In This Issue

	Frozen Federal Funding Results in Toll Roads, Fuel Tax Increases
	Reversible Lanes Irks Localss
	New EPA Rules Cuts Some Hybrids from HOV Lane
	Pa. Turnpike Lease May be Worth More
	Northstar Corridor Rail Charges Forward
	$111M Rail Contract Goes to French Co.
	Transportation Package Faces Uphill Battle
	Gov. Resists Push to Suspend Gas Tax
	Gas-Tax Veto Stands

Frozen Federal Funding Results in Toll Roads, Fuel Tax Increases

WASHINGTON – The Federal Highway Trust Fund is moving at full speed toward an unavoidable cash crisis; high gas prices have made Congress reluctant to increase the 18.4-cent federal fuel tax, which hasn’t been raised in 14 years. The push for more fuel efficient vehicles and use of public transportation decreases the amount of gas used, which in turn decreases the trust fund.

States, trying to address traffic congestion and repair inadequate roads, are growing concerned with the looming shortages in federal funding. DOT’s are turning to toll roads and consumption-based sales taxes to make up the difference. In 2009, revenues from the Federal Highway Trust Fund are anticipated to begin falling short of planned federal spending.

Currently, nearly 45 percent of all transportation spending come from the trust fund, and many people are unhappy with the funding alternatives. In Florida, over 90 percent of new roads since the early ‘90’s have been toll roads. Indiana, facing a $1.8 billion shortfall, leased the Indiana Turnpike to an Australian-Spanish consortium for $3.85 billion. Voters lashed back by replacing the Republican-run House that negotiated the deal with Democrats. Washington voters passed a 14.5-cent increase gas tax increase over five years. California voters approved the borrowing of $19.9 billion in bonds for transportation projects over the next decade. Georgia used a gas sales tax that rises with fuel prices, raising its construction program funding from $911 million to $2 billion. AASHTO says up to six states have instituted similar variable fuel taxes linked to inflation. Oregon is trying user-based fees instead of increased gas taxes.

Two years ago, legislators tried to fund a $375 billion highway package with a 4-cent-per-gallon increase in the fuel tax. However, after President Bush threatened to veto any road bills with a tax increase, they withdrew and the final spending plan came in at $286 billion. The trust fund had nearly $23 billion at the end of 2000, at the end of 2006, the balance in the fund had dropped to $9 billion.

This is a shortened version of the AP story that appeared in many of your papers. The version I read was very well done and was accurate about what going on and how states were dealing with the problem. Lots of effort is going into finding a solution, but there are no easy answers. I predict the next Congress and the new President will raise taxes whether or not any of them will admit it. I also expect that they will only raise enough revenues to keep the fund neutral; no “windfall” will result in increased funding. TW

Reversible Lanes Irks Locals

LOS ANGELES - Some Los Angeles residents are fighting the city’s almost completed plans to build a reversible lane on Sepulveda Boulevard to help fight rush-hour congestion on the San Diego Freeway. Locals fear the thoroughfare will become a mini-freeway from the $11.3 million project to widen six miles of boulevard between Wilshire Boulevard and Mulholland Drive.

Plans for the project call for dedicating the middle of the three lanes in the tunnel to southbound traffic for the morning commute and to northbound for the evening. Engineers say the reversible lanes may provide a quick fix for traffic congestion on the San Diego Freeway, which is used by motorists traveling between the San Fernando Valley and the rest of L.A. every day. Residents are concerned about the effect the project may have on nearby neighborhoods.

Public meetings will be held this week to discuss concerns about the Sepulveda Boulevard project, and the $950 million plan to add a carpool lane northbound on the I-405 Freeway between the I-10 and U.S.101 freeways. After getting $730 million in bond money this year, Caltrans held two public meetings in March to hear residents input on four proposals to expand the 405 freeway to accommodate a carpool lane.

New EPA Rules Cuts Some Hybrids from HOV Lane

WASHINGTON – The Environmental Protection Agency has proposed tightening the regulations for certified clean and energy efficient hybrid vehicles which would be allowed in HOV lanes without passengers. Last Thursday, the EPA announced strict new criteria expected to drive sales of “low emission” and “energy efficient” vehicles.

The new proposal will disqualify some hybrid cars which previously have been allowed in the carpool lane with a single driver. The cars must either be a dedicated alternative fuel vehicle, get 50 percent or better city fuel economy, or 25 percent better combined highway/city fuel economy compared with a similar gasoline car.

The Safe, Accountable, Flexible, Efficient Transportation Equity Act required the proposal by the EPA, which is designed to encourage drivers to purchase cars that are better for the environment. Four car manufacturers have qualifying cars under the stricter standards available: Toyota, Honda, Ford, and Mazda.

Pa. Turnpike Lease May be Worth More

Pennsylvania - The Pennsylvania Turnpike could possibly be leased for much more than originally anticipated, and Gov. Ed Rendell’s administration is continuing to push the lease of the tollway. They have requested that lawmakers give state officials broad authority to lease the turnpike, which the governor hopes will revive the state’s crumbling roadways by generating more than a billion in additional revenue.

