Cultivating Creative Leadership, Framing Emerging Issues

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Cultivating Creative Leadership, Framing
Emerging Issues
Georgia Institute of Technology
The Window of Opportunity is Open Transforming
Transportation Policy in the Age of Obama
Steve Van Beek, President/CEO Eno Transportation
Foundation March 13, 2009
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Top 10 Transportation Policy Developments to Watch
10. Air Traffic Control Modernization 9.
Workforce/Labor Politics 8. A National Freight
Policy? 7. Public Goods and PPPs 6.
Intercity/High-Speed Rail 5. Climate Change 4.
User pays and Trust Funds 3. State of
Economy/Price of Energy 2. Economic Recovery
Package/Stimulus
1. The Unexpected
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• Macro Economic Indicators

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Gross Domestic Product (2005-2008)Percent,
Adjusted to Annual Rates
The U.S. economy has been in recession since the
fourth quarter of 2007. Most economists now
believe it will last at least until the end of
2009, perhaps into 2010. The recently passed
stimulus bill should help.
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Cost of Jet FuelWeekly New York Harbor (in
cents per gallon)
The one bright spot with the current recession is
the price of jet fuel (and other fuels) has
plummeted since reaching a high of over 4 per
gallon in the summer of 2008. While this has
helped transportation providers on costs, it has
been offset by the reduction of demand.
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Consumer Confidence (Conference Board)1985100
With the slowing economy, growing unemployment,
and reduced wealth, consumers are pulling back on
spending dramatically, leading to reduced demand
for a variety of goods, including transportation.
(Consumers represent about three-quarters of the
economys spending)
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• Transportation State of the Industry
• And Metrics

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Surface Transportation Historic Declines in
Vehicle Miles Traveled (December Base), U.S. DOT
Percent Change in VMT Year Over Year
VMT was down significantly in 2008. The number,
and its effects on Highway Trust Fund revenues,
will be closely watched in the coming year as
Congress considers the surface transportation
authorization bill.
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Surface Transportation Vehicle Miles Traveled
(VMT) Down Significantly for the year 2008 (U.S.
DOT)
VMT Use on Urban Highways (U.S. DOT)
Average Daily VMT (Billions)
VMT on all public roads are down 3.6. This will
have a negative impact on transportation funding
as the HTF is funded by an 18.4 tax on gasoline
and a 24.4 tax on diesel fuel.
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Surface Public Transportation Up Significantly
with Gasoline Price Increases (APTA)
Transit Data APTA, Change 2008 4Q vs. 2007
Public transportation use is up despite lower
fuel costs, with riders taking over 2.6 billion
trips from October through December, totaling
10.7 billion for the year. Fiscally strained
state and local governments are causing budget
problems at many properties at the very time when
more passengers are turning to the mode. The
public does not understand the farebox and
funding challenges.
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Surface Transportation Freight U.S. Domestic
Rail TrafficJanuary 2009 vs. 2008 (AAR)
U.S. freight rail traffic is down significantly
over the last year, tracking declines in trucking
(ATA index -11) and air cargo (IATA global
-13.5) volumes. As freight and cargo are
leading economic indicators, these portend a
longer and more severe recession than predicted a
few months ago.
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Aviation Traffic Jan. Nov. 2008 began a
period of severe airline contraction,
challenging airports and communities (BTS)
Passenger levels dropped significantly during the
end of 2008 (for December YOY domestic was -5.7,
international -5.6). 2009 will see further
reductions as carriers attempt to align capacity
with scheduled demand levels.
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Airline Traffic Change in Scheduled Seats and
Departures by Hub Size, June 2009 vs. 2008 (YOY)

All size airports have lost significant numbers
of departures and available seats. Combined with
the tumultuous financial markets, this has caused
the rating agencies to place the airport industry
on a Negative Outlook.
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Airline Traffic Change in Scheduled Departures
by Hub SizeJune 2001-2009 vs. 2000 (each year
compared to 2000)
Airline departures, after a post-9/11 recovery,
have declined precipitously over the last year.
The large drops in air service for smaller
markets is encouraging the President and Congress
to look for solutions.
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• Transportation Policy 2009

