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PLENARY SESSION 2 Policy Provocateurs Tough Questions, Tougher Answers? David Seltzer, Mercator Advisors, LLC (Moderator) Nancy Richardson, Iowa Department of Transportation Steve Lockwood, Parsons Brinckerhoff William Ankner, Transportation Solutions D avid Seltzer of Mercator Advisors, LLC, moder- native energy sources. The real question for the future ated a panel discussion of transportation indus- is where the fund is going to get its money. In addition, try leaders serving as provocateurs to debate what should it be funding? If it is going to be limited, the policy dynamics of future surface transportation should it refocus and fund 100 percent of something crit- finance. Mr. Seltzer stated that the panelists were there ical to national needs? Should it fund programs rather to elicit ideas and stimulate discussion and not represent than projects? any specific organizations or agendas. He canvassed the Mr. Ankner: The trust fund is dead. We should create provocateurs' perspectives on the following issues: the a new way to fund our transportation needs. The trust Highway Trust Fund, other federal programs, federal fund has silos--that should not be continued. statutes, and tolling of untolled highways. Mr. Lockwood: On one hand, there are national needs The provocateurs included and investments that are hard to implement locally. What if the fund focuses on national interest investments Nancy Richardson, Director of the Iowa Depart- and then lets the rest of the national program end to be ment of Transportation; taken up locally? Nonrenewable consumption is what is Steve Lockwood of Parsons Brinckerhoff; and currently funding our Highway Trust Fund, and now we William Ankner of Transportation Solutions. are locked into a death spiral. We should use the general fund with a performance standard driving it to set up a The moderator posed a series of questions to the pan- new funding program that is based on performance. elists to solicit their perspectives and opinions. Ms. Richardson: Regardless of which fund is used and what it is called, we still need revenue. The United Moderator Seltzer: The Highway Trust Fund is half a States is better served with the trust fund because it is century old and has been used to fund the construction dedicated to transportation and not available for other of more than 42,000 miles of the Interstate highway sys- needs. Citizens understand the concept of the Highway tem. Policy makers are unwilling or unable to raise taxes Trust Fund. There are five or six proposals on the table to meet system preservation needs. Given the lack of a to bundle a new structural federal-aid program. These current common vision, is the notion of having a High- could include (a) a $0.40 per gallon federal gasoline tax, way Trust Fund still relevant? (b) continuing the existing gasoline tax and indexing it Mr. Lockwood: Compared with what? The fund is to inflation, (c) present choice extended with the gen- important for purposes of predictability for legislative eral fund enhancing the Highway Trust Fund (which is planning and procedures. However, the revenue-gener- probably the most likely outcome), (d) instituting a car- ating potential of the trust fund is eroding because of bon tax on fuel, (e) instigating a European-style open improvements in vehicle efficiency and the use of alter- fuel tax on all modes, and (f) going into debt to fund 17

