2018 AASHTO LEGISLATIVE ACTION AGENDA For Consideration by Congress and the Trump Administration

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1 ACTION #1 Fix the Federal Highway Trust Fund in the Infrastructure Package Highway Trust Fund spending will exceed revenue by $16 billion by 2020 when the FAST Act expires. In order to support a five-year bill at current levels after the FAST Act, $93 billion in additional revenue is needed; $117 billion to support a six-year bill. Federal funding debate can draw upon the experience of 31 states that have successfully enacted transportation revenue packages since The Highway Trust Fund (HTF) serves as the backbone of Federal highway and transit programs. The HTF has provided stable and reliable highway and transit funding since its inception in 1956, but this is no longer the case. Since 2008, the HTF has been sustained through a series of general fund transfers now amounting to $140 billion. According to the June 2017 projection of the Congressional Budget Office, by the time the FAST Act expires in 2020, annual HTF spending is estimated to exceed receipts by $16 billion, growing to $23 billion by In FY 2021, the HTF is expected to experience a significant cash shortfall leading to an estimated 40 percent drop in highway obligations from the year before, or from $46.2 billion to $27.7 billion. In the past, similar cliff situations have led to the possibility of a reduction in Federal reimbursements to states on existing obligations, leading to serious cash flow problems for states and resulting in project delays. In addition, due to a steeper projected shortfall in the Mass Transit Account, new Federal transit obligations are expected to be zeroed out between FY 2021 and FY 2023 without a solution to this shortfall. Simply put, this is a devastating scenario to the nation s transportation infrastructure that must be avoided well in advance of Providing 80 and 74 percent of capital, operations, and maintenance funding for highways and transit, respectively, states and their local partners continue to answer the call for more transportation investment. Thirty-one states have enacted their own transportation funding packages since 2012, and lessons learned from states efforts can help inform the national infrastructure dialogue. In order to provide additional HTF revenue to maintain or increase current highway and transit investment levels, there is no shortage of technically feasible tax and user fee options that Congress and the Administration can consider. Three broad categories of revenues for the HTF exist, along with illustrative examples: Raising the rate of taxation or fee rates of existing federal revenue streams into the HTF: Examples include motor fuel taxes on gasoline and diesel (including indexing), user fee on heavy vehicles, and sales tax on trucks, trailers, and truck tires. Identifying and creating new Federal revenue sources for the HTF: Examples include a mileage-based user fee, container fee, driver s license surcharge, vehicle registration fee, imported oil fee, sales tax on fuel, carbon tax, vehicle sales tax, sales tax on auto-related components, and a tire tax on light-duty vehicles. Diverting current revenues (and possibly increasing the rates) from other Federal sources into the HTF: Examples include customs duties, income taxes, and other revenues from the general fund.

2 ACTION #2 Increase and Prioritize Formula-based Federal Funding to Ensure Flexibility The current Federal highway program optimally balances national goals with state and local decision-making. Increasing formula-based transportation funding in the infrastructure package ensures additional dollars and the flexibility necessary for each state to best meet their unique investment needs. The Federal-Aid Highway Program is a Federally-assisted, state-administered program that is rooted in Article 1, Section 8 of the United States Constitution. This Federal funding model, which defers decision-making to state and local governments, continues to remain essential in delivering a safe, economic, efficient, and environmentally sound national system. By providing direct formula dollars to each state, state and local governments are afforded the necessary flexibility to meet their own needs while also achieving broad national goals. On average, over 90 percent of Federal highway dollars are apportioned to states by formula. This enables funds to be distributed to states in a stable and predictable manner and allows the Federal program to underpin projects that have already been identified and prioritized through the statewide and metropolitan transportation planning processes. Instead of Washington, DC, making the project funding decisions, this bottom-up, state and local approach to defining transportation needs relies on input from citizens, businesses, and elected officials to reach consensus on investment decisions through the 20-year long range plans and four-year capital programs. The Administration and Congress should put resources from the infrastructure package and appropriations into the existing formula program and its century-plus track record of success in supporting long-term capital improvements throughout every corner of the United States. The 80/20 Federal/ Non-Federal funding share means Federal support is focused on larger capital projects and leverages state and local dollars to be used for a much broader array of projects. To address the nation s infrastructure deficit, the Trump Administration has proposed to leverage $200 billion of Federal dollars over 10 years largely through discretionary grant programs where projects would be selected directly by the Federal government to induce $1.5 trillion of total infrastructure investments over the same 10-year period. This plan also assumes significant increases in state and local taxes or other funding sources, coupled with greater utilization of private equity and debt financing. State and local governments have plans in place and can put new Federal formula funds to work promptly; by contrast, in discretionary grant programs, the Federal government must solicit applications and review them before awarding funds which delays the deployment of funds. In addition, not only are grant applications costly both time- and money-wise, such grant dollars are uncertain by nature so states cannot properly plan for them and complete environmental reviews and assessments in a timely manner. Because discretionary grant programs scale up very poorly, more funding for such programs will likely result in an even lengthier processing timeframe making them an inefficient way to increase investments in transportation infrastructure. While opportunities exist to utilize financing tools and to expand private participation in the provision of infrastructure, a vast majority of transportation projects cannot generate a revenue stream, much less a positive rate of return. This means most projects require Federal support in the form of direct funding rather than financing incentives that encourage borrowing or utilization of private capital.

