CSG Transportation Policy Academy Part 7: Janet Kavinoky, U.S. Chamber of Commerce

CSG’s Transportation Policy Academy in Portland, Oregon wrapped up on July 20th with a policy roundtable that included Janet Kavinoky, Executive Director for Transportation & Infrastructure at the U.S. Chamber of Commerce in Washington, D.C. She spoke about the efforts of the Chamber and the business community to encourage infrastructure investment around the country.

“I have beat my head against a wall for a really long time trying to go into companies and say ‘what does transportation infrastructure mean to your business?’” Kavinoky told policy academy attendees. “What we’ve finally concluded and a fairly recent ‘aha moment’ for us is if I go to Nike and I say ‘I want to talk to you about transportation infrastructure,’ they start talking to me about transportation services. They’re trying to figure out what their freight-forwarders are doing, what their third-party logistics firms are doing, maybe what the trucking industry needs. And they’re not really thinking so much about the roads and the rails and the intermodal connections and the stuff that I spend more time eating, sleeping and breathing than I really ought to. We’ve got to have conversations with business about ‘what is your company aspiring to or looking at? What are the problems that you encounter? Who do you work with in order to move your goods? Can we go talk to them and figure out what they’re engaging in?’ Because in many cases it’s folks like freight-forwarders and third-party logistics firms that operate behind the scenes that have a lot of the real answers for where the challenges are.”

Kavinoky said the U.S. Chamber is developing some important resources to help make the case for infrastructure investment. The first is a tool called the Transportation Performance Index.

“As something to complement what ASCE is doing in its Report Card, we said ‘we need some sort of way to measure what matters to business and show how it’s changing over time,’” she said.  

The index is used to measure transportation supply, utilization and quality of service, Kavinoky said.

“Is the infrastructure where it needs to be today and is there enough of it? And that’s not just about freight by the way. The services sector is 40 percent of the U.S. economy. One of the things that I heard yesterday (during a visit to the Port of Portland) is one of the big issues for employers in this area is getting their employees to work. How are we going to attract people to work at our companies if they’ve got to sit in traffic or if they don’t have access to public transportation? So for business, it’s not just about freight. It’s about transit. It’s about roads. It’s about waterways. For companies here who are national or global companies like Schnitzer Steel … they need air access and they need air cargo access. So do you have the infrastructure today that supports the transportation services—the airlines, the trucking companies, the railroads, the transit services, the barge operators that you need.”

“Second is utilization. Especially if companies are looking to locate somewhere, they need to know if the area can absorb future growth. Caterpillar located a major facility in Georgia and they did that because they saw that there was the capacity in the Port of Savannah and in the surface transportation area so that they could grow an export business.”

“The third part that we look at that is harder to measure because we haven’t been doing it that much in this country is actually quality of service. Can you provide reliable, predictable, safe service on the infrastructure that you have? So we combined indicators together in all of those areas across all of the modes and came up with our Transportation Performance Index.”

“Over the last 20 years or so, even though we’ve been investing increasing amounts in infrastructure, we’ve kinda bumped along and haven’t gotten a whole lot better or a whole lot worse in our performance. Now in some cases, that’s really good news. It’s a testament to both the public and the private sector that we can keep things going even when we’re underinvesting, even if we’ve got a backlog of maintenance, even if we’re not doing capital investments. But at some point, that’s not going to work out so well. So I encourage you to look at the Transportation Performance Index. We’re also doing it for all 50 states. And use that as a way to talk about the story. But it’s not just the index. We did some associated economic analysis and we could show that there was a strong correlation between how well the system is performing and economic growth. As goes transportation performance, so goes the economy.”

In addition, Kavinoky said the Chamber is also working on a new effort to engage champions in the business community to make the case for infrastructure investment.

“The macro numbers don’t seem to be resonating on Capitol Hill these days,” she said. “So we’ve just embarked on another effort to go out and create a better description of what we think needs to be done in the country. Part of selling this is motivating the public. … Here’s what I get asked all the time on Capitol Hill. It’s usually a pretty pointed question. ‘Can you go get Wal-Mart to come up to Capitol Hill and testify as to why we need to raise the gas tax?’ … Because members of Congress right now seem to want to have well-recognized companies do their job and say ‘hey, we need you to invest in infrastructure’ and provide that kind of political cover for that. I might not be able to get Wal-Mart, per se, to do exactly what they want but we are going out and interviewing CEOs from 30 companies across different sectors asking them to talk about transportation. And, by the way, in doing it also trying to recruit them to the cause so that they will be willing to step up and speak out and also maybe even activate their employee networks in different states. We’re doing shorter in-depth interviews with people at a more operational level within a lot of companies to talk about transportation and why that’s important so that we can weave a better story because a lot of this is about communications and convincing.”

Kavinoky also promised to help state lawmakers in any other way she can.

“We’ll share all of our information with you,” she said. “We’ll share any information we can get state by state with you to help make the case. I will put you in touch with a state or local chamber of commerce if that’s helpful. If you think your state or local chamber of commerce isn’t being helpful, let me know. I won’t tell them that you called me but I might call and encourage them to do something. … Engage your businesses. We will help you engage your businesses. I don’t get involved in specific localized projects or else I would need a much bigger staff and nobody would give it to me. But I’m happy to try to give you resources, put you in touch with companies, help you tell the story in both words and numbers, and then think through policy practices and investment practices that will help work in your areas.”

I also asked Kavinoky to weigh in on where she thinks things stand in Congress with preparing for the expiration of MAP-21 in 2014 and trying to pass a successor on time that considers the long-term future of the Highway Trust Fund.

