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Published on October 30, 2007

Author: Sudiksha

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Slide1:  Breaking the Gridlock Alliance for I-69 Annual Meeting Houston, Texas December 1, 2006 The Eisenhower Interstate Highway System:  The Eisenhower Interstate Highway System This year we celebrate the 50th anniversary of the Eisenhower Interstate Highway System President Eisenhower’s grand vision connected the nation and ushered in an era of unprecedented mobility and prosperity, but the Interstate had a humble start and faced monumental challenges. I-40/US-70 Interchange (NC) The Beginning…:  The Beginning… Summer 1919: Lieutenant Colonel Dwight Eisenhower takes part in the first Transcontinental motor convoy. Washington, DC to San Francisco in 62 days Average speed of 6mph Recalling his experience in 1919 and marveling at Germany’s autobahns, Eisenhower committed himself to connecting America through a national system of Interstate Highways. Today:  Today Just as Eisenhower and his contemporaries recognized that America in the 1950s faced a major problem in the form of connectivity, today we are challenged by congestion. Congestion is choking our transportation system and robbing each one of us of valuable time and economic opportunity. Scope of the Congestion Problem Costs of Congestion to the Nation:  Scope of the Congestion Problem Costs of Congestion to the Nation The financial cost of congestion: Road congestion annually results in 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel.* When unreliability, extra inventory, and environmental costs across the entire transportation system are included, the cost of congestion climbs to nearly $200 billion annually.** Congestion on I-95 in Northern Virginia * Texas Transportation Institute, 2005 Urban Mobility Report ** USDOT internal analysis Cost of Congestion to U.S. Businesses:  In 2000, congestion at the Ambassador Bridge between Detroit, Michigan and Windsor, cost motor carriers between $150M and $200M. Atlanta area distributor of pet food with an 11-truck fleet finds it difficult for one truck to make more than 12 daily deliveries; in 1984, one truck made as many as 20 deliveries each day. OrePac Building Products has increased inventories by 7-8% to mitigate for congestion delays, limiting the funding available for other investment. Cost of Congestion to U.S. Businesses A Threat to the Inventory Revolution:  A Threat to the Inventory Revolution 1 Source: Census Bureau. 2 Source: Bureau of Economic Analysis, “15th Annual State of Logistics Report” (June 2004). Since deregulation, U.S. business inventory requirements have fallen precipitously, making the U.S. supply chain the most efficient in the world This reduction has in turn reduced total logistics costs and improved U.S. corporate earnings Macroeconomists assert that these trends have played a major role in supporting U.S economic growth Growing congestion will require businesses to carry more inventory, effectively reversing these trends Durable goods inventory/shipments ratio 1 Logistics costs 2 (as % of the goods component of GDP) Scope of the Congestion Problem A Hidden Tax:  Scope of the Congestion Problem A Hidden Tax Annual Cost per Peak Traveler (wasted fuel and lost personal time) Cost to Families and Civic Life:  Cost to Families and Civic Life As time spent commuting has grown, Americans have less time to spend with their families and friends According to a survey by the Washington Family Council… 55% of those surveyed with children at home miss one or more family functions per week due to traffic congestion If they could spend less time in traffic, 85% would spend more time with their family Congestion also negatively impacts the country's social fabric “the evidence suggests that each additional 10 minutes in daily commuting time cuts involvement in community affairs by 10 percent” (Robert Putnam, Bowling Alone, 2000) Scope of the Congestion Problem Growth in Wasted Hours:  Scope of the Congestion Problem Growth in Wasted Hours Congestion has increased dramatically over the past 2 decades In the 13 largest cities, drivers spend the equivalent of almost eight work days each year stuck in traffic Scope of the Congestion Problem No Longer Just an Urban Issue:  Scope of the Congestion Problem No Longer Just an Urban Issue Trends show congestion in smaller cities trailing larger cities by ~10 yr The travel growth rate has been even greater in rural than in urban areas Freight volumes are expected to increase by 70% by 2020 If left unaddressed, by 2020 congestion will clog many major interstate corridors National Highway System estimated peak period congestion (2020) Fundamental Causes of Highway Congestion:  Fundamental Causes of Highway Congestion Unlike in aviation or on rail networks, there is no mechanism (traffic controllers or dispatch systems) to manage use and prevent gridlock The price of highway travel (gas taxes, registration fees, etc.) bears little or no relationship to the cost of congestion Challenges to Traditional Transportation Funding: Capital Expenditure Shortfalls:  Challenges to Traditional Transportation Funding: Capital Expenditure Shortfalls There is an existing gap between capital expenditure requirements and authorized funding: Mounting Budget Pressures on States States and municipalities face difficult decisions on allocating limited public resources among competing priorities such as education, health care, public safety, and physical infrastructure. Under the current Federal gas tax system, improvements in vehicle fuel efficiency yield less revenue per mile of usage; Trust Fund revenues therefore do not necessarily increase proportionate to increased highway usage. Both the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) project that the Federal Trust Fund’s Highway Account will be either close to zero or in deficit by the end of FY09. Source: USDOT 2004 Conditions and Performance Report Transportation System Funding: Potential Policy Responses and Relation to Congestion:  Transportation System Funding: Potential Policy Responses and Relation to Congestion Status quo: Continue to rely upon current policies and funding mechanisms to plan, construct, & manage the system Status quo approach with higher gas tax: Continue use of current policies, but increase funding levels to allow for more investment Change the paradigm: Adopt new policies to plan, construct, & manage the system in a fundamentally different way Hybrid model Potential Policy Response (1) Status Quo: Continue to Rely Upon Current Policies:  Potential Policy Response (1) Status Quo: Continue to Rely Upon Current Policies Policies/funding tools Project decisions made by States and locals, with formula funding from Federal government Primary cost to system users is fuel tax (approx. 