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The Scope of the Federal Role Bush
Administrations Attempted Retrenchment

• Mineta/Peters USDOT (2001-2009)
• I think the federal government should collect
  and keep only that portion of the gas taxes that
  were collecting that meets those federal
  interest requirements, and the rest of it we
  should either give back to the states or never
  collect from the states to begin with so that it
  doesn't become federalized income, (Mary Peters)
  
• According to Peters federal interest
  requirements include maintaining interstate
  highways and other arterials, projects of
  national and regional significance, regulating
  highway safety and some research.
• No increase in gas taxes or other revenues
• Focus on private sector replacing public as a
  source of funding
• Little support for federal planning and
  leadership. Solutions will bubble up

The private sector plays a role where there is a
dedicated or forecast funding stream. Even
public commercial airports use bonding to finance
the majority of their capacity. Peters formula,
however, leaves out many of the public parts of
our system that cannot be funded exclusively
through the farebox, with fees, or with other
revenue streams.
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The 2008 Election A Realignment?

• re'align'ment n
• Crisis/galvanizing event
• Sweeping electoral change
• Mandate for new approach
• New governing coalition
• Coalition proves successful
• Wins reelection

• Realignments
• 1800
• 1828
• 1860
• 1896
• 1932
• 1964
• 1980

New governing coalitions deliver new policy
change (e.g., New Deal, Great Society,
Reaganomics). These political environments are
not status quo and offer the prospect of new
policy paradigms, including for transportation.
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Transportation Policy January 2009

• Policy is a Failure Todays policy architecture
  is flawed and is widely viewed that way (e.g.,
  congestion, bridge to nowhere). We lack an
  explicit understanding of what a policy should
  achieve.
• Issue Saliency Transportation as an issue is
  getting greater attention than in any time in at
  least a decade. Attention very high at the local
  and state levels, getting more attention at the
  national levels.
• Transportation as Stimulus Infrastructure seen
  as an attractive method of providing jobs and
  stimulating the economy. Sponsors
  ofready-to-go projects across the system have
  an opportunity.
• Funding The Airport and Airway and Highway Trust
  Funds, as well as our fiscal policy, are under
  severe strain and are unsustainable.
• Transportation Definition Increasingly linked
  with other non-mobility issues, including climate
  change and energy independence (joining issues
  such as land-use, clean air and water, and
  equity).
• Building Consensus Saliency and connections to
  other policies mean that building coalitions is
  more complex than ever.

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New Governing Coalition and IssuesDifferences
with Bush Administration

• Public Transportation (mass transit, rail)
• Infrastructure Spending (legitimate national
  role)
• Climate Change (cap-and-trade and Copenhagen)
• Organized labor and workforce issues
  (controllers, screeners, firefighters, NMB,
  liberalization)
• Fresh look at air traffic control modernization
  (schedule, acquisition)
• Skepticism about slot auctions and congestion
  pricing(New York)
• Review of Department of Homeland
  Security/TSA(role of contractors, focus on
  non-aviation modes)

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2009 An Agenda Bursting with Political, Policy,
and Transportation Challenges

• Obama and the First 100 Days
• Economic Recovery/Stimulus 1st round, 2nd to
  come?
• Executive Agency Transitions and Appointments
  Other DOT/FAA to quickly follow A bit delayed
• February FY2010 budget submitted to Congress
• March 6 FY2009 DOT appropriation expires
• March 31 FAA Authorization expires
• And
• September 30 SAFETEA-LU (surface authorization)
  expires
• November/December COP 15 Copenhagen, UN Climate
  Conference
• What Ill be Watching
• Transition Actions Regulatory moratoria,
  executive orders, appointments offer clues to
  direction of policy Ongoing
• White House/Agencies How much discretion will
  DOT Secretary have? What is the role of the other
  inter-government agencies? A bit early to tell

