California Conference Highlights State Funding Options
Posted in Legislation, P3s

With the delay of the federal transportation re-authorization and federal transportation funding in limbo, state transportation agencies across the nation are trying to cope any way they can. In California this week, 19 self help local transportation financing agencies - that collectively generate more than $4 billion a year for transportation - drew a large crowd of transportation public agency officials, elected officials, contractors and consultants to the 20th Annual Focus on the Future Conference in Los Angeles to explore their options. Conference speakers discussed current developments in transportation funding, environmental compliance and project delivery. The news on project delivery and innovation was positive, the environmental compliance news mixed, and the funding news pretty discouraging.

Interspersed with the grim chronicling of the current state and federal funding landscapes, the conference highlighted some bright spots, including federal ARRA funds, Measure R funding in Los Angeles, and innovative project delivery, PPPs and congestion pricing.

The Conference kicked off on Monday with a presentation by Assemblyman Mike Feuer who had about the only piece of good news on the funding front. He regaled the crowd with his story about how the Legislature passed AB 2321, which allowed the Los Angeles County Metropolitan Transportation Authority to put Measure R on the November 2008 ballot. Measure R passed by the narrowest of margins, allowing MTA to impose an additional one half cent sales tax for 40 years providing $9 billion of new revenues for transportation and transit projects in the county.

Feuer was followed by a panel that discussed the arduous federal reauthorization process. Kathy Ruffalo, a Washington lobbyist and member of the National Surface Transportation Infrastructure Finance Commission, led off, noting that it’s unlikely that a reauthorization bill will be enacted within the next 12-18 months.  Critical to enactment, in her view, is movement on the issue of new revenue sources.  She noted that the current primary sources, gasoline and diesel fuel taxes, are declining due to increases in the fuel efficiency of the vehicle fleet. She outlined some of the options, starting with increasing the fuel tax (viewed as political suicide by many Congressional members) and following with some more innovative options including VMT, user fees and congestion pricing that the Finance Commission has proposed. She warned that any creative solutions would take time to implement.

State Treasurer Bill Lockyer’s lunch-time address was enough to spoil appetites. Lockyer’s message about state funding was unambiguous; the Legislature and the Administration are deadlocked and unlikely to take meaningful action to resolve the State’s structural budget deficit in the foreseeable future. He believes the State’s budget deficit is not only structural; it’s effectively permanent, meaning that attempts to balance the state budget by borrowing from various transportation accounts can be expected to continue.

On the environmental front, a panel on Tuesday morning discussed issues related to implementation of AB 32 and SB 375, the greenhouse gas initiatives. Views ranged from modest optimism that greenhouse gas reduction goals could be achieved to strong skepticism about the efficacy of the whole program. Jack Boda from SanDAG reflected the view that, for the most part, elements of an implementation program were already in place, and that full implementation was feasible. Josh Shaw, with the California Transit Association, was less optimistic, noting that there seemed to be a disconnect between the Legislature’s mandate to reduce greenhouse gases, and its willingness to strip funding from transit to balance the budget. Lucy Dunn, President of the Orange County Business Council and a member of the California Transportation Commission, confessed to being an agnostic on the whole issue of greenhouse gas and global warming impacts, and expressed the strong view that implementation of AB 32 and SB 375 mandates were a potential political and economic disaster for the state.

Finally, on the project delivery and innovation front, Randall Iwasaki, Caltrans Director,  who teed up the Tuesday morning session of the Conference, delivered a positive report on the state’s recent success in attracting ARRA and other federal stimulus funds and in delivering the Caltrans program of projects. Looking to the future, he acknowledged that the State’s continuing fiscal crisis, and the failure of the Congress to move the reauthorization bill presented potential problems. In respect to innovation, panels on congestion pricing and public private partnerships reported on the success in other states in using these mechanisms to fund and deliver transportation projects, and on recent efforts in California to use these new tools.  In his report, Iwasaki also noted that Caltrans intended to move aggressively to implement the design build and public private partnership authority granted by the Legislature in SBX2 4 (Stats. 2009, Ch 4).

  • Stanley S. Taylor
    Of Counsel

    Stan Taylor focuses his practice on the funding and financing of major public transportation projects using traditional and innovative development and delivery methods. He also works with select private companies in the sector.

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