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April 30, 2009

Host: Ted Simons

ADOT Director

  |   Video
  • Interim Director of the Arizona Department of Transportation John Halikowski discusses the challenges and opportunities facing his agency.
  • John Halikowski - Interim Director of the Arizona Department of Transportation

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Ted Simons: Joining me now is interim director of the Arizona department of transportation, John Halikowski. He was appointed in February by Governor Brewer and is now awaiting senate confirmation. Thank you for joining us on "Horizon."

John Halikowski: Thank you, Ted. It's good to be back at my old alma mater.

Ted Simons: You are now, though, going to be running the department of transportation. What's your vision for that department?

John Halikowski: Well, my vision for that department, Ted, is that department has tremendous ability to enable transportation and infrastructure to be accomplished throughout this state. By that I mean the department really needs to function as a partner to regional and local governments to accomplish those things.

Ted Simons: Is that the biggest challenge you see right now as well?

John Halikowski: It's a huge challenge, but another huge challenge facing us obviously is the budget crisis. We've got declining gas revenues, license tax, and the fund sweeps over the years have taken a lot of highway funds out of ADOT's control for construction and maintenance, and they filled gaps into the general fund.

Ted Simons: How do you feel about those raids and those sweeps?

John Halikowski: Well, they're concerning to me. Quite frankly, what happens is that as the legislature will pull the tax out of our operating funds, we have a lot of difficulty then in maintaining our roadways and making sure that we're delivering those projects out there for the public.

Ted Simons: OK. The budget crisis in general; how is that impacting what is being done around the state and what is not being done?

John Halikowski: Well, what's happening with it is that we have to produce every year an updated five-year construction and maintenance plan. And that's ultimately approved by the state transportation board. We're in the middle of those public hearings right now. We've just recently had one in Marana and will be traveling soon to Flagstaff to hold one there. When the revenues decline, and when funds are taken out of ADOT’s operating fund, we have to then shrink that five-year plan down, because it must be fiscally constrained by law. So in essence what happens is we start deferring construction projects out beyond the five-year window, and also we're going to have to look at deferring some of our maintenance activities.

Ted Simons: And yet I can hear folks now saying you got your gas tax, your vehicle license tax, you got federal money coming in, still not enough. We had a proposition pass, still not enough.

John Halikowski: Well, remember, the half-cent sales tax is a Maricopa County sales tax. And so that half-cent tax funds construction projects and maintenance here in Maricopa County. Pima County also has its half-cent tax for construction projects. But when you look at greater Arizona out there, they're solely reliant on the gasoline tax for their transportation and maintenance, and what happens is that gas tax has been flat since 1991, there's no inflator built into it, and with a fuel efficiency and economy, we're seeing less people driving, we're seeing a decline in revenues.

Ted Simons: I was going to say, it's almost counterproductive sometimes to depend as much as we do on the gas tax. That being said, do you want to see inflation adjusted?

John Halikowski: I think the gas tax was probably a great idea when we were starting to build the interstate system in the U.S. in the 1950s. But again, as we're looking toward alternative ways of fueling vehicles out there, and we're looking towards different ways of taxing folks, I have to say that the gasoline tax is not something you necessarily want to hitch your wagon too, because quite frankly, it puts us dependent on foreign oil, and it's not necessarily good for the air. I think we need to look at alternative ways of funding transportation projects.

Ted Simons: And we just had a discussion on things like toll roads and user fees and these kinds of things. Are they viable here in Arizona?

John Halikowski: Well, that's a good question; because the devil's always in the details there. Will three bills currently that deal with these public-private partnerships, or some people will say, another road for toll roads. But the fact of the matter is that depending on what the structure of the bill is, they may be viable here. There are a number of companies we've been meeting with over the past couple years, investment companies, who are interested in public-private partnerships here in Arizona. We've got some folks dedicated at ADOT to working with that, and with the legislation. So we're excited and looking forward to it, because we see it as part of the funding picture.

