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56 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 Discussion Session 2: Federal, State, Overarching Challenges and Local Responsibilities: Finding the Right Balance Communicating current finance strategies and potential solutions to the public and elected officials: Discussion Session 2 focused on federal, state, and local There is a general lack of understanding about how responsibilities in meeting our transportation needs and transportation is funded and financed and a need for how to find an optimal balance between the three. Key better communication and education. issues that may merit future research involve the role Collection approaches, allocation of funds, size of the federal government and whether citizens of one of program: Too many debates are occurring at once, state should be sending money to other states to pay which is confusing for the public and elected officials. for local improvements. Some participants noted that Options, approaches, and potential next steps need to be there appears to be a misalignment between our climate simplified and streamlined. change control, energy, and transportation finance poli- Lack of clear and consistent objectives of reform: cies, which puts these areas at odds with one another. It Objectives (increase revenue, reduce greenhouse gas was also observed that local funding initiatives are often emissions, reduce congestion, etc.) need to be prioritized, more successful than others because localized cost and and a clear road map for achieving them needs to be needs are more approachable. designed. Key concerns and questions that arose from the con- Misinformation and lack of trust: The public is ference participants' discussion included the following: uncertain about the ability of federal government offi- cials to enact positive reform. Ability of the federal government to play a role: There was concern about growing U.S. debt levels and reluctance to raise the federal fuel tax and even consider Potential Research Areas a vehicle miles traveled (VMT) tax. Level of federal role: Should the federal govern- The following were given as potential areas of research: ment only participate in the Interstates? What about the National Highway System, smaller roads, and transit? International assessment of approaches to finance, Local and regional areas and the nation benefit from Consequences of underinvestment (loss of jobs, many roads--how should the benefit be determined? impact on economy, etc.), Misaligned national policies: Reliance on foreign Ways to transfer the success of local finance refer- oil, greenhouse emissions, and the financing of transpor- enda to the national level, tation were discussed. Lessons from state departments of transportation Pricing to alter behavior: A VMT tax could play a and other local transportation agencies to enhance trans- role in making driving more expensive and in providing parency and accountability to build trust, and accessible alternatives. Cost of implementing alternative approaches to revenue collection. Discussion Session 3: Ms. Henkin then opened the floor for general discus- Challenges in Reforming Current sion. The following issues were discussed: Transportation Funding There is a need to define how a national VMT fee Discussion Session 3 concerned whether people are might work. The fear is that it will always be treated as willing to pay more than they do today for their trans- though it is 20 years off. portation needs. Many participants noted that there is A number of research efforts are under way. There mistrust and a lack of understanding of the current trans- is a need to tie the issues together and identify the steps portation finance regime. Allocation and collection prac- that should come next. tices are confusing to elected officials as well as to the Perhaps there is a greater need to improve manage- public. Some participants observed that our objectives ment of demand than to build supply. A VMT fee could often appear to be at odds: Is the United States seeking be used to manage demand and align our broader poli- to generate revenue, manage greenhouse gas levels, or cies. The VMT fee and tolling are elements of the solu- reduce congestion, or is the goal some combination of tion, but perhaps the solution needs to be broader and these objectives? make all alternatives available. Individual participants in Discussion Session 3 identi- Two concepts are in play: social engineering and fied the following issues and potential research topics: pricing to alter behavior. There is also a political com-

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C R E A T I NG A R E SE A R C H R OA D MA P F OR TH E F U TU R E 57 ponent. Why is the United States in a morass? Excellent Chicago, Illinois, in 2002, explored the use of innova- ideas abound, but none of them are going anywhere. tive finance tools, as well as the Transportation Infra- Framing the issue is important and can create incen- structure Finance and Innovation Act credit program, tives on both sides. Take the issue of how money is dis- which was established in 1998 and provided a variety tributed regionally. What performance measures are used of credit enhancements to support the nation's transpor- to make those decisions and derive maximum benefits? tation needs. The Chicago conference also focused on Development of a neutral platform could assist in the upcoming reauthorization of the federal transporta- assessing regional transportation networks and in allo- tion bill and the policies and tools that could be used to cating funding where it is needed to optimize their per- deliver projects more quickly. formance. Eight years later, the reauthorization of the Safe, Demand management is not costless. There is a flood Accountable, Flexible, Efficient Transportation Equity of new research on the