What Happens To States When the Highway Trust Fund Runs Dry? Florida Weighs In
May 18th, 2014 | By: Infrastructure Report Card
Depletion of the Federal Highway Trust Fund- What Could it Mean for Florida? An Exclusive Interview with FDOT State Secretary Prasad by Steve Lubinski, PE, CWI, LEED-AP Miami-Dade ASCE conducted an exclusive interview on May 6, 2014 with Florida’s Secretary of Transportation and head of FDOT, Ananth Prasad. The Federal Highway Trust Fund (funded by the Federal Gas Tax) provides 30% of Florida Department of Transportation’s funding, but the fund is in danger of becoming insolvent in 3 months or less according to the Congressional Budget Office estimates. Capitol Hill gridlock could make insolvency a reality if they don’t act (as shown in the chart below from USDOT).
MD-ASCE: Miami-Dade ASCE thanks you for this opportunity. Can you discuss the magnitude of the problem with the Federal Highway Trust Fund?
AP: As you know it’s a problem. The Federal Highway Trust Fund will run out of money in July or August, so Congress will have to find a way to keep it solvent and come up with around $9 Billion. But then the bigger picture going forward is that the receipts coming into the Federal Highway Trust Fund are actually less than the outlays are for project commitments. With all of the projects from state Departments of Transportation the current shortfall would be around $15 Billion next year. First Congress will have to get $9 Billion for the Federal Highway Trust Fund to be solvent for the remainder of this federal fiscal year, and then going beyond, we need to either extend MAP 21 at the current funding level plus add an additional infusion of $15 Billion+ until a more permanent solution is arrived at by having higher revenues to support the program or reduce the program to the level of the revenue.
MD-ASCE: A big reason why the Highway Trust Fund revenues are not keeping pace with our needs is that cars have become much more efficient than 20 years ago. Are there other causes?
AP: Yes. The other issue is that the Federal Highway Gas Tax has not been raised since 1993 or indexed to inflation. When you look at the cars you drove in the mid 1990s, the car that you drive today is more fuel efficient. Also, what a dollar could buy in 1993 is not what a dollar can buy in 2014. So you have two things going against you, the first thing is the purchasing power of the gas tax which hasn’t changed since 1993 (inflation), and the second is your fuel efficiency. Hence we have this crisis that is getting more acute lately because of better fuel efficiency standards.
MD-ASCE: Has FDOT received any correspondence from USDOT about the possible insolvency?
AP: No. However, USDOT Secretary Foxx has made some comments in general briefings with us during federal highway and USDOT national meetings, but no formal correspondence sent out, nor any correspondence about the possibility of slowing down reimbursements to the states. With this federal program, we have to spend money, then seek reimbursement from them (USDOT).
MD-ASCE: Has FDOT begun working on any contingency plans on what to do if the Federal Highway Trust Fund does become insolvent in July or August?
AP: Our contingency plan is that we are only dependent on federal funds to the tune of about 30% of our programs. So, unlike other states as shown in a newspaper article, we are one of the few states that do not have to rely as heavily on federal funds. So what we’ve been doing is carrying a higher balance in our trust fund so that if we don’t get reimbursed (by the federal government) timely, then we can still continue to pay our bills to contractors. I would say that since Florida only relies on the federal government for 30%, and Florida revenues are a little robust, so we carry a higher balance in our Florida trust fund. I think we could survive an insolvent Federal Highway Trust Fund for 3-6 months without any negative impact, but beyond that you’re going to have a tangible impact that you can’t avoid.
MD-ASCE: What do you think will happen in Washington D.C. after July or August?
AP: Beyond July or August there is a big election coming up nationally so I’m cautiously optimistic that they will put more money in to make the fund solvent until next year, then after the fall elections are done the Congress would likely begin debating a much more robust highway bill and how to fund it. Policy frameworks are easy, but the bigger issue is how do you get funding?
MD-ASCE: Has FDOT made any plans for projects that would be protected if the Federal Highway Fund does become insolvent?
AP: Safety and preservation is first. The second thing would be public-private partnership projects. Those have to be protected. So we’ll walk through the list. We have a game plan for doing this. Obviously safety and preservation, then public-private partnerships, then we’ll start looking at projects that could be deferred and projects that are based on other things that are happening in a region that we don’t want to negatively affect.
