Policy Chief Meets With Industry Groups on Challenges of Infrastructure Financing

AASHTO Journal, 20 February 2015

AASHTO Policy Director Joung Lee met with local government and public-private partnership stakeholders this month in separate national conferences, as the transportation industry discusses Highway Trust Fund revenue options Congress may consider along with creative project financing.

The first was a Feb. 10 session on federal transportation funding hosted by the National Association of Regional Councils in Washington, D.C.

JoungLee.jpg Lee

Lee later said many of the regional officials who attended favored increasing motor fuels user charges, as a long-established means of generating revenue for the transportation system from a large group of its direct users.

That is the official policy position of the NARC organization, which also advocates indexing fuel taxes to inflation to help put the Highway Trust Fund revenues on a more sustainable long-term footing.

At that session, Lee discussed the AASHTO “matrix” of funding options that could be acceptable to AASHTO board members, who are the CEOs of state departments of transportation. But he emphasized that the association does not advocate for any particular revenue-raising option.

On Feb. 12, Lee presented the perspective of state DOTs at a “Federal P3 Summit” held In Washington by the National Council for Public-Private Partnerships, a group that promotes the use of P3s in all types of infrastructure systems.

Lee was on a panel that also featured Regina McElroy, the Federal Highway Administration’s director of the Office of Innovative Program Delivery, and Xerox Senior Vice President Parker Williams. The group discussed current federal and state efforts to encourage greater private sector participation in large transportation projects.

While P3s have traditionally focused on tolled highways or bridges, the panel also considered ways to broaden the pool of P3 transportation projects to include more that do not generate a direct revenue stream to repay investors. One option they explored was potentially increasing the use of states’ “availability payments,” which repay private-sector costs over time as public funds are appropriated or otherwise made available.

Lee told the groups that many states are taking action on their own to increase transportation infrastructure spending through a variety of funding measures. That’s because to many state officials, “their transportation policy is not about standing still, it’s about growing” their economies, he said, and they know they need to keep improving their infrastructure to support that growth.

But he cautioned that even with a number of states taking those steps, “that still doesn’t, in and of itself, address the significant funding gap” the nation faces in highway, bridge and transit spending.

Despite what states do on their own, Lee said, “the federal funding is still a significant piece of the funding puzzle.” With a flat federal-aid highway program in recent years, Lee said states are finding it increasingly tougher to come up with enough money to cover their current and projected needs.

Another lesson from state efforts, he said, is that the entire transportation industry must help legislators and the public understand “the value proposition” by clearly communicating infrastructure needs and explaining how those costs break down for average households.

Lee pointed to polling data showing voters generally believe the average driver pays many times more in dedicated transportation taxes than is actually the case. But when infrastructure investment advocates make their case effectively, Lee said, states are finding broader support for new revenue to increase transportation spending.

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