Overheard at the Transportation Research Board Annual Meeting

I have an article appearing in this week’s Capitol Ideas electronic newsletter that looks at some of the issues discussed January 13-17 at the Transportation Research Board’s annual meeting in Washington, D.C. The gathering brought together more than 10,000 transportation professionals from around the world, including many officials who focus on transportation policy at the federal, state and local levels. As usual there was plenty more that happened during the five-day meeting than I had space to recount in the article. So here’s a roundup of additional comments from a variety of speakers on a variety of topics including MAP-21’s focus on performance measurement, efforts to accelerate project delivery, what MAP-21’s expansion of the TIFIA program will mean for states, how federal restrictions on tolling might need to change to allow states to meet their infrastructure needs, and why many expect federal transportation programs could see cuts well before MAP-21 expires in 2014.

Cuts on the Way Sooner or Later

Sarah Puro, Congressional Budget Office: “It seems like cuts are going to have to happen in some respect. When you look at the long term … you either have to raise revenues or cut spending or do a combination of the two and those are really your only options. And if there’s no political will to raise revenues, the spending cuts may need to come. Transportation programs are protected from sequester for the most part but it’s hard to imagine cuts not coming.”

Silvia Garcia U.S. Department of Transportation, Deputy Asst. Secretary for Management & Budget: “We have a lot of different factors converging with the debt ceiling, the sequestration hits at the beginning of March, and the expiring (continuing resolution) at the end of March. None of us know what’s going to happen. I think it’s a question of what is Congress going to do and how does it come together. I think no matter what, the message right now from Congress is you’re going to have less money to do what you need to do. If it’s sequestration or if it’s something else, it’s the same message that we’re going to have.”

Joshua Schank, Eno Center for Transportation: “It’s really not going to be easy for states or transit authorities to replace (federal) revenues (if cuts are inevitable). If you look at how states are able to raise revenues, the mechanisms they have available to them, the best estimate we can come up with is that perhaps they could substitute for about 60 percent of the funds they would lose if the federal government were to cut (transportation spending) by 35 percent. We assume a 35 percent cut because that’s approximately what it would take to bring revenues in line with spending. So if the federal government wanted to take a responsible role and say ‘look, we don’t want to raise the gas tax but at least let’s not spend more than we’re taking in.’ Which I’m not recommending as a strategy but could be one theoretical approach. That would be the cut states would face. And we estimated they’d be likely to replace about 60 percent of that, which means there’d be about a 40 percent loss in overall transportation spending which is pretty significant.”    

Future of Transportation Funding & Tolling

Nathan Macek, Parsons Brinckerhoff: “Over a longer term horizon, we have the possibility that we could see such changes as an abandonment of fuel taxes. We’ve actually seen the governor of Virginia this past week propose the abandonment of the fuel tax in the state in favor of a larger sales tax. Now whether that goes anywhere, it will be interesting to see. But that has an implication for how we go about doing user-funded revenues if we pull the plug on fuel taxes.”

Macek: “If the feds aren’t going to pony up more money, increasing the fuel tax and providing more money for transportation, on the other hand they can’t be restrictive of what you can do with tolling. They can’t have it both ways. They have to provide the flexibility for states and regions to do what they need to do to help fund their own infrastructure if the feds aren’t going to pony up to the table.”

Macek: “I don’t think that we can be held hostage to how we funded construction of these highways 50 years ago to determine how we fund them going forward. I think we really need to think about that. If we really are in this preservation and system optimization mode, we need to free up and think about new ways of funding those systems and whether that’s tolling or something else, there needs to be that flexibility.”

MAP-21 Accomplishments & Challenges

Art Guzetti, American Public Transportation Association: “(Congress) passed a six-year bill. They just only had enough money to fund two years of it. What I mean by that is I think we have a policy framework in place for six years. I don’t think there’s going to be much discussion on the policy this year. It’s going to be about the critical issue of the revenue to make the program.”

Peter Rogoff, Federal Transit Administration, Administrator: “A lot of attention was paid—rightly so at the time—to the fact that we had a big battle in the House (last year) as to whether transit should be funded without the benefit of any trust fund dollars at all as was proposed by the House Ways and Means Committee. And a lot of attention was paid to that very difficult battle, in which we eventually prevailed. And a lot of attention has been paid to the fact that it’s just a two-year authorization bill and we only got a two-year bill because of the inability to take on the more challenging financing question that looms over surface transportation. And all of that’s true. But at the same time, in terms of policy changes, MAP-21 … was a real breakthrough for public transportation and made a great many significant policy changes in terms of the direction and role of the FTA … The ability to streamline our New Starts program and implement a new way of evaluating cost beneficial projects was something that we had been seeking from the very beginning …”

Silvia Garcia, U.S. Department of Transportation: “I think all of us wanted MAP-21 to be this big, great, multiple year bill. At the beginning we were pushing for a longer bill. But in the end, the MAP-21 timeframe is based on how much money there was to go around. So at the heart of all of this I think is this question of how much funding is there for transportation and it’s the first (authorization) bill in recent history that didn’t have significant (funding) increases. So I think the opportunities for us are mainly focused on the policy side (with) the consolidation of programs, the new policy, the streamlining, those types of things which we’ve really taken and run with …”