3 ACTION #3 Honor Funding Levels in the FAST Act Congress should honor authorized highway, highway safety, transit, and passenger rail program funding levels in the FAST Act through full-year appropriations bills, instead of short-term Continuing Resolutions that frequently disrupt Federal funding. Congress is urged to avoid using rescission of highway contract authority as a budgetary offset, as rescissions, at best, impede state DOT flexibility in programming Federal dollars and, at worst, result in hard cuts to highway funding. The FAST Act, which was signed into law on December 4, 2015, authorized $305 billion over five years to support Federal highway, transit, and passenger rail programs, including $225 billion in contract authority for the Federal-Aid Highway Program. In addition to avoiding a major cliff or drop in Highway Trust Fund obligations in 2015, the FAST Act also provided gradual increases in annual funding. Despite this significant achievement, Congress has not been able to honor authorized funding levels in the FAST Act due to recurring disruptions in the annual budget and appropriations process. Instead of enacting full-year appropriations packages by October 1, Congress continues to rely on the passage of short-term continuing resolutions. Such stopgap measures provide irregular and piecemeal Federal funding (i.e., obligation limitation), impeding states ability to award contracts in a timely manner and delaying communities from realizing the benefits of transportation improvements. Additionally, the continuing resolutions prevent states from accessing the two percent annual increase in Federal funding from the FAST Act at the beginning of each fiscal year. Congress has also been relying on rescissions of highway contract authority as budgetary offsets. An $856 million rescission in unobligated contract authority was enacted in June 2017 and a $7.6 billion rescission is scheduled for July 2020 under the FAST Act. At best, rescinding previously-authorized highway contract authority greatly impedes the flexibility of state departments of transportation to program Federal dollars to their priority projects and, at worst, it can result in hard cuts to highway funding. Congress should honor authorized highway, highway safety, transit, and passenger rail program funding levels in the FAST Act through full-year appropriations bills that reflect annual increases in the FAST Act. Congress should not rely on short-term continuing resolutions which disrupt Federal funding and delay projects nationwide. Congress is urged to avoid using rescissions of highway contract authority as a budgetary offset, as rescissions impede state DOT flexibility in programming Federal dollars and could result in hard cuts to highway funding. Any additional transportation funding provided by Congress in appropriations bills should be directed to the existing formula program rather than discretionary grant programs.

4 ACTION #4 Streamline Environmental Permitting and Approvals, and Reduce Program Burdens As stewards of both human and natural environments, state DOTs support modernization of NEPA, Clean Water Act, Clean Air Act, and Endangered Species Act to improve outcomes and reduce delays. To speed up project delivery, states should be provided with opportunities to assume more Federal responsibilities and associated accountability. The environmental review and permitting process for transportation projects can take many years to complete. Delaying delivery of much-needed transportation infrastructure improvements comes with very real consequences for the American public, including increased project costs, decreased economic competitiveness and productivity, and threats to public safety and quality of life. The state DOTs strive to protect the natural and human environment for future generations while enhancing mobility and accessibility. However, many environmental laws and regulations have not been significantly updated or modernized since their inception. Based on extensive experience with these laws and regulations, project sponsors and Federal resource agencies find that the current statutory and regulatory framework includes needless delay and duplication, and does not provide the flexibility for common-sense environmental solutions. Some state DOTs have achieved tremendous success in expediting project delivery and cutting costs for environmental reviews by assuming FHWA s responsibilities for NEPA reviews. Full benefits of assuming Federal authorities for NEPA are yet to be realized however, due to the complicated and lengthy application process and other administrative burdens that deter more states from entering into this important program. In addition, states face excessive regulation in administering Federal transportation programs, with requirements beyond what is called for in statute. They can be overly prescriptive and shift states time and money from delivering benefits to compliance with inefficient rules. Regulatory burdens must be reduced and streamlined both as to project approval as well as to other implementation of Federal transportation programs. This will allow for increasing mobility, protecting the environment, improving safety, and other benefits, Congress should: Update and revisit the underlying purposes of substantive environmental laws, such as the Endangered Species Act, the Clean Air Act, and the Clean Water Act, and develop processes that reduce the costs and time associated with traditional environmental reviews while maintaining environmental protections. Develop a pilot program to allow Federal agencies, including U.S. DOT and environmental agencies to waive or modify their own requirements to develop and test new, innovative practices and approaches to streamline project delivery and achieve positive environmental outcomes. Expand authorities that can be assigned to states and simplify the related processes. Examples include requiring FHWA to promptly streamline and simplify the application, MOU development, and audit processes for assignment of NEPA authorities, and expanding assignment authorities that states may assume beyond NEPA to include right-of-way acquisition, approval of Interstate access, and other Federal authorities.

