Tag Archives: highway funding

Four Areas Where Gov. Pence’s State of the State Address Missed the Mark

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?????????????????????????????????????????The 2016 session of the Indiana General Assembly may be short in time but, as usual, there is a long list of important issues. In outlining his priorities in the State of the State speech, however, Gov. Mike Pence fell short in four key areas.

First is civil rights expansion. After appropriately listening to Hoosiers since last spring’s public relations crisis, the Governor failed to articulate a clear vision. His words, depending on interpretation, bordered on telling legislators to do nothing at a time when action is needed.

The Indiana Chamber went through a similar lengthy listening process as public policy committees, the executive committee and the full board of directors (all comprised of representatives of member companies) debated the issue. Once a final determination was made, the Chamber communicated the decision that the members had voted to support the expansion of civil rights to protect sexual orientation and gender identity. Although not popular in all circles, similar clarity was needed from the Governor.

In the critical area of infrastructure funding, the Governor advocated against the only long-term solution presented thus far because it included several responsible revenue increases. As an organization that works each day to create and maintain the best possible business climate, the Indiana Chamber does not go looking for tax hikes. But in this case, they are necessary.

Third, on education, the “let’s take a step back on ISTEP” remark goes too far. Indiana already has a new test that measures our new, stronger standards. The test needs rebranded, not revised, and administered correctly to achieve the desired results.

Finally, there was no mention of work share, a common sense program to support employers and employees in an economic downturn. It will be needed at some point and the best time to implement it is now.

The Indiana Chamber has and will continue to communicate with the Governor and his staff our positions on these issues, which we believe are in the best interest of the state’s economy, employers and workers.

Waiting … and Waiting on a Highway Funding Fix

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30449450Federal highway funding is running low. Nothing new there. The Indiana Chamber, and many others, have called for long-term solutions from Washington instead of short-term fixes that simply extend the uncertainty.

How are states reacting to the current dilemma. According to the Kiplinger Letter:

  • Arkansas, Georgia, Wyoming and Tennessee have postponed 440 projects totaling more than $1.3 billion
  • Iowa, South Dakota and Utah have increased gas taxes. Others that may follow include Georgia, Idaho, Minnesota, Nebraska and South Carolina
  • Seeking funds from advertisers: Virginia sells space on highway rest stop signs to GEICO; Travelers Marketing sponsors highway patrols in Massachusetts
  • Partnering with private investors: Florida is seeking private funds to rebuild portions of Interstate 4; New Jersey, Pennsylvania and Virginia are seeking similar ventures

Kiplinger editors add:

But states can only do so much on their own. Ultimately, Congress must act. Odds favor another temporary fix this fall. A long-term solution will likely wait until 2017. Congress and a new president will have a fresh opportunity to tackle broad tax reform, including a possible hike in federal fuel taxes, which no longer approach what’s needed to pay for highway work.

Not what many want to hear in terms of the time frame.

On Tap in ’15: Road Funding, Sunday Alcohol Sales and 21st Century Fund

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Republican supermajorities and the biennial budget will be the context for all issues during the 2015 Indiana General Assembly, as a two-year budget must be passed and any caucus with 71 members (e.g., House Republicans) inevitably will have its internal disagreements. But, in the areas of economic development and infrastructure, another contextual factor will be a major road funding study by the Indiana Department of Transportation (INDOT) due in summer 2015 – after the Legislature has adjourned.

This INDOT study will examine existing fuel excise taxes, their future revenue potential and alternative funding mechanisms and revenue streams, such as vehicle miles traveled (VMT) or tolling. The study will provide a tool to address an acknowledged $750 million annual funding gap between current revenues and identified maintenance needs, let alone any new projects (such as third lanes on congested portions of Indiana interstates).

Legislative leadership and fiscal and transportation policy experts within the General Assembly seem content to await the results of the INDOT study before pursuing any significant changes to the way Indiana funds its roads, bridges and highways. Nevertheless, in the 2015 session we expect issues such as fees for electric or alternative-fuel vehicles to be addressed; examination of using more revenue from the 7% sales tax on gasoline for the state’s highway fund; and a discussion of indexing fuel taxes for inflation.