2¢/mile) Impact on Congestion? Current funding mechanisms do little to mitigate congestion Current congestion projected to grow exponentially Financial Impact of Status Quo? Highway Trust Fund (HTF) goes into deficit in FY09 Needed projects and improvements are not built Efficiencies gained through “just in time” delivery erode  shippers will look for alternatives Potential Policy Response (2) Status Quo + Higher Gas Tax: Current Policies, More Funds:  Potential Policy Response (2) Status Quo + Higher Gas Tax: Current Policies, More Funds Policies/funding tools Increase the gas tax Impact on Congestion? Congestion will be mitigated in some areas by expanding capacity and by implementing better technology Ultimately, congestion will persist because capacity expansion is limited Financial Impact of Statue Quo + Higher Gas Tax? In order to maintain the current system, the federal fuel tax would need to be raised by 20% In order to reach the maximum economic investment level, the federal fuel tax would need to be raised by 300% Source: USDOT Sources and Standards Potential Policy Response (3) New Paradigm: New Policies for Planning, Construction, & Operations:  Potential Policy Response (3) New Paradigm: New Policies for Planning, Construction, & Operations Policies/funding tools Increased use of direct user fees to fund capacity expansion/rehabilitation and/or manage congestion (The debate on why we should embrace tolling must shift from funding shortfalls to operational benefits) Public-Private Partnerships and private sector equity investment in some cases Impact on Congestion? Better system mgmt. -> increased reliability and decreased congestion w/ variable tolls Increased utilization of existing capacity through direct user fees -> demand management Infrastructure investments are made in the most critical places when private equity is at stake Financial Feasibility? $250 billion in private capital available for highway infrastructure today. About 80% of current highway “Mega Projects” (greater than $500 million) involve tolling; 60% of these tolling projects involve PPPs Hybrid? DOT’s Strategy to Reduce Congestion: A Six Point Plan:  DOT’s Strategy to Reduce Congestion: A Six Point Plan Execute “Urban Partnership Agreements” with 1-5 major metro areas Encourage States to enact public private partnership laws Develop new interstate highway and rail capacity through a “Corridors of the Future” competition Reduce bottlenecks at major freight gateways, including Southern California Find and implement solutions to border congestion Accelerate major airport capacity projects, reform airport pricing policies and overhaul air traffic control system 1) Relieve Urban Congestion:  1) Relieve Urban Congestion DOT Actions Travel to key urban areas and advocate for the following policies: Congestion pricing/high occupancy toll (HOT) lanes Bus Rapid Transit (BRT) Telecommuting and Flex Scheduling Expedited completion of capacity projects Develop an Urban Partnership Agreement with 1-2 cities to serve as “model”cities and test congestion pricing across a network. The City of London’s pricing program reduced average delays by 30%, and increased average speeds by 37%; Bus delays fell 50% 2) Unleash Private Sector Investment Resources in More States:  2) Unleash Private Sector Investment Resources in More States DOT Actions Develop an organized effort to encourage states to enact legislation enabling them to enter into infrastructure agreements with the private sector Overcome resistance to reform through education, demonstrations and relationship building Utilize existing Federal program authorities and SAFETEA-LU implementation to encourage formation of public-private partnerships 3) Establish a “Corridors of the Future” Competition and Advance SAFETEA-LU Projects That Reduce Congestion:  3) Establish a “Corridors of the Future” Competition and Advance SAFETEA-LU Projects That Reduce Congestion DOT Actions 1. Accelerate development/improvement of long-distance, transportation corridors that reduce congestion and safeguard our economy by: Promoting new financing and operational models Providing more certainty in the environmental review process Support development by: Running a competition to select 3-5 major corridors that will reduce congestion and help keep the American economy moving Fast tracking a select number of corridor projects in SAFETEA-LU that are likely to reduce congestion Resources DOT Brings to the Table :  Resources DOT Brings to the Table $15 Billion in Private Activity Bond Authority TIFIA Credit Assistance for Nationally or Regionally Significant Transportation Projects, with lending capacity of more than $10 billion Presidential Order on Environmental Streamlining Special Experimental Program (SEP-15), allowing FHWA to explore new approaches for contracting, right-of-way acquisition, project finance, and other Title 23 requirements Increased Authority for States to Toll Interstate Highways Value-Pricing Pilot Program Interstate Reconstruction and Rehabilitation Authority for HOV to HOT Lane Conversion Interstate Construction Toll Pilot Program Express Lanes Demonstration Program Conclusion:  Conclusion "Transportation is key to the productivity, and therefore the success, of virtually every business in America. Congestion and delay not only waste our time as individuals, they also burden our businesses and our entire economy with inefficiency and higher costs.” - Secretary Norman Mineta “The Interstate System is a journey, not a destination.” - President Dwight Eisenhower

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