Garcia: “One of the immediate challenges that we faced was MAP-21 was signed into law in July. The (continuing resolution) that started in October didn’t really take into account any of those changes that had happened in MAP-21. So that was the first time that we had to start talking about how do we implement this in trying to get the appropriators and the authorizers on the same page. Some of our programs we were able to start the process going along. But some of us are upset (that) we’ve missed the window in a two-year bill if the first six months of the (fiscal) year, we were not allowed to use some of that funding that we did have that was reallocated and those types of things. That’s been one of our biggest challenges. Not only did the funding amounts not increase, but we haven’t had access to all of the funding that’s there.”

Garcia: “More and more we’re looking at a very different funding dynamic. In general, I think we always assumed there’d be more money and there’d be more programs and now we’re having fewer programs and less money. So I think we really have to focus in on operational efficiencies and how we make these things work.”

Garcia: “We’re hopeful that whenever everything shakes out with the fiscal situation that we’ll at least get access to the funding that was provided in MAP-21.”

Expansion of the TIFIA (Transportation Infrastructure Finance and Innovation Act) Program under MAP-21

Garcia: “(One success of MAP-21) is the increase in TIFIA. We went from a program of about $100 or $120 million a year to $1.7 billion over a two-year period. I think one of the important messages I’m telling folks though is those are loans, not grants. And so that’s a very different kind of dynamic than what we’ve been used to when we look at funding increases. But having this great reserve of funds is a great opportunity to look at what are some iconic, big projects that we want to do and move those forward through the TIFIA program.”

Joshua Schank, Eno Center for Transportation: “It’s important to keep in mind that the total amount of funds leveraged by TIFIA over the last decade are still a fraction of the overall amount of spending that has been put forward. Secondly, TIFIA is severely limited by the fact that the existing user fee incentives make it very challenging for states and locals to put in revenue streams that could pay back those loans. So it’s great that TIFIA has been expanded under MAP-21. That’s wonderful and I hope it comes to fruition that all of the money that’s available for loans is given out to states. But that’s only possible if states and locals can come up with revenue sources to pay it back and right now they face the same political obstacles with those revenue sources at the state and local level that we face at the federal level in many cases.”

Garcia: “We’re interested in talking to folks who have revenue streams and ways to repay these loans because I think it’s really the big, new thing that we were able to do in MAP-21 on the funding side. We’re looking at ways for projects that are not just your typical toll roads and other types of things that we’ve done traditionally with TIFIA but transit projects and other (projects) that have revenue to really think about TIFIA and kind of sit down and talk about it because with the $1.7 billion we have in credit subsidy, we’re able to give approximately $17 billion in credit assistance, which can be leveraged up to about $50 billion in investment in infrastructure, which is a great opportunity for us to really make investments in areas that we need to. But it’s a give and take. It is a loan that needs to be repaid. And that’s a different kind of dynamic than some of the grant programs where we’ve traditionally seen endless growth and we’re not seeing that at this point.”

Garcia: “TIFIA is actually one of the programs that was not impacted by the (continuing resolution) so we have the obligation authority to be able to start awarding funds for TIFIA right now. MAP-21 changed the construct of TIFIA in some ways, made it a rolling process as opposed to kind of an annual process where we collect all the applications, evaluate them against criteria and then make the award. Now it’s an iterative process with individual projects as they go through those stages. So it’s really a question of when is a project ready, has it met all the criteria and we’ve done all our evaluation. So there’s not a set time for when we’re going to make the announcement (of the TIFIA awardees). It’s just a question of how the project has progressed through the process.”

Garcia: “The increase in TIFIA is definitely something to be excited about. I think having $17 billion worth of loans potentially out there leveraged for $50 billion in projects is game changing. I mean I think it builds on the infrastructure bank that we had proposed in our budget for a few years. This is really kind of that idea in an existing program. It’s really an opportunity to look at some big, iconic projects and help them move forward and leverage private dollars. And also … I think looking at other types of projects that we haven’t done in the past—looking at rail, looking at transit—and making people think about transportation in a different way and looking at what are your revenue streams, can you support a loan and how do you do those things is a great opportunity for innovation. No matter what, $17 billion in loans is a significant investment in infrastructure and I think … we’re going to have to put that money to work and really do some great things.”

Performance Management in MAP-21

Jeff Paniatti, Federal Highway Administration: “I know a lot of people who I think were disappointed with MAP-21, primarily when they looked at the length of the legislation and the funding side and the lack of resolution of issues with the Highway Trust Fund. But I think it’s important to realize that from the policy and programming side, it was some pretty transformative legislation … And I know of no area that has the potential to be more transformative than (performance management).”

