeded basis. So there’s a lot of work to be done in infrastructure and a lot of thought has to go on as far as how to fund that on a structural basis because it’s honestly a jump ball today. Every port wants a 50-foot harbor and there’s not enough money for everyone to have a 50-foot harbor. That’s just the reality of life.”

(Note: A day later, Maersk said no decision had been made to order the larger ships).

The MOL Excellence, a container ship owned by the Japanese shipping company MItsui O.S.K. Lines, docked at the Port of Charleston.

Newsome: “The bottom line message is we need harbors that are 50 foot capable, 24-7 basically…(Charleston) is an efficient harbor to dredge. To get another five feet (in the Charleston harbor) would (cost) $250 million…Georgia’s harbor-deepening project is a $700 million project. So this is expensive work.”

Newsome: “We have a problem in the southern states. We have hot climates, we have insufficient quality of tires on (truck) chassis and we’ve entered into a bit of a weight race on our container weights. We permit up to 100,000 pound gross weights (on trucks). We had to do that to compete with the neighboring states. But in reality we need to be taking those weights back down because there is not sufficient funding for highway maintenance today and I think it’s a bad policy long term to be in the weight escalation business.”

Trucks wait at the Port of Charleston's Wando Welch Terminal gate.

For more on the expansion of the Panama Canal and SLC state ports, see here.