measurable economic benefits Act: A Legacy for Users is awaited and will set the course derived from mobility. What wealth would be destroyed for national transportation funding in the coming years. by demand management? What is the full economic cost The fourth TRB transportation finance conference focused of managing demand, and what are the benefits? on the relationship between the revenues available to sup- port transportation needs and the financing mechanisms Conference chair Kay McKinley provided closing used to leverage them. In 2009, for the first time, the High- comments. She stated her belief that the diversity of the way Trust Fund was replenished with money from the organizing committee resulted in a comprehensive pro- general fund. With the declining purchasing power of the gram. People came to the conference for a learning expe- motor fuel tax, policy makers are seeking new approaches rience, and this was clear even at Wednesday's poster to provide sustainable funding sources to support trans- session, when people lingered around the presentations portation investment. The 2010 New Orleans conference rather than sampling the excellent New Orleans cuisine. explored these options as well as the latest transportation For Ms. McKinley, the highlight of the conference was finance instruments. Among them were Build America involving the next generation of transportation profes- Bonds, private activity bonds, availability payments, and sionals in the policy discussion. In almost every session a federal initiatives and economic stimuli, including the constant theme kept arising: how transportation profes- Transportation Investment Generating Economic Recov- sionals can engage the public and elected officials in our ery discretionary grant programs. issues. Ms. McKinley urged all in attendance to become The conference focused on the context in which the engaged in their own communities to identify stakehold- reauthorization debate is taking place, with a transporta- ers that can make a difference in transportation finance. tion funding gap of $142 billion. While some economists believe that a financial stimulus is needed, there is con- cern about the national debt, and these discussions are Concluding Observations taking place in an environment with increasing political polarization. The New Orleans conference provided a The conference attracted more than 150 experts from the platform for discussion of creative solutions for meeting public and private sectors, who explored current devel- transportation needs in the face of reduced revenues and opments and trends in the transportation finance sector. budgets, focusing on the federal programs, the Highway The conference venue provided an opportunity to assess Trust Fund, the expanded use of tolling, and P3s. the current economic and geopolitical context in which One theme that recurred throughout the conference transportation finance and policy decisions are made. is the need for transportation providers to engage the The Transportation Research Board (TRB) transpor- public, elected officials, and the media in this discus- tation finance conferences have illuminated develop- sion. Transportation and policy professionals have a ments in surface transportation policy and finance over challenging task in better educating stakeholders as to the past decade and a half. In 1997, the first transporta- why additional funding is needed, in view of the cur- tion finance conference focused on new financing and rent congressional priorities on job creation and deficit procurement techniques known collectively as innova- reduction. tive finance. They included state infrastructure banks, Another focus of the conference was the possible Grant Anticipation Revenue Vehicle bonds, and P3s, all migration from the motor fuel tax as the primary source of which were cutting-edge approaches in their forma- of transportation funding to a VMT tax. Opportuni- tive stages that moved beyond the traditional federal-aid ties to align transportation finance with climate change and state-aid funding processes. policy and forge a more sustainable future for the United The second and third TRB transportation finance States were discussed. Author Michael Tidwell delivered conferences, held in Scottsdale, Arizona, in 2000 and in a memorable keynote address on the final day of the con-

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58 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 ference, reinforcing the relationship between transporta- topics bearing on the future of transportation finance. tion investment and sustainability and focusing on the Conference participants were asked to identify specific local context in southern Louisiana in the aftermath of research needs ensuing from group discussion of the fol- Hurricane Katrina and in the wake of the Deepwater lowing issues: Horizon oil spill. The theme of sustainability was also reflected in the Are financing solutions chasing a funding problem? organizing committee's emphasis on engaging the next What is the appropriate role of governmental finance generation of transportation professionals in the confer- programs and subsidies? ence. The conference included a student video compe- What is the right balance of federal, state, and local tition exploring the public's general knowledge of the responsibilities in transportation finance? mechanics of transportation finance and a competition What are the challenges in reforming current trans- for scholarships enabling students to attend the confer- portation funding policies? ence in person. As with prior TRB transportation finance confer- The research topics suggested in each of these areas, ences, one of the most important outcomes of the New as well as others arising in the course of the discussion, Orleans conference was the identification of research are included in this report.