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18 F I NA NC I NG S U R FA C E TR A NSPOR TA TION IN T HE U NIT ED ST A T ES the trust fund so that future generations can make the be risky to make many funding decisions on the basis of choice to raise taxes. obscure definitions of livability and sustainability. Mr. Lockwood: The federal definition of sustainabil- Moderator Seltzer: Why have states and local govern- ity is incomplete. Moreover, it is not possible to develop ments failed to step up and take care of local needs? a one-size-fits-all federal program for funding on the Ms. Richardson: The United States needs to look at basis of livability. This type of approach would not be what should be funded nationally. From a research per- balanced. spective, we need to determine what needs our current Mr. Ankner: It is a matter of balance. How far down revenues could actually cover. into the decision-making process should federal program rules apply? Moderator Seltzer: Why not implement a vehicle miles traveled (VMT) tax? Would it be hugely complex to Comment: The United States generally does not have administer? people pounding down the door for bike lanes and Mr. Lockwood: The United States has a tradition of a pedestrian bridges. We have moved to suburbs. Sustain- narrowly focused federal-aid approach. We do not have ability is a cultural issue: we need to redefine the Ameri- the congressional votes necessary to approve a VMT tax. can dream. Ms. Richardson: The problem is that land use deci- Moderator Seltzer: When will reauthorization occur? sions that are made at the local level do not necessarily Mr. Lockwood: December 2014. support environmental sustainability. It would be inap- Ms. Richardson: March 2013. propriate for federal funding decisions to be based on Mr. Ankner: May 2013. local policy. When the audience was asked for its opinion on the Moderator Seltzer: Can tolling play a larger role in fund- same question, some suggested that it would not come ing our transportation needs? Tolls currently represent 6 until after the next presidential election when the result- percent of transportation funding. What percentage of ing administration is in place. systemwide revenue could be generated by tolling? Mr. Ankner: Tolling could generate 10 to 13 percent Moderator Seltzer: Some of the money in the Trans- of transportation revenue. The United States needs a portation Investment Generating Economic Recovery regional approach for the use of tolling rather than hav- (TIGER) program is being used to support transit proj- ing states attempt it alone. ects. Are efforts to use grants to support livability consis- Ms. Richardson: Iowa has no non-Interstate facilities tent with other transportation goals? that could generate enough toll revenue to be self-financ- Answer: Yes, there are small regions and megare- ing. An interesting piece of research would be to examine gions. The concept of sustainability recognizes the need how much of the Interstate system is currently not tolled to develop projects for these different contexts. The gen- and identify parts that could be. eral fund does not come with the same strings attached Mr. Lockwood: Parsons Brinckerhoff recently as dedicated programs like the TIGER grants. surveyed all toll activity undertaken since the imple- There are many rural states with two major Interstate mentation of the Intermodal Surface Transporta- highways intersecting at some point. Under this scenario, tion Efficiency Act in 1992 for the Federal Highway how would the federal government promote livability, Administration. While the 6 percent of transportation since the transportation needs they serve are not just funding currently generated by toll proceeds does not within their own borders? seem to be a large number, when one considers the Mr. Lockwood: Livability issues are important, but high-growth Sunbelt states that are dependent on tolls they are at the fine-grained local level. Should not deci- for new construction, anywhere from 25 to 50 percent sions about local issues be made at the local neighbor- of new-capacity projects are funded with tolls. In terms hood scale? Most people would not want to see the of private investment in road development and finance, federal government doing this. State departments of the current contribution is small and involves one or transportation do not want to be caught in this type of two projects a year. Nevertheless, there is a need for situation, either. tolling to be unleashed as a revenue source. Generating 10 to 11 percent of all transportation funding by toll- Comments: Federal involvement in the area of sustainabil- ing is feasible, but that really needs to be doubled to ity is disingenuous. The United States has underinvested roughly 20 percent. in this area, but there is a need for good demonstration Ms. Richardson: States should be permitted to toll projects and research. This would be an appropriate role existing Interstate highway capacity and allowed to use for the federal government. Some contend that it would any excess toll revenues for other Title 23 purposes.

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POL I C Y P R OV O C A T E U R S: TOU GH QU EST IONS, TOU GH ER A NSWER S? 19 All three provocateurs agreed with these last two Mr. Ankner: P3s are an important tool with sev- points. The audience was polled, and a large majority eral caveats. They are a way to get important projects agreed with both points. advanced sooner than they would have been otherwise. Mr. Lockwood: There is a need for education. The Moderator Seltzer: To what extent do you believe that ability of owners to deal with P3s has been solved by long-term concessions represent a long-term solution? some recent projects that have developed standardized Ms. Richardson: Publicprivate partnerships (P3s) are procedures to reduce the soft costs of one-off approaches. not relevant to Iowa. They are not a major part of the Long-term P3 arrangements of 99 years are troublesome, solution. Perhaps they could be used as a mechanism to though. One cannot know what highways will look like increase tolls. 99 years from now. There should be more opportunities for recompetition with long-term concessions.

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