MD-ASCE: In South Florida we have many big projects planned during this timeframe like the 826-836 interchange, managed lanes for Palmetto and I-75, I-95 Express phase 2.
AP: 826-836 would be one of the last things affected since it is a project already under construction.
MD-ASCE: And the other examples?
AP: The reality is that is that for projects like the express lanes on the Palmetto and I-75 where construction has not begun, we may have to delay the project a few months. But we would not delay an ongoing project of that magnitude like 826-836. We would look at projects that are about to start and maybe push out the start date a little bit, and not take on new projects until the situation stabilizes. Ongoing construction projects…. I don’t foresee that they would be impacted.
MD-ASCE: The USDOT site has a sub-account listed for mass transit, which projected it to remain solvent only until late 2014. How might mass transit be affected?
AP: We would have to look at prioritizing critical services, not taking on new things, and maybe scale back on some things. It’s like if tomorrow someone said you now need to live off only 70% of your income, then you’d have to make some choices. For the next 3 months you need to live off 70% of your income, you’d prioritize, you defer some things.
MD-ASCE: What are some things the public might notice if the federal transit account becomes insolvent?
AP: I’m sure the service levels would be affected. If you don’t have the money, you can’t run the same services….frequency of buses or trains, so you’d see diminished or less frequent service that you’d have to work around. Hopefully they will fix the shortfall. I think right now there is more of a focus (in Washington) on a short-term fix. I don’t believe there is enough support for increasing the gas tax, so the folks in D.C. they may have to look at other options of maybe cutting things that aren’t as relevant in the 21st century.
MD-ASCE: What are some other things you think Floridians should know?
AP: We need to continue investing in infrastructure. At the state level we are doing it. At the federal level their role should be proportionate with the amount of funding they provide. We need to deliver projects in a more cost-efficient way, while making sure we balance it within model impacts, historical impacts, social impacts, and economic considerations. All those things need to be balanced. If we do that, we can deliver projects in the most cost-efficient way.
MD-ASCE: What is your take on the last legislative session in Tallahassee?
AP: Our budget is robust. The legislative session just ended and the legislature just passed the budget to fund the transportation at record levels, which obviously the Governor has been very supportive of….our investment in ports, aviation, and transportation. Investments in transportation are the foundation for economic development and activity. If we are looking to attract businesses to come to the state and wanting businesses in the state to grow, they are going to ask: what’s our quality of life, quality of education, and quality of infrastructure.
Read the full interview here in their May newsletter.
Tags: #fixthetrustfund, congress, economic impact, Florida, highway trust fund, transportation
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This Week in Infrastructure: Infrastructure Week Delivers on its Name
May 16th, 2014 | By: Becky Moylan
Infrastructure Week lived up to its name! In addition to the events marking the occasion and furthering the conversation on emerging solutions, innovative approaches and best practices, President Obama, Vice President Biden, Secretary of Transportation Foxx and Congress all spoke over the past few days on the need for investment. On Wednesday, President Obama took his message to the Tappan Zee Bridge, a major thruway for New Yorkers, highlighting his plan to get projects moving faster while remaining on budget. Meanwhile, in Cleveland against the backdrop of a rail car repair shop, Vice President Biden shared a similar plea, citing the Infrastructure Report Card’s estimate that the U.S. needs to invest $3.6 trillion by 2020 to get our nation’s infrastructure GPA up to a B. Secretary Foxx also warned of the perils of inaction regarding the Highway Trust Fund, saying “We cannot meet the needs of a growing country and a growing economy by simply maintaining our current level of effort.” The remarks from the administration did not fall on deaf ears, as Chairman Boxer and Sen. Vitter released a bipartisan bill to authorize six years of highway and transit programs on Monday that passed out of the Environment & Public Works Committee on Thursday. Could infrastructure be the new political buzzword? Or will congressional gridlock derail it? Hopefully the trend continues into action, as failure to act comes at a high cost of its own, including a loss of as many as 700,000 jobs. As The Baltimore Sun points out, a short-term bailout “defeats the purpose of the trust fund.” It is time for a reliable funding mechanism that will pave the way to a Highway Trust Fund equipped with 2014 dollars, rather than 1993 ones. The Highway Trust Fund and transportation-based infrastructure, however, were not the only sectors getting attention during Infrastructure Week. The details of WRRDA were agreed upon and the bill will be sent to the President for his signature next week. Secretary Foxx also honored the Champions of Change in Transportation, reminding us that improving infrastructure, fixing the Highway Trust Fund and passing legislation like WRRDA is ultimately about helping people. These 11 individuals each offer innovative solutions to improve transportation in their communities and exemplify the great work that can help improve citizens’ lives through transportation projects. Hope you all had a great Infrastructure Week, too!Tags: congress, highway trust fund, Infrastructure Week, transportation, wrrda
