Blue Ribbon Committee on Highway Finance – September 16, 2009

Posted on September 16th, 2009

Date & Time: Wednesday, September 16, 2009 at 1:30 PAM
Location: Room 151, State Capitol
Committee Information:Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12147/I7794.pdf
Attachments: none

1:41 pm – Meeting called to order by the chairman, Senator John Paul Capps, who also presented opening comments.

1:43 pm – Minutes from the August 19th meeting approved. I wish I could provide you with a link to Exhibit C which is the official minutes, but because they are not posted on the web, the link above to my live blog will have to suffice.

1:44 pm – Mr. Sean Slone, Transportation Policy Analyst at the Council of State Governments (CSG) is presenting a discussion on transportation and infrastructure finance. The content of his presentation can mostly be viewed here: Transportation and Infrastructure Finance: A CSG National Report

1:49 pm – The funding for the CSG comes from state appropriations (43%), the remainder from grants (28%) and entreprenuerial efforts (29%).

1:51 pm – He says that there is needed 5-year investment of $2.2 trillion because “America’s infrastructure is crumbling.” [Note the crisis creation.] Current spending for highway capital improvements: $70.3 billion. ARRA (Stimulus Package) funding for transportation infrastructure projects: $48.1 billion. [Apparently the Obama administration does not believe that there is a crisis in America's infrastructure since such a paltry amount of the almost a $1 TRILLION dollar expenditure was allocated to the need.]

1:57 pm – 82% of federal transportation funding comes from federal fuel taxes. 24% of state revenues for highways come from state fuel taxes. The point is being made that because cars are more fuel efficient the fuel tax revenues continue to decline. Purchasing power has declined and the amounts are no longer sufficient to finance “large and growing” infrastructure needs.

1:59 pm – He says some methods of financing is to convert from Cents Per Gallon Excise Taxes to an ad valorem tax (Sales Tax). He also suggests indexing the fuel tax to some appropriate indicator such as the Consumer Price Index or the Construction Cost Index. It is additionally suggested that indexing only a portion of the motor fuel tax, coupling indexing with a “cap” on annual changes in the upward or downward direction in order to avoid wild fluctuations in tax revenue and in prices faced by customers.

2:03 pm – Vehicle fees are also suggested because they are relatively inexpensive to administer in relation to potential yield, can be varied by vehicle size, can be set in rough relation to highway cost responsiblity, are categorized as “very promising” as both a short and long term funding option. The types of these “fees” [read "taxes"] are heavy truck fees, excise taxes on vehicle sales, and personal property taxes.

2:06 pm – Mr. Sloan has covered other tax and fee mechanisms, bonding issues and ways for more public debt to be carried, and alternate transportation funding mechanism. A promising method might be Public-Private Partnerships (P3).

2:08 pm – A P3 is defined as collaborations between governments and private companies that aim to improve public services and infrastructure by capturing efficiencies associated with private sector involvement while maintaining the public accountability of government involvement. I will try to post more on this later.

2:10 pm – Mr. Sloan is talking about congestion pricing. This is a mechanism that seeks to assess vehicles for the costs they impose on society, which may include time costs, external congestion costs and other variable costs, such as environmental and governmental. These types include, tolling the entire roadway, tolling existing lanes, tolling new capacity, imposing a “cordon fee” on any vehicle that enters a designated area.

2:12 pm – VMT charges are being discussed. This is a fee based on miles driven in the state, collected at gas stations. This would mean you would have a GPS-based receiver tracking the amount of miles you drive. It seems that these guys believe this is the way of the future that we will be going. The point was being made Europe does it, like that somehow means we should.

2:15 pm – Mr. Sloan provides a list of factors for evaluating revenue mechanisms. The are revenue potential, sustainablity, political viability, ease/cost of implementation, ease of compliance, ease/cost of administration, level of government, promotes efficient use, promotes efficient investment, promotes safe and effective system operations/management, address externalities, minimize distortions, promotes spatial equity, promotes social equity, and promotes generational equity.

2:21 pm – We are currently reviewing the New Revenue Subcommittee Report. This is the report from the committee that I blogged this morning. Please see that here.

2:24 pm – Rep. Lowery is presenting the Revenue Transfer Subcommittee Report. He said that they started by evaluating a mid-range of amount of dollars needed. He said the transfer of existing revenues discussion centered on using existing revenues coming from auto sales taxes and other transportation related taxes to the highway department. Rep. Lowery suggests that this expenditure is an “economic stimulus.” He makes the point that there may not be a net revenue loss to other programs from which the revenue is transferred due to increased economic activity.

2:34 pm – Other business concerning meeting times and places are currently being discussed.

2:35 pm – Here are links to the reports that we were provided during this meeting:

• Performance Driven: New Vision for U.S. Transportation Policy (NOT part of the U.S. Department of Transportation.
  
• Paying Our Way: A New Framework for Transportation Finance by the National Surface Transportation Infrastructure Financing Commission (NOT part of the U.S. Department of Transportation)
  
• Final Report of the National Surface Transporation Policy and Revenue Study Commission: Transporation for Tomorrow (NOT part of the U.S. Department of Transportation)

2:40 pm – Meeting adjourned.

Filed under Uncategorized |

Comments are closed.