Ted Simons: I know some critics will call this double taxation if it's a toll road or user fee involved; the gas tax increasing that inflation adjusting it, these sorts of things. There's an idea, and a very sound idea certainly at the folks that support this are loud in supporting it, that you can't increase fees or taxes, and expect business to either stay here, grow here, or relocate here. How do you work that dynamic with transportation?

John Halikowski: Well, I would counter that argument this way. Businesses and people want to locate where there's good infrastructure and smart growth. And if we manage the transportation and infrastructure system properly, we will build such a system to make this state economically viable. A.S.U.'s own Morrison Institute has looked at this area and said Phoenix, Tucson, Flagstaff; it's an emerging megapolitan area. We're going to have to get smarter about how we govern that area, and smarter about how we fund it. So to me, those decisions should be made regionally and locally by those voters.

Ted Simons: All right; very good. Thank you so much for joining us.

John Halikowski: Thank you, Ted.

Arizona Town Hall/Transportation

  |   Video
  • Former U.S. Secretary of Transportation Mary Peters talks about recommendations from the 94th Arizona Town Hall on Transportation that recently took place in Tucson. Peters also shares her ideas for improving how Arizona finances and manages its public transportation resources.
  • Mary Peters - Former U.S. Secretary of Transporation

View Transcript
Ted Simons: Last week the Arizona town hall met in Tucson to come up with solutions to the state's transportation problems. Producer Kimberly Craft has more.

Kimberly Craft: More than 100 of the state's elite policymakers gathered in Tucson. They hunkered down in panels to consider the challenges and opportunities and find solutions to the state's transportation problems.

James Charlier: We understand Arizonans have mixed feelings about public transit.

Kimberly Craft: James Charlier, a planner based in boulder, Colorado, delivered the luncheon speech, telling them what they already know. Arizona, more than other states is petroleum dependent for moving people and goods. The majority of the money we spend on fuel leaves the state. It even climate change at 120-degree summer temperatures won't stop people from coming here, our population will double by 2050, perhaps earlier. And the development patterns we've followed for the last 50 years simply won't work anymore.

James Charlier: Your low-density sprawled-out suburbs are losing value, and they're full of foreclosure signs. And that's not an aberration or a temporary thing. That's the future. So you have an enormous and kind of exciting opportunity to shape what happens over the next couple decades, if you choose to.

Kimberly Craft: Transit didn't even come up in the conversation two years ago, according to Melissa walker, who directs the governor's task force. She says transit presents the silver lining to thinking about innovative transportation schemes. She came to push her own agenda, establishing a secure corridor to move freight through five states from Mexico to Canada. She urged town hallers to push for more federal multiyear funding and to start thinking about planning the development of borders and corridors together as a cohesive supply chain process.

Melissa Walker: I've heard several people describe it as not necessarily selling things together. We make things together. And so it's important for people to be aware of that so they understand why we need to collaborate with our partners on both sides of the border to ensure we have a fluid transportation system and economic benefits that should come from something like that.

Kimberly Craft: Market forces will shape the Arizona landscape and stimulate a lot of creative thinking; with the potential to give long-timers and newcomers alternatives to so much driving, and more money in their pockets to pump into the state economy.

Ted Simons: Arizona town hall participants recommended raising the state's gas tax, which helps pay for building and repairing roads. The tax has stood at 18 cents per gallon since it was implemented in 1991. Here now to talk about that and other options for meeting Arizona's transportation needs is Mary Peters, former United States secretary of transportation. Good to have you here. Thanks for joining us.

Mary Peters: Ted, thank you.

Ted Simons: The 18 cents a gallon since 1991 for the gas tax. Not changed. Is that a good thing or a bad thing?

