American Power Act has good consumer relief provisions

The Center on Budget and Policy Priorities published a report this week that explores in detail the impact of the Kerry/Lieberman American Power Act on low-income consumers. Expanding on an earlier podcast that was supportive of the bill’s low-income relief provisions, the report concludes:

“The Kerry-Lieberman American Power Act provides the same funding for low-income relief as the bill that the House passed last year (an amount equal to 15 percent of the allowance value). It
uses the same mechanism to deliver that relief to most low-income households (the state administered EBT system), and the size of the benefit is calculated in the same way. As a result, it meets the goal of protecting the typical household in the poorest fifth of the population from incurring a financial loss as a result of policies necessary to fight global warming.

Stripped back Mobility Fund offers opportunities for better projects, project selection

Governor Perdue got her Mobility Fund in the House Transportation budget, but not in the form she would have liked. The Fund is now more placeholder than budget bucket – a simple fix to enable widening of I-85 north of the Yadkin River. It would appear likely that the Senate will take up the House’s version of the Fund in the budget consolidation process.

The initial money will come from the Turnpike Authority – $39 million of unused ‘gap funding’ for the still-to-be constructed mid-Currituck Bridge and the Monroe Connector and bypass.

Before the Fund gets any new sources of revenue the Department of Transportation will have developed a set of selection criteria for Mobility Fund projects. According to authorizing bill language, these projects must be of state-wide or regional significance and ‘relieve congestion and enhance mobility across all modes of transportation.’ This would include public transportation.

The Fund does promise some relief of political pressure to fix the ‘equity formula’ that renders the Highway Trust Fund incapable of delivering critical but expensive projects due to the way it diffuses money around the state regardless of need. That remains problematic.

But as conceived by the House, the Fund does offer some prospect of new expenditures on public transportation as well as the hope that the Department of Transportation will draft selection criteria that takes into account long-term congestion relief, lifecycle and environmental costs, as well as access and equity considerations.

What the authorizing language currently lacks is a direction that DOT must seek public input while considering selection criteria options. Prioritization remains a largely opaque process for all but the most closely engaged of observers. Considering the impact transportation infrastructure has on daily lives this lack of transparency is at best regrettable. At worst it is cover for bad ideas becoming reality.

Even if not explicitly directed, DOT would do well to lift public confidence in the department and in the projects that become high priorities by deciding to seek input from local governments, statutory planning organizations and the public during the selection criteria deliberation process.

The 2011 session promises to be an active one for transportation. The creation of the Mobility Fund brings to two the number of state transportation funds that are in need of long-term sources of revenue. The Intermodal Fund that will be used to match local public transportation dollars raised through referendum-authorized local sales taxes is in need of a revenue stream. Starting from next year, referenda are expected in multiple counties.

A balanced approach to new revenue distribution is therefore vital. That revenue discussion would be greatly enhanced by placing Highway Trust Fund and prioritization reform on the table.

Mobility Fund DOA in House?

Representative Nelson Cole, House Transportation Appropriations Sub-committee Co-chair said in a meeting of that sub-committee today that, ‘Now is not the time to burden our citizens with more taxes.” He intonated that this was a feeling shared by a senior Appropriations chair.

This would appear to strongly suggest that the Governor’s Mobility Fund, one that heavily relies on DMV fee increases (especially a registration fee increase of 25%) and the scrapping of the sales tax net-of-trade exemption, is facing a steep uphill battle to gain traction in the House.

The rebuff at the 4pm meeting followed the Governor’s presser at 2.30 where a line of mayors and DOT Board members stood quietly as Perdue implored the House to take up her Mobility Fund proposal in the name of jobs and economic development.

Perdue admitted that the Fund was a response to the federal government not doing something about the I-85 bridge over the Yadkin River, but stressed that it was also a Fund that could address rural project needs and critical projects.

The notion that the Fund would focus on strategic projects appeared to be at odds with the proposal to direct 6.5% of the Fund to municipalities for use under Powell bill rules. Those rules allow municipalities to spend the dollars on projects as minor as sidewalks. In addition, $30 million would be used for interstate maintenance.

