Call to Order and Roll Call
The 5th meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, November 5, 2013, at 9:00 AM, at the National Corvette Museum in Bowling Green, Kentucky. Representative Hubert Collins, Chair, called the meeting to order, and the secretary called the roll. A quorum was present, and the October 1, 2013 meeting minutes were approved.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Jimmy Higdon, Ray S. Jones II, Bob Leeper, Morgan McGarvey, Dorsey Ridley, Albert Robinson, John Schickel, Johnny Ray Turner, and Whitney Westerfield; Representatives Denver Butler, Leslie Combs, Tim Couch, Will Coursey, Jim DeCesare, Keith Hall, Kenny Imes, Jimmie Lee, Charles Miller, Terry Mills, Tanya Pullin, Steve Riggs, John Short, Jim Stewart III, and Addia Wuchner.
Guests: Mike Hancock, Secretary, Kentucky Transportation Cabinet; Nora Roper, Assistant Manager, GM Corvette Plant; Eric Henning, Regional Director, State Government Relations, General Motors.
LRC Staff: John Snyder, Brandon White, and Christina Williams.
Welcome and Opening Remarks
Chairman Collins welcomed members and guests to the committee and congratulated Mike Hancock, Secretary of the Kentucky Transportation Cabinet, on his recent election as the President of the American Association of State Highway Transportation Officials. Chairman Collins also introduced James Scott with Scotty’s Contracting & Stone LLC; Mac Yowell, former State Highway Engineer and the Director of Public Works of Warren County; Juva Barber, the new President of the Kentuckians for Better Transportation; and Former State Senator Richie Sanders.
Representative DeCesare thanked Wendell Strode and all of the staff from the National Corvette Museum for its hospitality. He also recognized Bruce Wilkerson, Mayor of Bowling Green; Mike Reynolds, former State Senator; and Greg Meredith, District Engineer.
Presentation by GM covering its Activities in Kentucky
Nora Roper, Assistant Manager, GM Corvette Plant and Eric Henning, Regional Director, State Government Relations, General Motors, began a presentation on General Motor’s activities in Kentucky. Andrea Hales, GM Plant Communications Manager, was also introduced.
Ms. Roper stated the GM Corvette Plant has recently invested $131 million to upgrade the Bowling Green plant location and retool the facility to produce the new C7 model Corvette. The last C6 model, the previous version of the Corvette, was built on February 28, 2013. The number of C6 Corvettes that were built is 215,213.
The GM Corvette Assembly plant has approximately 1 million square feet and has one production shift that is 8 hours per day, Monday through Friday. The production volume is 17.2 units per hour, which translates to 137 Corvettes that are assembled on an 8 hour shift. The plant employs approximately 1,000 employees, including 700 hourly employees, 110 salaried employees, and over 200 contract and temporary employees. The construction of the new seventh generation Corvette, or C7, brought forth the need for additional permanent General Motors and UAW employees. Twenty-four employees were added, some being transferred from other parts of the U.S. In 2012, the GM Corvette Assembly Plant’s wages to employees totaled $53 million.
Constructing the new C7 included the need for additional buildings that were added to the plant. An extension of the building for pre-treatment of the frames was added as well as a new body shop. The body shop construction cost approximately $52 million of $131 million. The trim area of the plant was rearranged and now work stations are much more organized.
The C7 was revealed on January 13, 2013 and the Stingray name was brought back for the C7 model as well. After its reveal, C7 was one of the top 5 trending search topics on Google. At the North American International Auto Show the Corvette Stingray had close to 75 minutes of media coverage at the show. The only other automobile that came close to that amount of media coverage was the Cadillac ELR, which had approximately 10 minutes of coverage. The new Corvette has been on the cover of several magazines including, Road and Track and Car and Driver.
In January 2013, General Motors announced that the performance build center, where engines are built, will be coming to the Bowling Green Assembly plant. The production of those engines will start in the first quarter of 2014.
The C7, 2014 Corvette is the most powerful standard model ever, with an estimated 455 horsepower and 460 pound feet of torque. It is capable of accelerating from 0 to 60 MPH in 3.8 seconds and achieves more than one G in the cornering grip. It is also the most fuel efficient Corvette ever, with an EPA highway rating of 29 MPG and a city rating of 17 MPG. The C7 is the most fuel efficient car in the market for over 400 horsepower.
The plant is environmentally friendly and would like to continue to work towards being landfill free. The plant has received the energy star challenge for the industry, which means it has improved the use of the energy it uses, reducing the energy usage by 10 percent within the past 5 years. The plant has a wildlife habitat that consists of 75 acres, and it is the largest within any GM sites. The wildlife habitat contains walking paths and picnic tables and is open to the public.
Representative Coursey introduced his special guest in the audience, Jim Lafever, Chief District Engineer the Kentucky Highway Department, who is now Kentucky’s Operation Manager for the Infrastructure Corporation of America.
Senator Jones expressed his excitement to be in Bowling Green and stated he is a longtime fan of the Corvette, owning two Corvettes himself. He stated the Corvette C7 is a remarkable car and a significant step forward over the C6. The C7, by all accounts, is truly a revolutionary vehicle, particularly at the price point of the car. Senator Jones stated he believed that the C7 could be the Motortrend 2014 Car of the Year, and if so, it would be appropriate to publicly recognize that honor. Senator Jones stated the celebration of the C7 is not just about the car, but about the union auto workers and all of the people involved with building the car, showing what a competent qualified union workforce can do. He indicated the C7 will help GM with its turnaround, which will bring attention to Kentucky. He stated a start up of a motor sports club is possible in Western Kentucky due to the amount of Corvettes, and that would also bring a lot of attention to Kentucky. Senator Jones congratulated the GM Corvette Assembly Plant on its accomplishments.