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Recovery and Reinvestment (aka Stimulus)Major
Assumptions, Principles and Components

• Shift Back to Keynesian Economic Recovery Little
  left in the monetary tool box with rates near
  zero and financial institutions still reluctant
  to lend. With consumers and businesses
  retrenching, federal stimulus last resort.
• Infrastructure Investments Translate to Benefits
  Consensus that public investments in societal
  interest and, if properly designed, can help the
  economy and provide jobs. Extraordinary shift in
  saliency and elite opinion from a year ago.
• Performance/Accountability No earmarks,
  transparent process portends well and sets the
  stage for second-stage stimulus and significant
  authorization efforts.
• Existing programs and ready-to-go projects the
  priority Policymakers insisting that portions of
  projects be contracted out and started quickly to
  ensure they stimulate the economy in 2009.
• Reforms will await authorizations and other major
  policies Shifts to a more sustainable
  transportation era only marginal now, will await
  the major decisions to come.

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Economic Recovery BillSurface Transportation
Funding

• Highways (27.5 billion) For construction
  provided through State and Metropolitan
  Transportation Improvement Plans.
• Intercity/High-Speed Rail/Amtrak (9.3 billion)
• 8 billion for intercity corridors, high speed
  rail. Secretarial discretion (Surprise of the
  legislation)
• 1.3 billion for Amtrak (no more than 60 for NE
  Corridor)
• Transit/Public Transportation/Amtrak/High Speed
  Rail (8.4 billion) includes
• 6.9 billion for transit 80 urbanized formula,
  10 rural, 10 growing states/high density
  systems
• 750 million fixed guideway systems.
• 750 million for new starts/small starts
• Intermodal Surface Transportation (1.5
  billion) Competitive grants across the modes for
  a project deemed to be in the national or
  regional interest. 200 million in additional
  TIFIA authority.

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Economic Recovery BillAviation Funding

• Airport Improvement Program (1.1 billion)
  Discretionary monies provided with 100 federal
  funding.
• Explosive Detection Systems/Checkpoints (1
  billion) Competitive monies to be allocated by
  risk for procurement and installation of
  equipment.
• Facilities and Equipment (200 million) 180
  million for FAA needs, 20 million for airport
  lighting, navigation and landing equipment.
• NASA Aeronautics (150 million) Monies for
  research and development, including for
  development of NEXTGEN.

Solid support for transportation-related projects
in stimulus legislation. Once Congress has
greater confidence in the plan and requirements
for air traffic control modernization, it could
receive additional support in any second round of
stimulus.
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• Creating the Sustainable Transportation Era

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The Scope of the Federal Role ISTEA (1991 2001)

• To develop a National Intermodal Transportation
  System that is environmentally sound, provides
  the foundation for the Nation to compete in the
  global economy and will move people and goods in
  an energy efficient manner.
• Intermodal Surface Transportation Efficiency Act
  of 1991
• Record funding levels
• Flexibility, more support for transit
• MPOs, state and local priorities
• Donor/Donee (today 92.5!)
• Policy characterized by disjointed
  incrementalism
• National interest secondary
• Energy policy a failure
• Growing interest in environmental values,
  incorporation of NEPA

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Roles and Responsibilities for Climate Change
National Policy Yet to be Really Engaged

• International United Nations Framework
  Convention on Climate Changes Kyoto Protocol is
  the worldwide framework. U.S. has not signed the
  treaty. Kyoto expires at the end of 2012 to be
  replaced with a treaty to be considered at
  Copenhagen in December 2009.
• International maritime and aviation emissions are
  bunkered and are handled by the International
  Maritime Organization and the International Civil
  Aviation Organization respectively.
• National No current national policy. President
  Obamas FY 2010 budget promises to reduce 2005
  levels of GHG emissions by 14 by 2020 and 83 by
  2050.
• State and Local States such as California, and
  many cities (led by Seattle), have committed and
  are putting in place plans to reduce GHG
  emissions as well.