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ASCE Applauds U.S. Senate Conference Report on Water Resources Reform and Development Act
May 15th, 2014 | By: America's Infrastructure Report Card
Washington, D.C. — The following is a statement from Randall (Randy) S. Over, P.E., F.ASCE, president of the American Society of Civil Engineers (ASCE) regarding the conference report on the Water Resources Reform and Development Act by the U.S. Senate: “Today’s release of the conference report on the Water Resources Reform and Development Act (WRRDA) represents a major victory in providing the necessary funding to modernize the nation’s ports, inland waterways, dams and levees. The bill promotes economic growth and job creation through policies that strengthen U.S. infrastructure, allowing the United States to remain competitive in the 21st century. “ASCE’s 2013 Report Card for America’s Infrastructure graded the nation’s ports a C, inland waterways a D-, dams a D, and levees a D-. Our nation’s water resources are critical to our economy, our infrastructure, public safety, and the preservation and enhancement of our environmental resources. In fact, ASCE’s Failure to Act economic study on the nation’s marine ports and inland waterways shows that underinvesting in just these two sectors threatens more than one million U.S. jobs and $270 billion in U.S. exports by 2020. “WRRDA will drastically reduce the time it takes for project approvals by consolidating or eliminating duplicative studies, allowing concurrent reviews, and streamlining environmental reviews. The significant reforms in the law are not at the expense of environmental quality and will allow for a stronger, safer national water resources infrastructure. In addition, ASCE applauds the reauthorization of the National Dam Safety Program, the strengthening of the Levee Safety Initiative, and the efforts to put the trust back into the Harbor Maintenance Trust Fund so that our nation’s ports can remain competitive on a global level. “ASCE is pleased that Congress has collaborated on a final conference report on WRRDA to invest in America’s future. This decisive action will ensure that our nation’s ports, waterways, dams and levees receive much-needed funding. We look forward to the final vote next week and the legislation being signed into law by the president.” Founded in 1852, the American Society of Civil Engineers represents more than 145,000 civil engineers worldwide and is America’s oldest national engineering society.###
Tags: congress, dams, infrastructure, levees, ports, water, wrrda
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ASCE Statement on the Senate EPW Committee’s Proposed Transportation Bill
May 14th, 2014 | By: America's Infrastructure Report Card
Washington, D.C. —The following is a statement from Randall (Randy) S. Over, P.E., President of The American Society of Civil Engineers (ASCE) on the bipartisan Senate Environment & Public Works Committee’s newly proposed MAP-21 Reauthorization legislation: “The proposed MAP-21 reauthorization legislation from Chairman Boxer and Senator Vitter is yet another positive step to improve our economy and raise the grades on the nation’s surface transportation infrastructure. While the proposed long-term bill is encouraging, whether or not it becomes law rests entirely in the hands of Congress. Senators Boxer and Vitter know that American families and businesses need a long-term transportation bill to provide the certainty they are looking for. The question remains whether Congress will assure economic certainty, or discard this new proposal for a short-term bill that will only hurt our ability to plan for the future. “Senator Boxer’s proposal continues a lot of the positive work we saw under MAP-21. We must continue to increase project flexibility and accelerate projects for delivery. The more efficient and effective we can be, the greater the opportunity for raising our nation’s infrastructure grades. Likewise, we must continue to focus on how we can increase movement of goods by modernizing the investments of the past for a new economy. “ASCE has been saying for months that we must fix this problem immediately with a long-term, sustainable revenue solution in order to keep America competitive. “Regrettably, while the bill may reflect political realities, it does not go far enough in addressing our country’s investment gap. By maintaining our current funding levels, we are maintaining America’s D+ infrastructure grades. ASCE’s Report Card for America’s Infrastructure shows that our nation needs a renewed investment strategy for a new century.“We applaud the leadership exhibited by Senators Boxer and Vitter to start the discussion to solve this problem. Now the question becomes: how are we going to pay for it? ASCE supports an all options on the table approach to addressing the insolvency crisis with the Highway Trust Fund. Our challenges are too vast and the costs are too great for us to continue with the status-quo. America’s economy cannot afford for the Highway Trust Fund to become insolvent—now is the time for action.”