In questions from the press, Secretary Conti acknowledged that the capacity of existing funds that could pay for the Yadkin River Bridge project’s various phases were ‘encumbered by various formulas’. He added that the distribution of dollars around the state was an issue that required a longer conversation. Conti was referring to the equity formula of the Highway Trust Fund.

Senate transportation budget punts on the Mobility Fund

The Senate budget that passed today did not take up the Governor’s proposed Mobility Fund and with some very minor exceptions adhered to existing statutory budget allocation formulae.

The Governor’s proposal came in the wake of North Carolina’s failure to secure complete stimulus funding for the replacement of the I-85 bridge over the Yadkin River. The Mobility Fund responded to the hole in the coffers caused by the failed ARRA bid. State money has been subsequently shuffled from elsewhere to fund the replacement. There was an announcement of a road-widening project either side of the bridge being funded by the Mobility Fund.

I previously described the Fund as policy-making on the run – an ad hoc response to the Yadkin River funding problem. The Senate got it right by passing on the Fund. How the money would be spent in the future was unspecified. The goals were vague, the vision blurry. The problems around project prioritization in this state are bad enough without adding to them.

What needs to happen before higher fees and taxes is that the new project prioritization process needs vast improvement. Dollars need to be distributed around the state based on traffic volume, need and an up-to-date framework that recognizes the increasingly urban nature of this state. Project prioritization must get away from ‘everyone getting theirs’ mentalities, twenty year-old formulas that reflect old political power (the ‘equity’ formula that guides distribution of Highway Trust Fund dollars) or the deference to counties wanting their unprecedented immunity from fiscal responsibility for local roads to continue.

Only when this is done will we know what is truly required in the form of new revenues.

When this is done, a special project construction fund such as the Mobility Fund will be unneccessary.

Aside from the Fund’s fundamental problem that it deals with our prioritization problem by ignoring it, it is additionally problematic because of its potentially negative effect on the state of our existing roads. The Mobility Fund would have been funded through increases in DMV fees, including vehicle registration fees. DMV fees are used to fund road maintenance.

Our road maintenance needs are acute. A recent estimate is that over one-quarter of lane miles on our arterial roads need repair now or in the near future. If there is to be an increase in DMV fees, the money needs to go towards maintenance. Raising fees now for a new construction Fund makes it more difficult to do so again in the near future to better respond to the maintenance challenge.

Traffic volume is on the rise again after a sluggish five years. Pavement wear rates will increase with the increase in volume. We have to look after our existing investments and get a handle on construction priorities – not pour money into a slush fund with indeterminate goals. The Senate did well to punt on the Mobility Fund.

American Power Act provisions to protect low-income consumers ‘well designed’

The provisions in the Kerry-Lieberman American Power Act (APA) to protect low-income consumers from incurring higher energy bills in the transition to a less carbon energy reliant economy are ‘well designed’ according to Chad Stone, Senior Economist at the Center on Budget and Policy Priorities.

The APA places a cap on carbon emissions and it is expected that before clean energy innovations mature energy prices will rise – rise that will trigger increases in the costs of goods and most services.

The APA proposes a low-income relief policy and delivery mechanism much like the one proposed in the House bill that passed last year. Stone summarizes it this way:

There are three main highlights:

First, households with incomes at or below 150 percent of the poverty line will be eligible to receive monthly energy refunds by direct deposit or through states’ electronic benefit transfer – or EBT systems. These are the debit-card systems states already use to deliver food stamps and other federal benefits.

Second, households that receive food stamps, as well as low-income seniors and people with disabilities who participate in the Supplemental Security Income program, will be enrolled for the energy refunds automatically.

Third, households with slightly higher incomes —about $33,000 -$55,000 a year for a family of four — will be eligible for a smaller tax credit. The credit will be refundable, meaning that if the amount of a family’s credit exceeds its income tax liability, it can receive the difference in the form of a refund check.

Check out the full podcast here, as well as analysis of the House bill here.