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55 PLENARY SESSION 7 Creating a Research Road Map for the Future Tamar Henkin, High Street Consulting Group (Moderator) Kay McKinley, PBS&J This final session focused on summarizing the conference discussions and identifying areas for further research bearing on the future of trans- portation finance. The leaders of Thursdayâs three mid- day discussion sessions reported on key issues raised and participated in a discussion with conference participants on research priorities and methods. Tamar Henkin of High Street Consulting Group moder- ated the final session and noted the need to instill an under- standing of the difference between funding and finance. The following discussions summarize some topics and issues for further research that arose in the three discus- sion sessions held during the lunch hour on the first day of the conference. diScuSSion SeSSion 1: are financing SolutionS cHaSing a funding ProBlem? tHe aPProPriate role of governmental finance ProgramS and SuBSidieS There is a fundamental disconnect: most people in the United States do not understand the difference between funding and financing. Ms. Henkin reported that Discus- sion Session 1 had focused on the role that public funding and financial assistance can play in meeting our transpor- tation needs, and participants in that session identified the following issues that may be worthy of further research. ⢠Communications on funding and finance issues: What messages and communication techniques resonate with the public? ⢠The catalyst effect at the national level: To what extent does the existence of federal credit requiring a revenue source lead to identification of new candidate projects and revenue sources that would not otherwise be advanced? ⢠The catalyst effect at the state and local level: How do states encourage local governments to bring alternative revenue sources to the table in their plan- ning processes (Texas as an example)? What are the operative alternative sources of funding, and what incentives can encourage their use? ⢠The âbut forâ question: What happens when a candidate project is denied federal credit support? Do these projects disappear, are they financed with tradi- tional funding sources, or are they advanced on a lim- ited recourse basis by using other financing sources? ⢠Updated value capture research: How can the experience with value capture with transit projects be transferred to highway improvements? Have sponsors of highway projects been successful in leasing air rights located above highway rights-of-way? ⢠Publicâprivate partnerships (P3s) for other than toll road projects: How should the benefits and costs of these less studied P3 transactions be quanti- fied? Are there hidden costs and difficult-to-quantify benefits? ⢠Public equity in P3 projects: To what extent do state and local governments take an equity position in P3 projects in transportation, and what are the various models for doing so (e.g., subsidies, revenue sharing)?
56 FINANCING SURFACE TRANSPORTATION IN THE UNITED STATES diScuSSion SeSSion 2: federal, State, and local reSPonSiBilitieS: finding tHe rigHt Balance Discussion Session 2 focused on federal, state, and local responsibilities in meeting our transportation needs and how to find an optimal balance between the three. Key issues that may merit future research involve the role of the federal government and whether citizens of one state should be sending money to other states to pay for local improvements. Some participants noted that there appears to be a misalignment between our climate change control, energy, and transportation finance poli- cies, which puts these areas at odds with one another. It was also observed that local funding initiatives are often more successful than others because localized cost and needs are more approachable. Key concerns and questions that arose from the con- ference participantsâ discussion included the following: ⢠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 a vehicle miles traveled (VMT) tax. ⢠Level of federal role: Should the federal govern- ment only participate in the Interstates? What about the National Highway System, smaller roads, and transit? Local and regional areas and the nation benefit from many roadsâhow should the benefit be determined? ⢠Misaligned national policies: Reliance on foreign oil, greenhouse emissions, and the financing of transpor- tation were discussed. ⢠Pricing to alter behavior: A VMT tax could play a role in making driving more expensive and in providing accessible alternatives. diScuSSion SeSSion 3: cHallengeS in reforming current tranSPortation funding Discussion Session 3 concerned whether people are willing to pay more than they do today for their trans- portation needs. Many participants noted that there is mistrust and a lack of understanding of the current trans- portation finance regime. Allocation and collection prac- tices are confusing to elected officials as well as to the public. Some participants observed that our objectives often appear to be at odds: Is the United States seeking to generate revenue, manage greenhouse gas levels, or reduce congestion, or is the goal some combination of these objectives? Individual participants in Discussion Session 3 identi- fied the following issues and potential research topics: Overarching Challenges ⢠Communicating current finance strategies and potential solutions to the public and elected officials: There is a general lack of understanding about how transportation is funded and financed and a need for better communication and education. ⢠Collection approaches, allocation of funds, size of program: Too many debates are occurring at once, which is confusing for the public and elected officials. Options, approaches, and potential next steps need to be simplified and streamlined. ⢠Lack of clear and consistent objectives of reform: Objectives (increase revenue, reduce greenhouse gas emissions, reduce congestion, etc.) need to be prioritized, and a clear road map for achieving them needs to be designed. ⢠Misinformation and lack of trust: The public is uncertain about the ability of federal government offi- cials to enact positive reform. Potential Research Areas The following were given as potential areas of research: ⢠International assessment of approaches to finance, ⢠Consequences of underinvestment (loss of jobs, impact on economy, etc.), ⢠Ways to transfer the success of local finance refer- enda to the national level, ⢠Lessons from state departments of transportation and other local transportation agencies to enhance trans- parency and accountability to build trust, and ⢠Cost of implementing alternative approaches to revenue collection. Ms. Henkin then opened the floor for general discus- sion. The following issues were discussed: ⢠There is a need to define how a national VMT fee might work. The fear is that it will always be treated as though it is 20 years off. ⢠A number of research efforts are under way. There is a need to tie the issues together and identify the steps that should come next. ⢠Perhaps there is a greater need to improve manage- ment of demand than to build supply. A VMT fee could be used to manage demand and align our broader poli- cies. The VMT fee and tolling are elements of the solu- tion, but perhaps the solution needs to be broader and make all alternatives available. ⢠Two concepts are in play: social engineering and pricing to alter behavior. There is also a political com-