Representative DeCesare agreed with erecting a sign if the C7 was named the Motortrend 2014 car of the year. He also mentioned that the Corvette has been named the official sports car of Kentucky.
Representative DeCesare thanked Ms. Roper and Mr. Henning and stated a few short years ago there were some questions and issues surrounding the plant and it is refreshing to have the plant go from a few hundred employees to approximately 1,000 employees over the past few years. The capital improvements that have been made and the way the employees have been involved in the community are also refreshing. Representative DeCesare stated he appreciates not only the automobile that the plant provides, but the jobs that are provided and the way the plant contributes to the community of Bowling Green, Warren County, and Kentucky.
In response to a question asked by Chairman Harris, Ms. Roper stated 1981 was the year that Corvette production was at its lowest and also the same year that Corvette came to Kentucky. Chairman Harris stated he is thankful that the decision to continue Corvette production was made.
In response to a question asked by Chairman Collins, Ms. Roper stated the approximate base price for a new C7 Corvette is $52,000 and $57,000 for the convertible model. That price is without any extras or add-ons.
Representative Lee reflected on selling a few Corvettes when he was an automobile salesman. He stated Corvettes and their relationship with Kentucky have been a huge success story. As a former automobile salesman, he sold Corvettes with pride.
Discussion of the Future of the Federal Aid Highway Program
Mike Hancock, Secretary, Kentucky Transportation Cabinet, began a discussion on the future of the Federal Aid Highway Program. Secretary Hancock recognized Steve Waddell, State Highway Engineer who was in the audience, as well as Chuck Wolfe, Public Information Officer, and Greg Meredith, District Engineer.
Secretary Hancock stated that the Federal Highway Trust Fund has a long-term structural imbalance. Secretary Hancock stated Chairman Combs of the Budget Review Subcommittee on Transportation just returned from Washington D.C. where she has been informed of many of these issues as well.
Secretary Hancock stated people are driving less and the purchasing power of the Highway Trust Fund is declining at increasing rates. Also, alternative fuel sources are creating some issues that reduce revenues to the Trust Fund.
Congress has demonstrated over the past few years an appetite for Transportation which is a positive thing. Referring to the first chart of the presentation, the chart indicated what will become a fiscal reality if Congress does not act. In relation to Transportation over the last four or five years, Congress has pushed the envelope and is living beyond its means, in the Federal Highway Trust Fund by supplementing the Trust Fund with General Fund revenue to the tune of approximately $40 billion. While this is not necessarily a bad thing for Transportation, it does put the nation in a precarious position. Without further congressional action to infuse additional General Fund dollars in the fund, FY 2015, which begins next October, could be a very difficult year for the Federal Highway Trust Fund. Secretary Hancock wanted the Committee to be aware of the upcoming situation and consequences Kentucky could be facing if Congress does not act. As the six year highway plan is built, and as the 2014 session of the General Assembly gets underway, it is imperative that the potential severity of non-action by Congress is understood. The chart provided illustrated that Congress has funded the Federal Highway Trust Fund for distribution for the states at about $40 billion annually back to 2009. In 2015, without additional action, that highways component drops from $40 billion in 2014 to $0.2 billion in 2015. The fund will rebound in 2016 to $31.4 billion and then increases to $36 or $37 billion by 2023.
The plan that Secretary Hancock plans to submit in the 2014 session of the General Assembly will be built around the assumption that Congress will act providing the funds necessary to keep the program at about $40 billion a year nationally. He stated that action may or may not happen and there is no guarantee that the action will occur before 2015.
Secretary Hancock warned that the Highway Program may have to be slowed in 2014, depending on how likely it appears that Congress will provide those funds, so as not to incur huge bills in 2015 and have no way to pay them.
If the Federal Highway Trust Fund Program drops to $0.2 billion in 2015, there will be no federal highway program authorizations in 2015. The projects in the pipeline will continue to move at the pace Congress helps move them, but there could conceivably be no Federal Highway Trust Fund Program in 2015.
Congress has a history of addressing this problem, and the Highway Trust Fund has received multiple General Fund transfers over the past few years. In 2008, $8 billion was received, in 2009, $7 billion was received, and in 2010, $19.5 billion was received. MAP-21 has provided approximately $20 billion in funds.
Secretary Hancock referred to a chart in his presentation that refers to the buying power of the Highway Trust Fund dollar. With the assumption that the buying power in 1993 was at 100 percent, by 2012, 37 percent of that purchasing power will be lost, and by 2023, more than half of that purchasing power will be lost under the current scenarios.
Secretary Hancock referred to another chart that demonstrated that the Highway Transfer Fund will outpace receipts by $15 billion or more per year. The Highway Trust Fund, as currently operated, is not sustainable. Congress will have to evaluate realistically and holistically the way Transportation is funded in America.
The last chart that Secretary Hancock presented established that Kentucky is not alone in potential funding shortfalls in transportation. Kentucky was anticipated at having approximately a $647 million program, and it will actually have a $3 million program in FY 2015, without congressional action, an estimated program reduction by 99.5 percent.
In response to a question asked by Chairman Harris, Secretary Hancock stated the assumption that the states will receive $40 billion in funding is due to what Congress has done since 2008 each year that it has been confronted with this situation. Congress has funded an amount of money necessary to bring the amount to the states back to about $40 billion a year, which is where it has been since 2005. He believes Congress will continue to provide at that level, but there is no guarantee. He reiterated that 2015 would essentially be a catch up year. Then, when the money does start coming in there will be the ability to authorize funds again for Transportation.
Chairman Collins thanked members and guests in attendance and adjourned the meeting at 10:05 am.