5 ACTION #5 Ensure States Ability to Safely Deploy Connected and Autonomous Vehicles AASHTO supports integrating DSRC-based Connected Vehicle technologies with development and deployment of Autonomous Vehicles to maximize public safety. States should continue to maintain their traditional oversight of vehicle operations and enforcement of traffic laws. There is great potential that Connected and Autonomous Vehicles (CAV) will have in improving safety, enhancing mobility, and reducing the environmental impact of surface transportation systems. It is estimated that over 90 percent of fatal vehicle crashes are a result of human error that could be mitigated through CAV technologies. While there has been significant focus on autonomous vehicles (AV) and the benefits they may bring, there has been less attention on a future that includes connected vehicles (CV). As infrastructure owners and operators, state DOTs believe that establishing a strong foundation for AV requires ensuring robust connectedness among vehicles and the infrastructure. The overwhelming support for the development and deployment of CAV systems is evident in the significant commitment that state and local agencies have already made in leading, supporting, and fostering the testing and deployment these new technologies. Historically, the regulation concerning the design, construction, and performance of a motor vehicle is a Federal obligation that has been under the oversight of the National Highway Traffic Safety Administration through the Federal Motor Vehicle Safety Standards (FMVSS). The licensing of motor vehicle operators, registration of vehicles, and enforcement of traffic laws have been the domain of states. The development of automated driving systems (ADS) has the potential to disrupt this separation of design versus operation whereby motor vehicles are no longer driven by a person but by the ADS (i.e., artificial intelligence) and important questions about design, regulation, and certification of complex computer systems must be addressed. In addressing this and many other questions, states should be able to maintain their traditional oversight of vehicle operations and enforcement of traffic laws. Finalize the Vehicle-to-Vehicle Communications Rulemaking (NHTSA ): The transportation industry must use every tool available, including Dedicated Short Range Communication (DSRC) to connect vehicles with each other and the infrastructure, to make our transportation system safer. NHTSA issued a rulemaking on establishing a DSRC standard in January 2017 and the current administration has taken no action on the comments received. This new regulation is important to the state DOTs to ensure the investments they make in new technology will be compatible with, and used by, the motor vehicles operating on the infrastructure they own, operate, and maintain. Support the Senate AV START Act: Unlike the SELF DRIVE Act passed in the House, the AV START Act which passed the Senate Commerce Committee includes much clearer preemption language that reflects the successful, longstanding Federal state regulatory paradigm for motor vehicle laws as automated vehicles become a permanent part of our society. The AV START Act, however, should be amended to better define performance of an autonomous vehicle to make sure that compliance with local traffic laws is excluded, which would better associate the bill with current Federal responsibilities.

6 ACTION #6 Reauthorize Federal Aviation Administration Programs The Federal Aviation Administration (FAA) and Airport Improvement Program (AIP) funding is set to expire on March 31, Airport infrastructure funding is imperative to maintaining essential safety and capacity improvements. Passage of a multi-year Airport Improvement Program Authorization is important for long-term planning for both general aviation and commercial aviation. The Federal government must continue to be a strong partner in order to maintain a safe, efficient national air transportation system and develop our nation s aviation infrastructure. Passage of a multi-year authorization program will allow the FAA, states, local airport partners, and commercial and general aviation stakeholders to develop and implement capital improvement plans effectively and efficiently. Legislation currently under consideration in Congress to reauthorize the FAA and aviation programs would increase funding for the AIP and the Facilities and Equipment (F&E) programs. These funds would be used to modernize the air traffic control system and to repair and replace existing facilities and equipment. In addition, the proposed legislation addresses the need for increased funding for airport modernization and improved infrastructure for air cargo. FAA and Airport Improvement Program (AIP) funding is set to expire on March 31, A House bill (HR 2997) sponsored by Chairman Shuster passed the House Transportation and Infrastructure Committee; a Senate bill (S 1405) sponsored by Chairman Thune has not yet been voted on by the Senate Commerce Committee. As both chambers continue their deliberations, the state DOTs recommend the following: Pass a multi-year Airport Improvement Program through the existing revenue mechanism at the max- imum levels that can be sustained by the Airport and Airway Trust Fund. Continue innovative financing methods such as state infrastructure banks, state revolving loan funds and continue tax exempt financing for airport revenue bonds. Maintain, at the minimum, the FAA matching share for an eligible AIP project at 90 percent of the project costs. Continue contributions from general fund revenue for FAA administration and operations and maintain AIP funds for airport improvements and transportation connectivity. Continue to fund the non-primary airport grant program and reform the process of carry-over funds being converted to an FAA discretionary program thus reducing state apportionment. Reauthorize the Essential Air Service Program and the Small Community Air Service Development Program. Increase the State Block Grant Program for voluntary participation by all qualified states and provide administrative funding eligibility to implement the program. Allow local airports the authority to increase the cap and allow for more flexibility of the Passenger Facility Charge to include multimodal access projects. Furthermore, consideration should be given to the long term stability of the Contract Towers Program, continued support of the Airport Cooperative Research Program, and Unmanned Aircraft Systems (UAS) preemption provisions that do not impede state authorities.