Founded in 1852, the American Society of Civil Engineers represents more than 145,000 civil engineers worldwide and is America’s oldest national engineering society. For more information, visit www.asce.org.#####
Tags: congress, highway trust fund, senate, surface transportation
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This Week in Infrastructure: Finding Funding for the Highway Trust Fund
May 9th, 2014 | By: Becky Moylan
The Senate Finance Committee held a hearing this week on “new routes for funding and financing highways and transit.” This effort included warnings from the Congressional Budget Office (CBO) that $13 to $18 billion will be needed each year to maintain the current funding levels the Highway Trust Fund provides. Sen. Boxer (D-CA) responded with a promise to have her bill out next week. As elected officials continue to explore options and offer solutions, including a proposed change to the TIGER Grant program, warnings continue of what is at stake. (Spoiler alert: it’s a lot.) This issue affects all Americans and it’s a ‘toll’ we’re all paying for in one way or another. So how exactly did we get here? Vox has an explanation in six charts. This week also saw some discussion on raising the gas tax (from the media, not so much from politicians) including CNBC, CNN Money and Al Jazeera America. The Washington Post offers a great explanation of how inflation, not efficiency, has led us to this transportation funding cliff. And the discussion of tolls as a funding mechanism continued from last week, an option that may be more appealing to Congress during an election year. Discussion is vital, but we need continued leadership and action to secure a reliable funding mechanism. As states, including Oregon, brace for transportation projects without federal funding dollars from the Highway Trust Fund it is time to #FixtheTrustFund.Tags: congress, highway trust fund, roads, TIGER Grants
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This Week in Infrastructure: White House offers bill to GROW AMERICA
May 2nd, 2014 | By: Becky Moylan
Congress is back in session, but it was not a member of the legislative branch who introduced legislation to fund transportation projects. Instead, the U.S. DOT and President Obama followed up on a promise from earlier this year to propose a $302 billion transportation budget, titled GROW AMERICA (which stands for Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America). Don’t worry, you won’t be tested on the anagram at the end of this post. However, despite a step toward a possible funding option for the Highway Trust Fund, to guarantee it doesn’t become insolvent during the height of summer road construction, Time suspects you didn’t even hear about it. There was some coverage, but it was not splashed across the top of news websites, nor did it get a breaking news app push notification or email (at least not from any I use. If yours did let me know and I will gladly convert). Most notable to the news media was the administration’s proposed shift in current law regarding tolls on interstate freeways. It is an alternative to raising the gas tax that will offer additional revenue, though the law makes it an option for states, rather than a federal mandate. So could the GROW Act be the answer to preventing Washington’s next cliff? Or will Congress put a pothole in its path to better transportation? Several states, including Iowa and Utah, continue to fear the Highway Trust Fund’s insolvency. And a Nevada paper urged that the country needs a plan. Both Rep. Dina Titus and Rep. Bill Shuster wrote in Roll Call this week about the importance of maintaining our infrastructure. It is time to transform these words into actions to #FixtheTrustFund.Tags: congress, gas tax, GROW Act, GROW AMERICA Act, highway trust fund, infrastructure, Tolls, White House
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This Week in Infrastructure: Highway Trust Fund Gets Media Attention
April 18th, 2014 | By: Becky Moylan
On a typical day, a Google news search for the Highway Trust Fund over the past 24 hours results in a page or two of results. But this week Wednesday, the search query garnered nine pages of hits, and the option to “explore in depth” 166 articles. What did these articles say? And why does it matter? Well, the articles report what those following closely already knew: Congress is giving states the transportation blues. Less reported, while perhaps more newsworthy for the people who specifically seek out the Highway Trust Fund in the news, the USDOT announced its latest projections on when the money will run short, currently predicted as the end of July. This latest warning comes as Transportation Secretary Foxx bus tours across eight states, raising awareness of what he refers to as “clearly a crisis.” Several states progressed with transportation project legislation this week including Connecticut, Massachusetts and Virginia, but without reliable funding for the Highway Trust Fund, it’s unclear how realistic these proposals are. Many cities are considering public-private partnerships (P3s) as an alternative. As the president emeritus of Harvard wrote this week “now is the time” to find the funding and rebuild our nation’s infrastructure. A great first step to do that is to fix the Trust Fund.Tags: congress, highway trust fund, infrastructure, P3