57CREATING A RESEARCH ROAD MAP FOR THE FUTURE ponent. Why is the United States in a morass? Excellent ideas abound, but none of them are going anywhere. ⢠Framing the issue is important and can create incen- tives on both sides. Take the issue of how money is dis- tributed regionally. What performance measures are used to make those decisions and derive maximum benefits? ⢠Development of a neutral platform could assist in assessing regional transportation networks and in allo- cating funding where it is needed to optimize their per- formance. ⢠Demand management is not costless. There is a flood of new research on the measurable economic benefits derived from mobility. What wealth would be destroyed by demand management? What is the full economic cost of managing demand, and what are the benefits? Conference chair Kay McKinley provided closing comments. She stated her belief that the diversity of the organizing committee resulted in a comprehensive pro- gram. People came to the conference for a learning expe- rience, and this was clear even at Wednesdayâs poster session, when people lingered around the presentations rather than sampling the excellent New Orleans cuisine. For Ms. McKinley, the highlight of the conference was involving the next generation of transportation profes- sionals in the policy discussion. In almost every session a constant theme kept arising: how transportation profes- sionals can engage the public and elected officials in our issues. Ms. McKinley urged all in attendance to become engaged in their own communities to identify stakehold- ers that can make a difference in transportation finance. concluding oBServationS The conference attracted more than 150 experts from the public and private sectors, who explored current devel- opments and trends in the transportation finance sector. The conference venue provided an opportunity to assess the current economic and geopolitical context in which transportation finance and policy decisions are made. The Transportation Research Board (TRB) transpor- tation finance conferences have illuminated develop- ments in surface transportation policy and finance over the past decade and a half. In 1997, the first transporta- tion finance conference focused on new financing and procurement techniques known collectively as innova- tive finance. They included state infrastructure banks, Grant Anticipation Revenue Vehicle bonds, and P3s, all of which were cutting-edge approaches in their forma- tive stages that moved beyond the traditional federal-aid and state-aid funding processes. The second and third TRB transportation finance conferences, held in Scottsdale, Arizona, in 2000 and in Chicago, Illinois, in 2002, explored the use of innova- tive finance tools, as well as the Transportation Infra- structure Finance and Innovation Act credit program, which was established in 1998 and provided a variety of credit enhancements to support the nationâs transpor- tation needs. The Chicago conference also focused on the upcoming reauthorization of the federal transporta- tion bill and the policies and tools that could be used to deliver projects more quickly. Eight years later, the reauthorization of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users is awaited and will set the course for national transportation funding in the coming years. The fourth TRB transportation finance conference focused on the relationship between the revenues available to sup- port transportation needs and the financing mechanisms used to leverage them. In 2009, for the first time, the High- way Trust Fund was replenished with money from the general fund. With the declining purchasing power of the motor fuel tax, policy makers are seeking new approaches to provide sustainable funding sources to support trans- portation investment. The 2010 New Orleans conference explored these options as well as the latest transportation finance instruments. Among them were Build America Bonds, private activity bonds, availability payments, and federal initiatives and economic stimuli, including the Transportation Investment Generating Economic Recov- ery discretionary grant programs. The conference focused on the context in which the reauthorization debate is taking place, with a transporta- 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 taking place in an environment with increasing political polarization. The New Orleans conference provided a platform for discussion of creative solutions for meeting transportation needs in the face of reduced revenues and budgets, focusing on the federal programs, the Highway Trust Fund, the expanded use of tolling, and P3s. One theme that recurred throughout the conference is the need for transportation providers to engage the public, elected officials, and the media in this discus- sion. Transportation and policy professionals have a challenging task in better educating stakeholders as to why additional funding is needed, in view of the cur- rent congressional priorities on job creation and deficit reduction. Another focus of the conference was the possible migration from the motor fuel tax as the primary source of transportation funding to a VMT tax. Opportuni- ties to align transportation finance with climate change policy and forge a more sustainable future for the United States were discussed. Author Michael Tidwell delivered a memorable keynote address on the final day of the con-
58 FINANCING SURFACE TRANSPORTATION IN THE UNITED STATES ference, reinforcing the relationship between transporta- tion investment and sustainability and focusing on the local context in southern Louisiana in the aftermath of Hurricane Katrina and in the wake of the Deepwater Horizon oil spill. The theme of sustainability was also reflected in the organizing committeeâs emphasis on engaging the next generation of transportation professionals in the confer- ence. The conference included a student video compe- tition exploring the publicâs general knowledge of the mechanics of transportation finance and a competition for scholarships enabling students to attend the confer- ence in person. As with prior TRB transportation finance confer- ences, one of the most important outcomes of the New Orleans conference was the identification of research topics bearing on the future of transportation finance. Conference participants were asked to identify specific research needs ensuing from group discussion of the fol- lowing issues: ⢠Are financing solutions chasing a funding problem? What is the appropriate role of governmental finance programs and subsidies? ⢠What is the right balance of federal, state, and local responsibilities in transportation finance? ⢠What are the challenges in reforming current trans- portation funding policies? The research topics suggested in each of these areas, as well as others arising in the course of the discussion, are included in this report.