The impending Copenhagen meeting will put
pressure on the U.S., IMO, and ICAO to propose
and enact serious climate change policies. The
issue has become a diplomatic priority of high
politics.
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Climate Change Sources of U.S.
TransportationGHG Emissions (CO2 Eq.), U.S. EPA
United States
The chart shows how the 28 transport share for
GHG emissions breaks down by modeincludes
domestic transport only.
Total Light-Duty59.2
International
Under the Kyoto Protocol, international emissions
are bunkered and handled by the IMO (maritime)
ICAO (aviation).
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Climate Change Flow of GHGs from sources to
distributionMillion Metric Tons CO2 Equivalent
(2007)
ICAO, IMO
downstream
28
upstream
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A Sustainable Transportation Era The Debate for
2009 and Beyond

• Our Challenges Include
• Meeting mobility goals for passengers
• Building a freight policy
• Reducing the use of fossil fuels and converting
  to sustainable energy sources
• Correlating use of transportation with revenue
  sources
• Prioritizing intermodal connectivity by focusing
  on the interests of passengers and shippers
• Providing for a secure and resilient
  transportation system
• Shifting to a more performance-based system to
  ensure state, local and individual
  decision-making is consistent with national
  imperatives
• Striking the right balance between the setting of
  national policy and empowering and incentivizing
  inclusive state, local and regional planning
  (including aviation, freight, and private
  providers of services).

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Federal tools to promote sustainable
transportation

• TOOLS
• Supporting federal research
• Inventorying emissions
• Adopting more inclusive planning
• Reforming the criteria for federal funding and
  tax incentives
• Stabilizing funding sources
• Raise gas tax
• Urban congestion/road pricing
• Migrate to Green VMT
• Adopting GHG national target(s)
• Taxing carbon and/or
• Allocating emissions

Easier
Politics
Harder
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Getting to the Sustainable Transportation Era in
Six Easy Steps

• Be Aggressive we could be entering a reform
  cycleold assumptions should be reviewed and
  challenged. The new model will take years to
  build (and more than one authorization), but here
  we should try to start.
• Articulate the Benefits of Transportation
  Investments emphasize job creation, benefits to
  U.S. competitiveness and environmental values.
• Do Not Apologize for Transportation Spending the
  lions share of transportation funding is
  provided by user-fees and does not contribute to
  structural problems in the nations deficits and
  fiscal policy.
• Clarify Public and Private Roles what
  responsibilities do we believe are fundamentally
  public or private?
• New Revenue Models Are Necessary whatever their
  form, new revenues must be created to adopt
  meaningful programs meeting long-term goals.
• Make a Big Tent passing a meaningful bill will
  be a great challenge. Dont get distracted by
  peripheral issues in the policy debate. A
  coalition should be broad (including state and
  local governments, providers, shippers, labor,
  and environmental advocates), but not so broad as
  to dampen the breakout thinking by the quest for
  a common denominator.

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Recommendations to Transportation Interests

• Recognize the Opportunity Toss out conventional
  wisdom and be aggressive. With priorities of
  stimulus, energy use and climate change public
  transportation is well positioned.
• Policy Context is Dynamic Pressures to restore
  the economy and shift policy priorities will keep
  the window of opportunity open at least for a
  time.
• Define Projects for the Context What
  contributions will your projects make to the new
  set of national priorities? What are the net
  contributions for GHG emissions, energy use,
  mobility, and job creation?
• Search for Wide Funding Sources As the stimulus
  bill reflects, monies for projects may be
  available from non-traditional sources. Find
  them. Why is your project a good pilot for the
  new era?
• Help Educate Policymakers and Shape
  Authorization Lots of misconceptions about
  transportation.

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For more policy discussions http//transportatio
n.nationaljournal.com/ Questions and
Comments Stephen D. Van Beek,
Ph.D President/CEO Eno Transportation
Foundation 1250 Eye Street, Suite 750 Washington,
D.C. 20005 [phone] svanbeek_at_enotrans.com