“There is a lot of work going on to try to get something done on time,” she said. “But if you look at the track record of highway and transit legislation, we haven’t gotten it done on time maybe ever. The key to this next bill is the money. It is all about the money. … There were a lot of great reforms in MAP-21. There’s more to do. We can do a lot. We can speed up project delivery more. We can tweak policies. We can do all of that stuff but nothing works without the cash because without more revenue for the Highway Trust Fund, the federal aid highway program will be 10 percent of what it was in 2014 in 2015. So if you’re planning for 2015 and somebody tells you what are we guaranteed to get from the federal government, take what you got in 2014 and reduce it by 90 percent. That’s how much new obligation the Highway Trust Fund can sustain in 2015. … Federal transit program will go to about 33 percent of what it was because they just happen to be in ever so slightly better shape. So overall federal assistance to states and locals will go down roughly by 82 percent. If we don’t have cash, we can’t do anything.”

Kavinoky said privatization and devolution are among the solutions some members of Congress are pushing for.

“I testified in front of the House Budget Committee about three months ago on this topic and we still have members of Congress who believe that the solutions are either let the private sector do it, which doesn’t help the Highway Trust Fund. That might help build other projects and we’re big fans of doing public-private partnerships at the Chamber where it’s appropriate. Or devolve to the states. In other words, take the problem off the federal plate and hand it to the states.”

“Devolution doesn’t mean you’re going to get any money back. Devolution means you’re going to get the responsibility for raising the money back. So if you happen to have a member of Congress who says ‘well, why don’t we just devolve responsibility to the states,’ understand that it will then be your responsibility to go and raise the revenues, not the feds. If that’s what you want to do, awesome. We’re not going to support that at the Chamber because we think that there’s got to be a way to knit together the entire transportation system. And even if we devolve responsibility back for everything but the interstate highways, that doesn’t mean you’re getting any money back because the 18.4 cents a gallon that’s coming in to the federal Highway Trust Fund and 24.2 cents on the diesel side will probably then be able to support maintaining operating the interstate highway system largely so we’re not giving you any money back. The only answer is to find cash and that means going to the General Fund, which is a little bit difficult in this budget environment because that means we’re going to rob Peter to pay Paul, or raising revenue.”

Kavinoky told attendees that when it comes to the revenue equation, there are short, medium and longer term concerns.

“We’ve got to fix 2015 or we’ve got a real problem,” she said. “We’ve got 2015 to 2024, where current receipts will not sustain a federal aid highway and transit program at its current levels. And then we’ve got 2025 and beyond when you’ve got new (corporate average fuel economy) standards kicking in where we need a whole new ballgame. The U.S. Chamber continues to maintain that the most straightforward, simplest way to raise the revenue you need between 2015 and 2024 is increasing and probably indexing gasoline and diesel taxes.”

There could be other revenue solutions as well, Kavinoky said.

“We can convert to sales tax. We can increase taxes on trucks and tires. We can try to take customs user fees, although my members aren’t going to go for that because they’ve got enough problems at the border as it is. There’s all sorts of cats and dogs we can put together. Congress could decide to go after the oil companies. The more you go after those cats and dogs, the more enemies you create and it’s a little bit harder to get votes. If somebody has a better idea, I want to hear about it because I’ve been wracking my brain on this one for years. So we’ve got to get the money.”

The other issue is finding the right context in which Congress might consider infrastructure investment, Kavinoky said.

“The opportunities to get the money don’t come as standalone legislation because nobody is going to want to vote for any sort of revenue increase in standalone legislation. We have to look at tax reform, which may or may not happen. … We have to look through a broader budget deal, something around increasing the debt ceiling or dealing with an appropriations process. So we’re looking for every opportunity we can.”

Whatever the case, Kavinoky believes, state officials and others should weigh in now on what they would like to see happen.

“What will help dramatically is if we start hearing from state and local officials that they don’t want Congress to drop the ball because there are a lot of members out there who really just want to stick with the devolution solution. If you’re willing to take that one on, it would actually be helpful for me to know not because we want to fight it but because I don’t believe that you’re going to have a whole lot of states that will say ‘yeah, I’m ready to pick up the ball. We’re going to do that right now.’ So if I’m lying when I go to a member of Congress and say ‘I think you’re going to get a lot of pushback from governors and legislators,’ I kinda need to know that. But that’s where weighing in with your Congressional delegations and letting them know they’ve got to solve the problem and you don’t want it laid in your lap could be really useful.”

Finally, Kavinoky said that although the process of communicating the need for infrastructure investment has grown more complex and targeted, success still requires political champions willing to take difficult votes.

“From a strategy perspective it used to be go shout as much as you could with big reports and big numbers. Now the strategy is much more targeted, bite size, personal size communication and through networks that we’ve been building. It is a long arduous process. Good thing is at the Chamber we’ve got lots of lists of people we can send things to and we ask them to take action and we try and personalize it. We try and make it local and state. (U.S. House Transportation & Infrastructure Committee Chair) Bill Shuster is talking a lot about (how) he wants somebody to draw something for him so he can explain how a box of cereal gets to somebody’s door. So we can do all of that and we will. But I will tell you, I think when it comes to the transportation investment side, it’s still going to require a lot of elected officials willing to step up and do stuff even if the general public doesn’t quite get it and that’s where I think we have to come in and other interest groups. This is why we work with labor on these issues—one of the more productive places the Chamber works with labor—to see how we can provide political cover in certain places. But the nature of the communications stuff has changed dramatically.”

Additional Resources

“Transportation Performance Index – 2011 Update,” U.S. Chamber of Commerce (Next update scheduled for September 2013)

Free Enterprise – Infrastructure Blog, U.S. Chamber of Commerce

Let’s Rebuild America, U.S. Chamber of Commerce