Michigan Tax Hike Fails; Oregon Hosts Road Usage Charge Conference; CSG Supports Infrastructure Week Activities and Upcoming P3 Conference

Michigan voters Tuesday declined to support a ballot measure that would have hiked the state’s general sales tax, fuel taxes and vehicle registration fees to provide funding for dilapidated roads but removed the sales tax on fuel, which currently goes to other purposes. I also have a report from last week’s International Bridge, Tunnel and Turnpike conference on transportation finance and road usage charging in Portland, Oregon. I’ll bring you up to speed about CSG’s involvement in next week’s Infrastructure Week activities and look ahead to a conference next month highlighting public-private partnerships.

Michigan Voters Reject Tax Hike for Roads

The ballot measure, known as Proposal 1, would have raised close to $1.3 billion for roads but complicated wording, angry voters, a rainy election day and low turnout all may have contributed to its demise, the Tribune News Service reported.

The complicated wording stemmed largely from the complexity of removing the sales tax on fuel, the revenues from which currently go not to roads and transportation but to schools and local governments. Passage of the measure would have actually triggered into law 10 bills passed by the legislature during a lame duck session last December.

Voters may have been angry that after months of discussion, lawmakers were unable to come up with a better road funding solution and left it in their hands (something lawmakers said was necessitated by the fact that the dedication of the sales tax was written into the constitution and could not be changed by statute alone).

Turnout was already expected to be as low as 20 percent since the only other things on the ballot were municipal and school board elections. Rain across much of the state Tuesday probably didn’t help.

Now talk turns to what the state will do next.

“We need to go ahead and get these roads and infrastructure fixed immediately, given the nature and the extent of the damage that has occurred from not maintaining,” said state Rep. Peter Lucido.

Polling information reportedly shows that, despite the rejection of the ballot measure, Michigan voters are willing to pay more to fix the roads. And no one seems to disagree the state’s roads are in terrible shape.

But tea party conservatives don’t want to raise taxes to get it done and Republican Gov. Rick Snyder and the Republican-controlled legislature struggled to come up with the solution they did.

As Michigan policymakers ponder the future, they may be able to look to the state of Georgia, which finally moved beyond the rejection of the 2012 T-SPLOST ballot measure this year to enact a new transportation funding bill, and perhaps soon to Missouri, where a proposed gas tax increase could help that state save face in the wake of voter rejection of a sales tax increase for transportation last summer.

For more on Michigan’s Proposal 1 and the forces that lined up for and against the measure, you can read my article for The Current State from March.

The Detroit Free Press had a list of potential "Plan B" options that could be considered for fixing the state's roads.

IBTTA Transportation Finance & Road Usage Charging Conference

“We’re meeting in Oregon because Oregon has been a pioneer in transportation funding,” said Patrick Jones, Executive Director & CEO of the International Bridge, Tunnel and Turnpike Association at the outset of last week’s conference on transportation finance and road usage charging in Portland. “Oregon was the first state to institute a gasoline tax for transportation back in 1919 and Oregon is the first state to implement an operational program of road usage charging.”

On July 1, Oregon indeed will become the first state to institute a mileage-based road usage charge with a group of 5,000 volunteer motorists.

Many will be watching the Oregon experiment closely, cognizant of struggles at the federal level to keep afloat the federal Highway Trust Fund and hopeful that something could be on the horizon to one day replace the mechanism that has bolstered it for much of the past century.

“The gas tax is no longer a good proxy for road user benefit,” Oregon Congressman Earl Blumenauer told conference attendees. “Increasingly fuel efficient conventional automobiles, hyper-efficient diesel, hybrids, plug-in hybrids, electric cars… We’ve shattered any direct connection between gallons of fuel consumed and road user benefit.”

Blumenauer is among those in Washington proposing what would be the first gas tax increase at the federal level in 22 years. But that would be just a first step.

“We are proposing that we go ahead, we raise the gas tax 15 cents, phased in over three years,” he said. “We index the gas tax and then ideally, why don’t we get rid of the gas tax because it is not—for all the reasons you know—sustainable in the long run.”

Blumenauer also wants Congress to consider legislation that would establish a grant program to fund road usage charge pilots around the country.

“I’ve introduced House Bill 679 because it’s time to extend the Oregon experience,” he said. “We’re asking that you become our partners in this two-step process. Step number one is to make sure that Congress steps up and keeps the federal partnership vital and well-funded.”