Mary Peters: I think it's -- let's put it in context. It may be a bad thing in that it's not bringing in as much revenue. But I think continuing to depend on the gas tax whether its 18 cents on a state level or 18.4 on a federal level, is really relying on a mechanism whose time I believe has come and gone. Often the gas tax is running out of gas. Americans are driving less, using less fuel, and our vehicles are going to be significantly more fuel efficient in the future. So really it is an opportunity to look for an alternative way or ways of funding transportation.

Ted Simons: And I want to talk about some of the ideas you have in mind, specifically. But back to the gas tax idea, indexing the tax to inflation; is that a way to perhaps bridge between what is now and what you would like to see?

Mary Peters: It may well be. I found that many people in elected positions are reluctant to do so. I've said in the past if the public had been clamoring for a gas tax increase, it would have happened before now. What I believe is true is that the public has lost faith in how those mechanisms are allocated, so they're not willing to support increasing or indexing the gas tax until they see that we're going to do a more responsible way of allocating revenues.

Ted Simons: It sounds like indexed for today's monies, you're talking 28 cents a gallon instead of 18, possibly. Is that what lawmakers would shy away from?

Mary Peters: I think they would. We saw an example recently in Idaho; state governor had proposed a 10 cent a gallon gas tax increase, right in the neighborhood of what you're talking. The legislature only moved a two-cent increase and that was voted down. They couldn’t even get that through.

Ted Simons: OK. Let's talk about your ideas regarding a different way to finance highways, roadways here in Arizona. Let's start with here in Arizona. Toll roads, pay to play, you like those ideas.

Mary Peters: I do. I think that there are ways to bring more revenue to bear to meet our transportation needs without relying on what is an unsustainable, unreliable method of funding, which is that gas tax. Part of that could be tolling or paying a per mile cost; we sometimes call it a vehicle miles tax, vehicle miles traveled tax or something like that. That would give us the opportunity I believe to use price signals to determine where and how we invest instead of relying on the most powerful political player to allocate those revenues to projects that they want billed. It happens too often on the federal level.

Ted Simons: Direct user fees sounds like double taxation.

Mary Peters: I don't think it is if we get away with the gas tax or basically take the gas tax down at the same time we're bringing these other mechanisms into play. I think it wouldn't be double taxation at all. But let me also say that people are paying today, they're paying not only that gas tax, but they're also paying with their time, with their patience, with their lack of productivity because in too many cases we've just got choking congestion in areas where we need to build more, but the revenues aren't necessarily going to those places to build those roads.

Ted Simons: And yet I know there's another line of reasoning that says, anything that facilitates the building of more freeway enhances the idea of keeping the car culture alive is irresponsible, seeing as how the car culture -- these folks would say is a dying culture and we need new ways of getting folks around.

Mary Peters: I believe that we need to have multimodal solutions. I'm very, very pleased as I come back to Arizona now that we have the transit system here in the Phoenix area, and also in Tucson, and much better transit applications than we've had in the past. What that gets to, Ted, is we should pay for whatever mode of transportation best meets our needs. And so if driving on a highway best meets or needs, we should have the freedom to do that, but we should have alternatives. If we send the right price signals, whether we're taking a transit system, whether we're driving our own car, by ourselves or in a carpool or something like that, if we use price signals, we would have those options and those abilities to choose which mode we use.

Ted Simons: Let's talk about some of these modes as far as toll roads are concerned and user fees and the technology that would be involved. How would it work?

Mary Peters: This is -- people think this is throwing quarters in a basket, like we used to do in Chicago on toll roads. Overhead gantries can read at full highway speed a transponder affixed to a vehicle. And basically take the money out of an account that's been set up for the fee that you're paying to use that section of roadway. But here's what is important. Not only can you pay that electronically and not have to stop at tollbooths and the congestion associate the with that, but those price signals can be used to manage the traffic on the road so you're virtually guaranteed a full freeway speed ride from the time you get on until the time you get off.

Ted Simons: You say you're guaranteed, but how would that work? How would you make it fair for folks who may not have the income to afford that -- are you pricing the poll or the fast lane?