The INDOT study follows a report by the Governor’s Blue Ribbon Panel on Transportation Infrastructure identifying a set of priority projects and laying out a long-term vision for surface transportation infrastructure across Indiana. This report includes recommendations for waterborne, air and rail commerce that may be taken up by the General Assembly, including the creation of dedicated funds for these important modes of transportation.

Likewise, while the final segment of Interstate 69 has yet to undergo regulatory review and be announced, current law prevents it from running through Perry Township in Marion County as an option; we expect legislation to remove that prohibition to be introduced. We also expect investment in next-generation telecommunications infrastructure to be addressed through legislation that streamlines zoning and regulatory approvals, seeking to make them less cumbersome and more consistent across different political jurisdictions within the state.

In the area of economic development, many items will be discussed. Along with continued reform of Indiana’s business personal property tax, other anticipated issues include: examination of tax increment financing (TIF) districts; repealing Indiana’s ban on the Sunday sales of alcohol; increasing production limits on craft breweries; renewal and reform of the state’s 21st Century Fund; film production incentives; and review of both the existing patent-derived income tax exemption and the state’s venture capital tax credit.

Indeed, we expect a major thrust for fiscal leaders this session to be a re-examination of many of the state’s existing economic development programs and tax provisions, as well as discussion of a new Regional Cities Initiative by the Indiana Economic Development Corporation and the Pence administration.

Given mixed economic signals and the continued emphasis on job creation, we anticipate it will be a very busy session.

IFA, INDOT Address Transportation Committee About Toll Road, Future Plans

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The Interim Committee on Roads and Transportation heard from both the Indiana Finance Authority (IFA) and the Indiana Department of Transportation (INDOT) on the Indiana Toll Road and current and future road infrastructure needs on Sept. 23. IFA Public Finance Director Kendra York and INDOT Commissioner Karl Browning testified.

York reviewed the status of several public-private partnership (P3) projects around the state, but most of the interest and questions concerned the pre-packaged Chapter 11 bankruptcy of the private operator of the Indiana Toll Road, ITR Concession Company, LLC (ITRCC) and its affiliates. ITRCC filed for bankruptcy on September 11.

York testified that the bankruptcy proceeding is expected to result in either the sale of all assets of ITRCC (including lease rights to the toll road) to a new entity or a restructuring of the existing debt. Under either scenario, the toll road will continue to be owned by the IFA on behalf of the state of Indiana. IFA will continue to have the rights it negotiated in the original lease agreement including the right to approve any new operator and that operator will be strictly held to the same operational standards set forth in the original lease agreement. There will be no change to the current toll rate structure under the lease agreement. Road operations will continue as usual during the bankruptcy process without impact to drivers, employees, vendors and the communities served by the road.

York said IFA will continue to monitor the bankruptcy and work with related parties to protect the public interest. In other words, any concerns about adverse effects of the bankruptcy proceeding on the toll road or the state of Indiana are misguided at best, misleading at worst.

Browning provided a broad overview of the state of Indiana’s roads and bridges during his testimony. When adjusted for inflation, INDOT is operating much more efficiently than in years past: Operating expenses in 2014 are approximately $74 million less than in 2005, but while INDOT is operating more efficiently, the state needs more revenues to address a growing need for maintenance of existing infrastructure, let alone expansion of the state’s highway network.

Within the next five years, all fuel excise tax revenues from the state’s highway fund will be required for maintenance of existing infrastructure; no funding will be available for expansion projects. Additionally, more than half of the state’s bridges are in the last 25 years of their useful life (50+ years or older) and will need significant reconstruction or remediation.

Both federal and state highway revenues are expected to remain flat or slightly decline due to a number of factors, including increased fuel efficiency standards and alternative-fuel vehicles. This will cause the state to have to look for creative ways to finance projects (such as P3s) or find new sources of revenue. INDOT is in the middle of a legislatively-mandated two-year study of needs and funding sources.