Paniatti: “MAP-21 identified the national goal areas. It required (the U.S. Department of Transportation) to establish measures with input from the community in 18 months and with some guidance from Congress, particularly as you see in the MAP-21 thresholds for pavement condition on the interstates, which we have to establish, and bridge conditions on the (National Highway System), which is prescribed in law. In some other areas they provided some input with regards to the measures. They said once U.S. DOT did its work, the states would set targets within 12 months of establishment of the measures and then the MPOs would follow that by establishing targets within six months of the state targets. And this would all be incorporated into the planning process. And then within four years of enactment and biennially after that, the states would report on progress. And if there wasn’t progress in certain areas, particularly the safety area and the infrastructure area, then there would be some corrective actions. Not taking money away but some requirements to spend money and dedicate the money to those areas until certain thresholds were reached. So pretty simple when you walk through the process, not so simple and easy when you have to go through the whole process of implementing it.”

Paniatti: ““This area has the opportunity to transform our approach to the federal aid program and even beyond that to transportation by being much more transparent about the impact that the resources that are invested have in the outcomes on safety, on infrastructure, on performance of the system. I think it can also be very helpful to us as the state and local (governments) are establishing the targets, my expectation is those targets will have to be set and be resource constrained. And so I think it will be helpful at both a state level and the federal level that we’re having a conversation with regard to what will the state of our system be with the resources that are available. And I think that’s a good thing. We’re able to say that with this amount of resources available to us at the federal level, this is what we can accomplish or not accomplish in terms of the state of the infrastructure and the state of safety and state of operation of the system. And hopefully that will help us with the other part of MAP-21, which is the funding part, and that conversation which is yet to be resolved for the long term.”

Kirk Steudle, Michigan Department of Transportation Director: “(Performance measures) are a means not an end. It’s an important tool and can improve decision making but it’s not a substitute for greater investment. This is a great policy piece. I’m glad Congress put this policy piece in place. I think it’s right on. But it’s got to be viewed as a work in progress. And when we get through the next authorization … it will have to address funding because really there’s not a lot left.”

Michael Lewis, Rhode Island Department of Transportation Director, AASHTO President: “I think it’s human nature that we are afraid to be measured because we think there are negative things that could come out of that. And I think what’s been happening in recent years is there’s been a shift away from being afraid that negative things could come out of being measured to positive things could come out of being measured. Positive things like being able to better articulate what we’re doing at the state DOT, at the MPOs, at the Federal Highway Administration, at U.S. DOT on where we’re putting our resources … We still struggle with being able to articulate to the general public what it is we do …”

Lewis: “Performance measurement is good. It’s good for big states. It’s good for small states. It’s good for rural states and urban states. It’s good for all of us because it’s going to help us target our resources so that they are most effectively used.”

John Halikowski, Arizona Department of Transportation Director: “For us, the cornerstone of MAP-21 really is that it’s a transformation to a performance and outcome-based program. States are going to invest resources in projects to achieve individual targets but—here’s the important point—that will collectively make progress toward national goals. And that collectively is very important because like it or not as much as we’d like to think that we are independent operators out there no matter what level of government you’re in, you’re part of the system. And it’s a national system for good reasons.”

Halikowski: “We have to move in this direction of performance measurement because it’s the right thing to do … We are accountable to those taxpayers that we work for out there to establish this system … We have to strive for a collective, agreed on set of goals …”

Halikowski: “What’s interesting about the timeline is that MAP-21 became effective in October of 2012. We’re in this rulemaking process in April of 2014. But then MAP-21 does expire in October of 2014. So from my perspective in a larger state, I’m very concerned about this expiration date and will there be changes along the way as we are moving forward with instituting these goals and state performance targets as we move forward to 2016.”

Jane Hayse, Atlanta Regional Commission: “I do believe if implemented successfully, (performance measurement) can help restore the public’s trust in government. Referring to (last summer’s transportation sales tax ballot referendum) in Atlanta, so significantly we got our head handed to us on a silver platter and a lot of that can be attributed to a lot of other factors but lack of trust in government is real and is out there and again this is a process to help us (combat) that but we’ve got to approach it very carefully.”

Accelerating Project Delivery in MAP-21 and the Federal Highway Administration’s Every Day Counts Program

Victor Mendez, Federal Highway Administration, Administrator: “For major projects, it takes us 14 years as an industry to deliver. In today’s world, 14 years is way too long … When we sit here as an industry and say we’re going to improve your safety and we’re going to improve your air quality and quality of life and on and on, all these benefits and we’ll get them to you in 14 years. It does not work. That was very difficult for us to explain.”

Mendez: “Building a bridge, for example, next to an existing bridge, demolishing the old bridge over a weekend and sliding in the new bridge. Some very simple but complex ideas that are out there that we as an industry simply did not get a hold of and implement them … I see (Every Day Counts) as providing a channel to the industry to create innovation, to think about new ideas and take old ideas and improve on them and then being able to share them nationwide.”

Mendez: “We’re here to work with you and share these success stories … Cut down on time of delivery to the customer—the taxpayer—faster and more efficiently. And I think if we can do that as an industry, I think Congress if we’re going to go and ask them for additional funding I think we need to show them that we know what we’re doing and we can be efficient and can make really great decisions and deliver to the taxpayer.”