Mary Peters: I don't think so. Today with the gas tax, we don't have the discretion to take a lower income family and say, OK, when you pump gas into your car you're going pay a lower fee than you or I perhaps to say that. With the transponder you can do that. Let's say a low-income person would want to subsidize transportation, maybe public transportation doesn't meet their needs, working on a construction job maybe where they have to be there at 5:00 a.m. Let's debt money to their account, or give them a credit so they don't pay as much per mile. You can do that with this technology that we have today, but you can't do that with a gas tax. And the gas tax truly is regressive. It has a much higher proportion of spendable income on low-income families than it does on higher income families.

Ted Simons: Is there a concern, getting more of the private sector involved in transportation, that the private sector by its nature wants to make money, and may very well cherry pick ideas and roadways and projects that would benefit them the most, but may not benefit society or the community the best?

Mary Peters: I think if we're talking about attracting private sector revenue, and I think there's a tremendous opportunity to do that, we do have to make sure we're protecting public interests. That people aren't required to use the road, where there are no alternatives, that they're being priced out of being able to use that roadway. But all of those things can be dealt with in the context of the state or the local government owners negotiating those contracts with the private sector to make sure public interest is preserved. And we can also I think help acclimate people to this type of pricing by using maybe a hot lane concept, instead much H.O.V. lanes.

Ted Simons: That idea: The transponder ideas, the toll road, all of these things, are they in place right now and how are they working?

Mary Peters: They are. They're in place several places. Probably the longest running priced lane demonstration that we have in the United States is on state route 91 in Southern California; roughly runs from riverside county into Orange County very heavily commuter corridor. And there are priced lanes; these express priced lanes are adjacent to the so-called free lanes or general purpose lanes where people aren't paying a fee to use them. Here's what's important. Those price lanes get 40% greater throughput than do the adjoining general purpose lanes. And the way they do that is they raise or lower the price depending on the amount of traffic so they can keep that free flowing. It's happening also in Minneapolis, in Miami, in Texas. There are numerous examples today.

Ted Simons: Last question, it's happening there, is it viable? Are Arizonans ready? Arizonans don't want to see cameras; they don't want a big brother looking down on them any way, shape, or form. Now you've got cameras and toll roads -- are we ready?

Mary Peters: We probably need to get ready. We still think toll is a four-letter word. I think we have to get acclimated. It's not so much how you pay, what you pay, but how you pay. If we can find a way for people to pay for transportation but give them a much better return on investment, get them out of this choking congestion, I think people will warm up to that. And the hot lanes I think are the best way to start that.

Ted Simons: Very good. Thank you so much for joining us on "Horizon."

Mary Peters: Thank you, Ted.

Arizona Unemployment

  |   Video
  • Arizona Department of Commerce economist Dennis Doby delivers the latest unemployment figures.
  • Dennis Doby - Economist, Arizona Department of Commerce
Category: Business/Economy

View Transcript
Ted Simons: Welcome to "Horizon." I'm Ted Simons. Three new confirmed cases of swine flu in Arizona were reported today. That brings the total to four. The latest Arizona cases are all school-aged children as a result; two elementary schools in the Chandler unified district have been closed for seven days by the Maricopa County health department. Arizona is expected to lose nearly 168,000 jobs over the rest of this year and into next year. That's the latest from the Arizona department of commerce, which says a slight recovery is expected later this year or early next because of lower prices on key consumer items. Credit is expected to thaw, helping the recovery. Here to talk about all that is Arizona Department of Commerce economist Dennis Doby. Good to see you again.

Dennis Doby: Good to see you.

Ted Simons: You've got numbers for us, don't you?

Dennis Doby: Yeah, but they're not real good.

Ted Simons: What have we got?

Dennis Doby: For March the unemployment rate went from 7.4% in February to 7.8% in March of 2009. The job growth was down to 6.9%. That's pretty high; and a loss of 183,100 jobs for March of 2008.