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This Week in Infrastructure: Reasons to Keep Advocating for Investment
April 11th, 2014 | By: Becky Moylan
The Opinion Pages of The New York Times presented a series of reasons “We Should Be in a Rage” and among them were—you guessed it—because of the state of our nation’s infrastructure. These grievances, along with suggestions and productive dialogue to change it, appeared in print across the country this week. In Mississippi, one writer named legislators’ neglect as the reason for low grades, and given that the state legislature once again passed on increasing the state gas tax, the frustration is understandable. For, as the Mayor of San Diego demonstrated, improving infrastructure takes time and money. Infrastructure provides a better quality of life, and as the decision-makers continue to appreciate its significance, new ideas for funding are being implemented. The desire to have long-term plans is also a promising development, especially as it could help combat the issues many states—including Oregon and Wisconsin—are currently facing. The watershed law Pennsylvania enacted last fall is proving the value of a strong transportation bill. Such legislation is unfortunately still often only discussed and debated and not enacted, including this week in Illinois and Indiana. New transportation legislation is also currently just a goal at the federal level. However, on Thursday Sen. Boxer and fellow senators announced the Environment and Public Works Committee’s commitment to a six-year bill to replace MAP-21, the current law authorizing the Highway Trust Fund. While only the start of a long process, this at least means state DOTs can rest a little easier, and continue with transportation projects and the jobs that come with them.Tags: congress, highway trust fund, infrastructure, MAP-21, P3
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Congress Looks to Learn Lessons from Canada’s P3 Experience
April 10th, 2014 | By: Infrastructure Report Card
This week the House Transportation and Infrastructure Committee looked to our northern neighbor Canada for advice on the federal role for public-private partnerships (P3) holding a panel hearing on the International Experience with Public-Private Partnerships, chaired by U.S. Rep. John Duncan (R-TN). Experts from the Canadian financing market were brought in to share their perspective on how their 200+ P3 projects have gone and what they consider to be the best practices of their federal and state framework. Kicking off the discussion, however, was Rep. John Delaney (MD-06) who is sponsoring a bipartisan bill that is gaining support – The Partnership to Build America Act (H.R. 2084) relating directly to P3s. The Partnership to Build America Act would create an infrastructure fund using repatriated corporate earnings and then utilize financing tools like public-private partnerships. The bill has gained the support of 60 House co-sponsors (30 Republicans and 30 Democrats) in the House and a companion, bipartisan Senate bill by Senators Michael Bennet (D-CO) and Roy Blunt (R-MO). If this were passed, it’s estimated that at least 25% of the projects financed with the new fund would use a P3 model. The panel of expert witnesses had many suggestions for what made the Canadian model successful for structuring P3s. However, it was Dr. Larry Blain, Chairman of the Board of Directors, Partnerships British Columbia, who suggested the following four benefits of performance-based infrastructure that should inform the U.S. structure:- Planning discipline and preparation. Performance-based infrastructure projects require comprehensive and long-term definition, costing and risk assessment. Many pitfalls are avoided before a shovel hits the ground.
- Certainty. Projects are on or under budget, and on or ahead of schedule, and key risks are assumed by the private partners. This is a key benefit of performance-based, financially-motivated contracting.
- Life-cycle asset management. In a performance-based approach the private partners have to maintain and rehabilitate the asset over 15-30 years, and they have to leave the asset in the required condition or face financial penalties.
- Efficiencies and innovation. Competition and the profit motive can lead to startling results, where the winning proposal provides solutions that the public owner never contemplated.
Tags: Canada, congress, Delaney, hearing, House, infrastructure, P3, public-private partnership
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