I welcome the opportunity to present testimony on transportation finance and funding issues.  Although I have served on this Board, and am chairing the Governor’s Reform Commission on the Reform of the Connecticut Department of Transportation, and am the Executive Chairman of Pitney Bowes, I am not speaking today on behalf of the Reform Commission or Pitney Bowes.

Before I provide my views and financing and funding strategies, I want to make several preliminary observations:

• We cannot expect the public to support tax or fee increases for transportation if there is not complete transparency and logic for any movement of revenues or expenses between the General Fund and the Special Transportation Fund. The public will see such increases as general tax increases, to which they are resistant, as opposed to funding sources for transportation, which they would support.
• The public will also be reluctant to support increased transportation funding if we cannot have more discipline in making project cost estimates and approving appropriations for them.  When the General Assembly approves an expenditure based on Connecticut DOT project cost estimates, and then sees those estimates double or triple for no apparent good reason, the public and its elected representatives will be very reluctant to give ConnDOT more money to spend.
• Connecticut’s heavy dependence on federal transportation money puts it in peril if replacement funding sources are not found quickly because the Federal Highway Trust Fund is essentially insolvent.
• Reliance on motor fuel taxes as the primary funding source for covering bonded indebtedness for transportation projects is increasingly risky because of the likelihood that people will reduce fuel consumption over time.  This was emphatically pointed out by Mary Peters, the Commissioner of the U.S. Department of Transportation in her minority position statement on the Federal Surface Transportation Study released earlier this year.
• In the ConnDOT 2007 Master Transportation Plan, ConnDOT identifies a minimum of $3.27 billion funding gap between what is needed to keep the current transportation infrastructure in a state of good repair, and what is projected to be available from existing funding sources.  This gap does not take construction cost inflation into account, nor does it make any assumptions about reduced federal funding.  Whether this gap is higher or lower than it should be, nevertheless, it is indisputable that we have a significant funding gap if we do business as usual.

With this apparently grim picture, what can we do to improve mobility for people and goods to insure that we have a globally competitive economy in Connecticut and a higher quality life?  Also, what can we do to improve safety on our roads, bridges, tunnels, and public transportation systems?

The good news is that there are many cost-efficient strategies we could employ, but have not chosen to employ so far.  I will not discuss tolls or congestion pricing because those subjects are part of a study, the results of which will be released next year, and because the speakers following me will cover this in far more detail.  However, I will note that, without some form of fee based on road usage, any attractive public-private investment partnership option will be very difficult to implement.  I would hope that the toll study under way will have as broad a scope as possible in terms of technology, pricing, and process options.

Today, I will focus on other alternatives for addressing mobility and safety issues.

Strategy 1:  Use private sector sponsors to fund programs to reduce demand.

Reduce trips

The least resource-intensive way to improve mobility for those who have to travel on our roads or use our public transportation infrastructure is to reduce trip demand from those who could employ other alternatives:

• There are many private sector companies, like Cisco Systems, HP, Microsoft, ATT and the other telecom service providers, and Research in Motion who benefit from individuals working at home or at satellite locations closer to home.  Early telecommuting experiments failed in many organizations because they were too ambitious or because organizations did not understand execution imperatives.  Allowing employees to work more flexibly from a more convenient location even one day a week is a very popular benefit, and it is less risky than adopting a full telecommuting program.  Over time, as organizations learn what works best, they can expand these programs.  ConnDOT and the Department of Labor should convene a group of large employers, as well as technology providers, and workflow consultants, to identify and promote best practices in alternative work locations.  To the degree that these practices become widespread, our traffic volumes will shrink just enough to increase traffic flow significantly, as they do on certain religious holidays that are not broad work holidays.
• We have learned in the past two decades that we have mobility issues throughout the day and evening, not just at peak commuting times.  We are increasingly a just-in-time society, with retailers and manufacturers holding smaller volumes of inventory and expecting suppliers to deliver products, parts, and materials at greater frequency.  We also have many individuals making retail trips by automobile to do errands that could be avoided if a convenient home delivery infrastructure were in place.  The good news is that there are many delivery options available today that would reduce both the redundant delivery systems many retailers and manufacturers use today and the consumer travel to the retail site.  Recently, DHL announced an agreement to eliminate its residential delivery system and to use the U.S. Postal Service system.  We need to encourage other delivery services to focus on their core capabilities and to join forces to reduce traffic congestion, fuel consumption costs, and environmental emissions.
• We also might find that some of these delivery companies are better equipped to provide residential delivery services for other firms to increase convenience for consumers, such as the elderly, who would welcome more deliveries to their homes, rather than having to go to as many locations to collect items they have purchased.  Once again, state and local governments can convene meetings that enable every firm with a delivery capability to leverage that capability for more purposes.  Web-based systems could also be created to match small retailers with delivery needs to those with excess delivery capacity.
• Similarly, ConnDOT should be doing a better job promoting ride-matching services that would allow individuals to access rides in automobiles from other individuals commuting to or from nearby locations at the same times of day.  The State of Virginia has used this system effectively to reduce single-occupant vehicle demand on the highways.  Our NuRides program needs to be modified to allow payment to the ride brokerage agencies based on the number of road miles they eliminate, as opposed to a flat fee.  Houston has implemented such a system, with an annual cap that protects the government from budget overruns.