Ted Simons: 183,000 fewer people employed year-to-year. Have we seen anything like this before?

Dennis Doby: In numerical numbers, no. In percentage terms after World War II, the late '45, December '45, percentage terms it reached 8.2%. In numerical terms, this is a record.

Ted Simons: Any surprises from some of the numbers you just talked about?

Dennis Doby: No real surprises; construction, trade, professional business services leading the way in the losses.

Ted Simons: How low is this going to go? I guess we can get to the forecasting aspects. We know it's pretty bad right now. Is there light at the end of the tunnel?

Dennis Doby: I think so. I think we're getting close to the bottom, at least that's what our forecast tends to anticipate. But the fact we're down at 6.9% in April, which may be lower, hopefully the bottom will be reached in the next few months.

Ted Simons: 7.8%. Are we likely to see eight, nine, maybe even 10?

Dennis Doby: We're likely to see 8% and possibly 9% before this peaks. The unemployment rate being a lagging indicator, we'll see it continue to rise through 2009. It's possible to hit double digits like our neighbors in Nevada and California.

Ted Simons: But yet when you talk about job growth, we're ranked pretty much at the bottom, aren't we?

Dennis Doby: As of March we're ranked at the bottom. We're 50th out of the 50 states. Michigan was behind us, but we passed them with our minus 6.9% over the year growth.

Ted Simons: Correct me if I'm wrong, lots of folks who may have gotten severance pay, are they now coming on to the rolls, or have they been there? How does that work?

Dennis Doby: If you're -- with the unemployed, it's a measure of, are you actively looking for work. If they're looking for work, they're on the rolls as being unemployed. If they're a discouraged worker and they're answering we're no longer looking for work, they won't show up in the numbers.

Ted Simons: It sounds like we'll have more state workers, possibly teachers as well joining the rolls.

Dennis Doby: That's what it looks like, yes.

Ted Simons: Compare and contrast if you would this recession with maybe mid '70s, early '80s, where we were hit pretty hard as well.

Dennis Doby: We were. But the growth rates, the over the year losses for what we're projecting for calendar 2009 are going to be higher than what we've seen in '82 or '75. Those lasted -- the recessions officially 16 months. Our peak was in December of 2007, as of April, we're in the 16th month. So this one is going to last longer. And it's also going to be deeper than both of those recessions.

Ted Simons: as far as the forecast, from what you can see what the forecast says, what are we looking forward to? What should we watch out for?

Dennis Doby: Potential shocks in the economy that could hit and cause even further growth. Right now we're looking for the bottom to be reached, and you've seen a number of national reports saying that the end may be -- we may be getting close to that. We certainly hope that that's the case, and we think the bottom will be reached somewhere in 2009, and the rate of loss will slow into 2010. The problem with reaching positive numbers is it's going to be slow growth instead of a rapid increase like we've seen in prior times.

Ted Simons: With that said, is there a leading indicator that would indicate better job numbers ahead?

Dennis Doby: I don't think there's a leading indicator; at least not the one that I'm aware of. There's some stuff that -- to look at like retail sales, the G.D.P. numbers that were recently released showed personal consumption expenditures were up in the first quarter from the fourth quarter of 2008, but the fourth quarter of 2008 was pretty bad numbers. So you've got to take and look at a wide variety of indicators to see some potential hope out there for slowing and foreclosures, maybe some increases in the sales of those. There's positives, but for every positive there seems to be a negative.

Ted Simons: Any sign of something concrete and positive in the near future?

Dennis Doby: One thing I'm looking for to see is a positive for me is, we've had 19 consecutive months of over the month declines in construction employment. If we can get a positive over the month increase in construction employment, I'm going to take that as a positive sign.

Ted Simons: I think we'll all take that as a positive sign. Thank you very much for joining us.

Dennis Doby: You bet. No problem.