But that’s become easier said than done in recent years with Congress passing numerous short term measures that make use of borrowed General Fund dollars to prop up a bankrupt Highway Trust Fund just to maintain roughly status quo funding levels. It’s a recipe that has taken its toll on state transportation agencies, which must plan far ahead when they want to tackle major, multi-year transportation projects.

“I could just dust off the speech I gave last summer explaining why it was really stupid what we were doing (passing a short-term extension) because we’d be right in the same place next spring and here we are,” Blumenauer said. “States are cutting back on summer construction, scratching their heads. No country became great building its infrastructure nine months at a time.”

Unfortunately it’s a trend that seems likely to continue, Sarah Puro of the Congressional Budget Office said at the conference.

“There is some debate about whether there is going to be a very short term extension to let’s say July, through the end of the fiscal year, which is September 30, or through the end of December,” she said. “But if you’re looking for a reauthorization program, I wouldn’t hold your breath.”

Blumenauer believes a gas tax increase could serve as a bridge and buy time until something like Oregon’s road usage charge is ready to employ on a larger scale. It’s the solution many states have been turning to and it has the support of a wide variety of transportation stakeholders, Blumenauer said.

“Introducing (the gas tax increase) legislation, I’ve been told that ‘Congressman, that’s not realistic, it’s not politically popular, it’s not feasible,’” he said. “How many of you are amongst the 19 states that have raised transportation funding in the last two years? … Five states have increased the gas tax this year already. Red Republican states. And I’m politically unrealistic? The proposals that both President Obama and Republicans have advanced have been declared dead on arrival. The ink is scarcely dry on the press release. … When I introduced the gas tax increase, I was joined by the U.S. Chamber, the AFL-CIO, bicyclists, engineers, local government, transit, AAA and truckers all saying ‘we want you to increase our taxes because America needs it.’ All the political cover any politician could ever want. And I’m politically unrealistic?”

Blumenauer asked conference attendees to join him in urging President Obama to declare he won’t sign any further short-term extensions after the next one that go into the next fiscal year.

“Under no circumstances should we allow this to go past October 1st and enable this reckless behavior on the part of the federal government,” he said. “It will never get any easier, it will never get less complex, it will never get cheaper.”

Blumenauer said a gas tax increase is something that can be done and must be done.

“But it’s not enough,” he said. “At the same time, we have to lay the foundation for a new era in transportation. The road user charge is not just a more effective, long-term solution to be able to provide adequate resources for transportation—although it is. … But it is an opportunity for us to transform transportation in this country.”

Others too see the potential for Oregon’s latest experiment to inform the national conversation.

“It is in the laboratories of democracy in states and local governments where innovative new policies like the road usage charge will blossom,” said Tammy Baney, who chairs the Oregon Transportation Commission. “If Oregon’s experience with the gas tax is any indication, if we are successful with the road usage charge, perhaps someday Uncle Sam will join us. Together we can find a solution. … I believe we can create a successful funding model that will support our infrastructure needs while not losing sight of our commitment to the environmental and public health of our communities. … Remember, there’s always room at the end of the Oregon Trail for those of you who want to follow the path that we are blazing.”

Those involved in the toll industry also said they have an appreciation for what road usage charging can bring to the table.

“From my perspective there are more similarities than differences between tolling and road user charging,” said Javier Rodriguez, Executive Director of the Miami-Dade Expressway Authority and President of IBTTA. “If my state adopts road user charging, whether it’s on a pilot basis or not or just a study, from my perspective it’s an education process for the users to understand what the true cost of transportation is and that’s good for all of us. Our customers in the toll industry understand that. We need the general public to understand what the true cost of transportation is and the differences between urban transportation facilities and rural transportation facilities.”

But some do have reservations.

“I would be concerned for California with trying to set a flat per-mile price for road user charging,” said Samuel Johnson of Transportation Corridor Agencies, which operate toll roads in Orange County. “I’m not confident we would be able to set that at an amount that would really reflect the cost differences especially in a state like California where we have coastal cities that right away cost a whole lot more than the inland cities. So we have some challenges there.”

Johnson also is not convinced road usage charging will solve what has become a problem with the gas tax—transparency. The public doesn’t know how much they’re paying and they don’t know where it goes.