The administration released an analysis by Wall Street investment bank Morgan Stanley & Co., which reported the turnpike’s 359-mile route between Ohio and New Jersey and the northeast extension could be worth an upfront payment of $12 to $18 billion, depending on the lease length. The return on a $12 billion payment with 8 percent interest would generate the $965 million Rendell had project the lease would bring in in his first proposal.

A Rendell-appointed study group estimated the state needs $1.7 billion a year to upgrade the state’s deteriorating highway system and cash-strapped mass transit systems. The governor’s plan has so far had a luke-warm reception from the legislature thus far. Morgan Stanley also studied the possibility of putting a non-profit organization in charge of the turnpike, as other states use. The non-profit corporation could borrow against toll revenues and hire private companies to run the roads, which could contribute $1.4 billion annually for highways.

Northstar Corridor Rail Charges Forward

WASHINGTON – Plans for Minnesota’s first possible commuter rail line is progressing forward. The Federal Transit Administration has asked the Northstar Corridor Rail Project to submit its application for federal funding, according to Congressman Jim Oberstar. The FTA typically only makes this kind of request if the project has a good chance of being approved.

The proposed Northstar Corridor would run from downtown Minneapolis to Big Lake, just south of St. Cloud. Forty percent of the line’s $320 million cost is expected to come from the federal government.

The corridor will save over a million gallons of gas every year by taking an estimated 2,600 cars off the roads every day. Planners say it will also spur economic growth and development along the route. Up to $3 billion in housing, retail and other services is planned by developers along the Northstar line.

$111M Rail Contract Goes to French Co.

AUSTIN - A French company may soon take over freight rail and future commuter rail operations in the Austin area. Capital Metro is expected to give final approval in two weeks for Veolia Transportation Services Inc. to take over freight and future commuter lines after Sept. 30, according to Capital Metro spokesperson Adam Shaivitz.

Shaivitz said it makes sense to have a single operator running both the freight and commuter lines because they will be operating on one track. Currently, Austin Area Terminal Railroad run’s the Capital Metro’s freight.

Veolia’s $111 million contract consists of $61 million for rail freight operations, $6.9 million for the commuter line’s 16-month start up period and $28 million for peak hour commuter rail service. The 32-mile commuter rail line is expected to begin its service in fall 2008 from downtown Austin to Leander, with a $5.2 million annual operating budget, said Shaivitz.

Transportation Package Faces Uphill Battle

Delaware - Delaware lawmakers do not appear to support the governor’s proposed transportation revenue enhancement package to reduce the $1.5 billion transportation deficit in the state. Gov. Ruth Ann Minner’s proposal, under consideration in the General Assembly, is needed to get several important projects back on schedule, according to DOT officials.

On May 16, members of the Joint Bond Bill Committee were unenthused when DelDOT Secretary Carolann Wick appeared before them. House Bill 50, the bill containing the revenue package, was set aside last week.

Minner’s package consists of a 5-cent motor fuel tax increase, a 50-percent vehicle registration fee increase, a two-year, 1.75 percent increase in the vehicle documentation fee, elimination of EZ-Pass discounts, and toll hikes on Route 1.

Gov. Resists Push to Suspend Gas Tax

INDIANAPOLIS – The Indiana Speaker of the House is urging Governor Mitch Daniels to suspend the state’s gasoline sales tax, but so far he is not budging. Speaker B. Patrick Bauer sent the governor a letter Tuesday saying, “Thanks to the greed of the oil companies, Indiana is making tens of millions of dollars.” Bauer noted that 43 other states are not charging sales tax on gasoline right now.

Gov. Daniels staff is looking into whether it would be possible to do it if he wanted to. Under a 1981 “energy emergency” law, the late Governor Frank O’Bannon temporarily suspended the tax in 2000, when gas prices hit $1.80 per gallon. Daniels’ administration is trying to determine whether the threshold of an “energy emergency” has been reached now.

Indiana regular unleaded gasoline hit a record $3.35 last Monday, according to the AAA Hoosier Motor Club. Gov. Daniels said that he does not think the suspension would be effective or responsible at a time when the government’s revenues remain tight. The governor added that the reduction in price would be minimal

The story makes Bauer’s comment sound like other states have suspended the sales tax on motor fuel when in fact only a few actually charge it in the first place. True, they are not charging it right now…nor have they done so in the past. TW

Gas-Tax Veto Stands

LINCOLN, Neb. – State senators will not fight the millions of dollars in Gov. Dave Heineman’s state-budget vetoes, including the increase in the state gas tax. An additional $19 million in road spending was among the vetoes earlier this week to the state’s $6.8 billion budget. The gas tax would have been raised about 2 cents per gallon as part of the spending increase.

The governor said at a time of record gas prices, it would not be right to raise the gas tax. A legislative committee voted not to override the veto. The governor’s vetoes totaled about $24 million, and included other items such as special education, and funding for those who provide services such as foster care and nursing care.