In short, while the state did well in the Major Moves era with strategic investments, it is facing increasing challenges to pay for future upgrades to its surface transportation network. New sources of revenue need to be found and the Indiana Chamber looks forward to the final analysis by INDOT in the two-year study.

Surface Funds Go Far Beyond the Surface

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When is federal transportation funding not really transportation funding? According to the Heritage Foundation, it’s when 35% of the allotted funds that come from our gasoline taxes are "diverted to high-cost, underutilized programs like trolley cars, transit, covered bridges, hiking trails, earmarks, administrative overhead, streetscapes, flower planting, hiking and bicycle paths, museums, transportation enhancements, tourist attractions and archaeology."

I don’t think Heritage or anyone else is questioning the need for at least some of the initiatives identified above. The concern, a legitimate one, is where should the money come from. Interested to hear your perspective on this one?

Below is an explanation from Heritage about the requirement to divert funds, the 12 categories eligible for diversion and how one state has used its funding:  

Under current law, each state is required to devote 10 percent of the Surface Transportation Program (STP) funds it receives each year from the federal highway trust fund to eligible enhancement projects as defined in existing statutes. Under legislation extended by SAFETEA-LU (P.L. 109-59), fiscal year 2012 spending authorizations for the STP will total $9.3 billion, implying that enhancement spending would then total $930 million that year.

According to current law, enhancement program spending must be limited to the following 12 purposes:

  • Provision of facilities for pedestrians and bicycles;

  • Provision of safety and educational activities for pedestrians and bicyclists;

  • Acquisition of scenic easements and scenic or historic sites (including historic battlefields);

  • Scenic or historic highway programs (including the provision of tourist and welcome center facilities);

  • Landscaping and other scenic beautification;

  • Historic preservation;

  • Rehabilitation and operation of historic transportation buildings, structures, or facilities;

  • Preservation of abandoned railway corridors;

  • Inventory, control, and removal of outdoor advertising;

  • Archaeological planning and research;

  • Environmental mitigation; and

  • Establishment of transportation museums. 

The Virginia Department of Transportation provides detailed information on its enhancement projects, and its annual list illustrates just how silly the program can get, as measured by the misspending on approved projects using scarce federal transportation dollars. Among the 82 approved projects costing $30.2 million for FY 2012 are the restoration of the historic Bull Mill in Scott County, a hiking trail on an abandoned rail bed in Buchanan County, renovation of a former rail passenger waiting area in Danville, renovation of the LaCrosse Hotel, restoration of the Assateague and Cape Henry lighthouses, construction of a pilot schooner for a Norfolk museum, smartphone-based battlefield tours, and gateway signs to various Virginia wine regions.

 

Grabbing Some More of Your Dollars

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While the majority of the attention is on health care reform, climate change and the like, other "routine" business continues to take place in Washington. On the agenda this week, as early as later today, is consideration on the Senate floor of a $122 million, fiscal year 2010 Transportation/Housing and Urban Development appropriations bill.

Don’t confuse this with the legislation authorizing highway funding that expires on September 30. The consensus there is that an extension, as long as 18 months, will be enacted so that little challenge can be put off until 2011.

On the transportation bill, there have been more than 50 amendments filed. Most come from Arizona’s John McCain; you remember him from that 2008 presidential election thing. Among the items McCain wants to remove from the bill:

  • $195,000 for renovation of the Emmett Till Memorial Complex in Tallahatchie County, Mississippi
  • $500,000 to construct a beach park promenade in Pascagoula, Mississippi
  • $500,000 requested by Senate Majority Leader Harry Reid to provide a credit counseling service in Las Vegas

I’ll vote with McCain on this one. But then this whole earmark argument has been heard before — and it still seems to be business as usual.

Another worthy amendment would prevent lawmakers from congratulating themselves by using stimulus funds to purchase signage for such projects in their communities. The only stimulus that would provide is to the legislator’s re-election efforts.