Reduce motorized travel

There are two big opportunities for reducing motorized travel demand:

• To increase bicycle access at train stations and bus terminals; and
• To make bicycle and pedestrian travel more viable options for short trips.

ConnDOT and the towns which operate rail stations have a severe rail station access issue.  There is far more demand for rail station parking than the available supply of parking spaces.  At a minimum, there needs to be a central system for identifying and allocating parking spaces.  Today, individual towns treat parking spaces like season tickets for popular sports franchises.  They issue parking permits to residents, who then keep them as long as they want, and who derive value that can be passed down to future owners or residents.  Parking access should be priced at its true value, should be continuously re-offered to those willing to pay that value, and the revenues collected should be used to improve the stations, not for the general funds in the towns.

However, beyond a more effective revenue collection system, ConnDOT and the towns need to learn from the experience of major cities like Amsterdam that make bicycle and pedestrian access to the trains and the stations very easy.

For shorter trips, bicycles are used more extensively for more of the year in many parts of North America, including Canadian cities like Montreal, than they are here in Connecticut.  One of the most absurdly inefficient uses of motorized travel is the use of motor vehicles to drive single children or to have them drive themselves to high school and middle school, when bicycle alternatives would work just fine most of the year.  We should be accessing funding from the Safe Routes to School program, but, beyond that, major bicycle or athlete clothing and equipment companies, like Nike or Adidas, could support these efforts.

Strategy 2: Use private sector solutions to get better usage of existing transportation assets.

Raise revenue and improve system-wide efficiency through better travel information.

From studies we found during the work on the Reform Commission, people who use roads and public transit will pay more for better information on whether there are travel delays, to give them an opportunity to make alternative arrangements.  Today, ConnDOT travel information is limited to interstate highway data, and, for people already in transit, is insufficiently detailed and timely to be useful.  ConnDOT also has to recognize that its transportation information infrastructure is more designed to achieve compliance with Federal Highway Administration requirements than it is to give useful information to travelers or others, like supply chain managers, who depend on accurate, precise, and timely transportation information.

Private companies are far better able to provide the level of detail needed by transportation asset users, but the ConnDOT can participate in a partnership that enables it to capture additional revenues, either in the form of higher fares or a fee-based service for which citizens would pay.

That information would include real-time data on the interstate highways and on principal arterial roads like Route 1 and Route 7.  It would also include specific information on available parking at specific rail stations.

Incent Private Sector Developers to Increase Parking At and Around Rail Stations.
I began my transportation volunteer work in 1985 to try to get funding for rail station parking in Southwestern Connecticut.  Today, we still have a shortage of parking spaces.  There are many solutions that the State could use more aggressively to increase the supply of parking.  As major development projects get approved by the State Traffic Council near major rail stations, the Council could require the dedication of parking spaces to rail station users.

Reduce unpredictable delays by reducing the number and severity of motor vehicle accidents.

By using the technological and business capabilities of the State’s licensed automobile insurers, and the trade associations that represent trucking companies, the state can take a wide range of steps to reduce the frequency and severity of motor vehicle accidents.  For example, Progressive Insurance offers an insurance plan in some states called MyRate that rewards safe, low-mileage drivers with discounts, by validating their safe driving behaviors with an on-board device.  This insurance plan is not allowed in Connecticut.  The state should allow it, but make sure it is voluntary and that appropriate privacy protections are in place for those who choose it.

Similarly, cameras are used in many states and cities around the world, including here in the United States, such as the City of Chicago, to identify vehicles committing moving violations.  Whether this technology is deployed, or others are used in its place, there is no question that technology that detects unsafe driving behavior and makes information on that behavior available to law enforcement authorities significantly reduces motor vehicle accidents.

These kinds of solutions can reduce unpredictable delays from accidents and significantly improve mobility and safety throughout the year.

Strategy 3: Increase the supply, efficiency, financial attractiveness and reliability of motorized transportation.

