On the road again

The new highway bill redirects Highway Trust Fund money toward infrastructure projects and gives more money to states.

By Staff -- Logistics Management, 6/1/1998

Forget ISTEA, NEXTEA, and BESTEA. The new six-year, $215 billion highway and mass-transit bill will be known as "TEA-21," the Transportation Equity Act for the 21st Century.

Under the new bill, federal funding for highway programs will increase from $23 billion this year to more than $28 billion annually over the next five years. "We're looking at

a 44-percent federal highway funding increase through 2003, compared to the previous six years," says Pete Ruane, president of the American Road and Transportation Builders Association.

The bill authorizes up to $175 billion for highways and $41 billion for mass-transit programs, with additional spending for safety programs. It guarantees that at least $200.5 billion of the total authorization will be spent during the bill's life.

In addition to raising funding levels for highway construction and repair, TEA-21 changes the way the 18.4-cents-per-gallon federal fuel tax will be distributed. Previously, the tax was directed to the Highway Trust Fund, where it was used to offset the federal budget deficit. "In essence, we had a $23 billion trust-fund IOU that was never going to get paid," says Ruane.

Transportation interests lobbied to remove the highway funds from the unified federal budget. TEA-21 keeps that money in the budget but guarantees that all revenue that comes into the Highway Trust Fund will be used for transportation improvements. The bill also gives states grants for transportation-infrastructure improvements that amount to at least 90.5 percent of the money they contribute to the highway fund in gasoline taxes.

Rep. Bud Shuster, chairman of the House Committee on Transportation and Infrastructure, welcomed the redirection of highway funds to transportation projects. "We are spending too much time in traffic, too many people are dying on bad roads, and too much highway money has been siphoned off for other federal spending," he says. "Soon, as a result of this bill, that all stops."

Something for Everyone

Like its predecessor, TEA-21 offers something for just about everyone. For example, many congressional districts will be rewarded: TEA-21 grants about $7 billion requested by House members for construction projects in their districts. It also continues to reserve a percentage of federal construction contracts for companies owned by minorities and women.

The bill preserves an exemption for renewable fuels--the ethanol tax break--until the year 2007, a provision that is seen as a victory for farm states that produce the corn-based fuel. The bill also requires that state and federal agencies coordinate their environmental-review processes, a change that should cut delays in transportation projects.

To make it easier for capital-intensive projects to obtain full funding, TEA-21 will promote greater private-sector involvement through loan guarantees, lines of credit, and direct loans. "It makes available approximately $500 million in Highway Trust Fund revenue over six years to support credit assistance of up to about $10 billion," says Ruane.

TEA-21 is the product of a month-long negotiation in Congress. The conference committee assigned to draft a compromise between the Senate and House versions of the spending package trimmed between $10 billion and $13 billion from the bills approved by the two houses. To keep the bill within the balanced-budget agreement, which requires offsetting any spending increases with cuts in other programs, Congress trimmed $17 billion from non-highway programs.

Not everyone in Congress is pleased with the bill, which President Clinton signed into law last month. Critics charge the law is laden with pork-barrel spending.

Sen. John McCain, chairman of the Senate Commerce Science and Transportation Committee, says, "This bill would be comical if it weren't such an abrogation of our responsibilities to the American taxpayer." He condemned the bill for including more than $9 billion in 1,850 demonstration projects--a long-favored way for members of Congress to bring home the bacon. McCain urged President Clinton to use the line-item veto to reject all of those projects.