“When we go to implement road user charging, it’s a chance to fix that,” he said.

And Johnson isn’t sure how such a system would function in an international border region like San Diego. How would those coming across the border be called upon to pay their fair share?

Finally, Johnson said he worries that instead of trying to implement road user charging the right way from the beginning, California will try to do it in a way that can be easily sold to politicians and the public. That was a concern others had as well.

“Right now the trend I see on the other side of the table on the road user charge is because of the dominance and importance of privacy concerns and public acceptability that the pilots and the movement tends to be toward less technical solutions such as annual odometer readings and things like that because those are easier to get public support,” said Ed Regan of engineering and construction firm CDM Smith. “That will not help you with all-electronic tolling and so forth. The point is the toll industry needs to really get on board with the road user charging community and the road user charging community needs to consider the broader application of road user charging such as demand management in congested areas … rather than just the most simplistic and least intrusive way of doing it. But we need to talk to each other.”

Conference organizers said they hope the Portland event moved that conversation forward.

CSG Resources

Further Reading

CSG Transportation Policy Academy & Infrastructure Week

Next week (May 11-15) marks Infrastructure Week, an annual event that brings together thousands of stakeholders in Washington and around the country to highlight the importance of investing in and modernizing the nation’s infrastructure as well as the essential role it plays in our economy. The week coincides with this month’s impending deadlines for Congress to address the dwindling federal Highway Trust Fund and extend the authorization of federal transportation programs

CSG is proud to serve as an Infrastructure Week affiliate and next week we’ll be bringing a group of the nation’s top transportation-focused state legislators to Washington for our 2015 Transportation Policy Academy. The lawmakers hail from nine states, including three of the five that have passed major transportation funding measures so far this year. Eight are chairs or vice chairs of transportation committees in their respective states. The select group, chosen in consultation with CSG’s regional offices, will have the opportunity to:

  • tour transportation projects in Northern Virginia;
  • hear from Maryland’s Secretary of Transportation Pete Rahn;
  • participate in a policy roundtable with speakers from organizations like ASCE, AASHTO, the U.S. Chamber of Commerce, the American Trucking Associations, Transportation for America and the Eno Center for Transportation;
  • join together with officials representing other Big 7 organizations serving state and local officials including the National Association of Counties and National League of Cities;
  • talk with officials at the U.S. Department of Transportation;
  • hear about the priorities of the American Road & Transportation Builders Association and the American Public Transportation Association;
  • get an update on mileage-based user fee activities around the country; and
  • meet with members of Congress to relay their concerns about the future of the federal program and the importance of infrastructure investment at all levels of government.

The event is made possible through the generous support of the American Society of Civil Engineers, Nissan and UPS. I’ll have a full write-up of the policy academy in the pages of The Current State and here on the blog in the weeks ahead.

But in the meantime, Infrastructure Week provides great opportunities to share information on this critical issue across many organizations and like-minded individuals. Many will be doing that on Twitter and other social media next week. Infrastructure Week organizers are asking folks to look for and use the hashtag #RebuildRenew.

InfraAmericas Conference to Focus on Public-Private Partnerships

The 2015 InfraAmericas U.S. P3 Conference takes place June 9-10 at the Grand Hyatt Hotel in New York City. CSG is proud to serve once again this year as a supporting organization for the annual event, a gathering of infrastructure developers, investors, financiers, state and federal public officials and regional transportation authorities on the subject of public-private partnerships. Speakers with a state government connection will include Douglas Koelemay, who heads Virginia’s Office of P3s, former Indiana Public Finance Director Kendra York, Pennsylvania Department of Transportation Office of P3s Director Bryan Kendro, North Carolina DOT CFO David Tyeryar, Colorado High Performance Transportation Enterprise Director Michael Cheroutes, Ohio DOT’s Deputy Director of Innovative Delivery Adam Sheets and Massachusetts Assistant Secretary of Transportation and CFO Dana Levenson. Among the topics to be addressed: whether some states are shifting away from the traditional pipeline of P3 projects, what the biggest political and legislative developments on P3s were over the last 12 months, how the P3 industry can create a unified message for its own advancement, and how key P3 deals like the Portsmouth Bypass, I-4, I-77, and the Pennsylvania Rapid Bridges project came together. For an idea of what to expect from the InfraAmericas conference, you can read my coverage of last year’s event here. You can register to attend this year’s conference here.