In a recent article in the New York Times, the Rochester, New York, Transit Authority was profiled because it actually has a budget surplus.  The reporter noted that Rochester had re-evaluated all of its bus routes, had eliminated some, changed the routing on others, but, most importantly, had identified specific large customers, such as the school districts and the major businesses, which were willing to supplement fare revenues to get more customized services and to eliminate redundant bus services they had in place.  We have a highly fragmented infrastructure for delivering bus service here in Connecticut.  That service has a lot of actual and potential innovation, but there are also opportunities for reconfiguring the networks to have those who can benefit pay more.

Expand Alternative Travel Outreach

We have many great programs here in Connecticut, such as TransitChek, which can be implemented faster and at much lower expense than building additional capacity on highways, rail systems, or even bus systems.  These programs are generally thinly-funded and poorly-marketed.  We need to look at selectively increasing funding and marketing for programs that can get the most immediate and largest paybacks in decreasing the number of people who use single-occupant vehicles.

Strategy 4: Engage Private Investment and Operational Capital for Selected State Transportation Assets

I believe that public-private partnerships for investment or operation of selected state assets would make a great deal of sense in conserving scarce state transportation capital.  Realistically, the attractiveness of selling highway assets is limited unless we have tolls with congestion pricing potential, so I would not recommend that we consider that option at this time.

On the other hand, there are asset categories which we should consider opening more fully to private investment and operation, but with appropriate state oversight:

Highway Service Areas

As noted in our Reform Commission report, one of the areas in which Connecticut is below average in transportation assets is the quality and condition of its service areas.  Many are over 50 years old.  Getting the private sector to invest significant capital in these areas could achieve several benefits, aside from making them far more attractive for travelers:

• A private sector operator could move more aggressively to increase revenue yield, the benefit of which could be shared with the state.  While these service areas are net profit contributors to the state today, they could be greater profit contributors with more focus.
• Service areas along I-95, I-91 and I-84 could be equipped more modern technology and other amenities for truckers, which would make them more attractive for truckers to get badly-needed rest and reduce fatigue-related highway accidents. A simple investment in technology that would allow truckers to keep electric power going while they eat and rest would be significant.
• Culverts and other topographical and environmental issues adjacent to the service areas could be addressed in the renovation of these service areas.

Bradley and Other Airports

It became clear to me during the work we did on the Reform Commission that our airports had great underutilized potential.  While Bradley is a net profit contributor with a strong management team and board, it is inevitably constrained by annual budgeting processes as to its ability to maximize revenue potential. For example, at a time when the New York area airports are increasingly unattractive because of air traffic congestion delays, Bradley could have a service reach much farther into Fairfield County than it does today, were it to have a more focused marketing plan.  The management team at Bradley is capable of developing and implementing such a plan, but annual and inflexible budget constraints limit Bradley’s potential.

A private operator with appropriate state oversight could do far more with Bradley, and with other airports that have potential for commercial service.  To effect this result, the state would need a more centralized management structure than it has today, and would need to consider packaging a number of airports, including Tweed-New Haven, to make them attractive to a private operator.

Strategy 5: Employ and Provide More Incentives for Smart Growth Strategies

I support Connecticut’s fledging effort to study transit oriented development, which was approved in last October’s bonding package.  However, the funding needs to be more narrowly focused on transportation and other development projects that specifically focus on creating walkable environments and on developments that occur within a walkable distance from public transportation facilities.  Transit-oriented development will relieve the funding crisis in two ways:

• It will enable developers to create more demand and, therefore, more revenue for public transportation without significant state expenditures; and
• It will cause individuals to engage in activities closer to where they live, thereby reducing the need for single-occupant vehicles and the stress they cause on scarce roadways.

The State also needs to empower the State Traffic Commission to exercise its power in issuing Major Traffic Generator Certificates of Operation to induce communities to require a master plan that takes transportation impacts more fully into account, consistent with smart growth and transit-oriented development strategies.

Concluding Observations

What I want to leave with you today are the following observations:

• While there is no “silver bullet” solution that, by itself, will have a big impact on our funding crisis, there are many smaller initiatives that cumulatively would close the funding gap.
• To take advantage of those initiatives, we need to rely far more heavily on private sector assistance and partnership than we do today.  Some of the best initiatives would require little or no public funding.
• To the extent that the State plays a major role in driving these initiatives, we need appropriate oversight, but we also need methodologies that enable us to make sensible multi-year decisions that will be investments in the future of our transportation network.

In the absence of significant changes in the way we look at transportation, we will become far less competitive in the national and global economy.

Thank you for giving me the opportunity to present my views today.

This entry was posted on Tuesday, October 21st, 2008 at 1:03 pm and is filed under Government, Infrastructure, Public Policy, Transportation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.