Financing remains major challenge to any future surface transportation legislation

As LM reported late last week, a piece of legislation focusing on various aspects of surface transportation, with a freight focus, that could serve as a new version of SAFETEA-LU (The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users), was making the rounds in Washington, D.C. last week.

This bill, entitled the “Transportation Opportunities Act,” included many notable and forward-thinking options with domestic supply chain and freight operations slants, including a national infrastructure innovation and finance fund, an Office of Freight Policy and a National Freight Transportation Policy, and a mileage-based user fee system that would convey prices to users to reflect system use and other travel externalities and serve as a funding source for surface transportation programs, among others.

Even though this draft is being widely discussed and has received some positive praise, enthusiasm for it needs to be muted for various reasons, especially since neither the White House nor the Department of Transportation have endorsed it as representing their current respective policies.

“There are some interesting provisions, notably those having to do with freight, where the draft calls for a National Policy, a National System Plan and a process for regular strategic updates to guide decisions on discretionary funding,” said Mortimer L. Downey, Chairman, Coalition for America’s Gateways and Trade Corridors, Senior Advisor, Parsons Brinckerhoff, and Former U.S. Deputy Secretary of Transportation. “Freight planning has also been enhanced in the various metro and state planning sections.”
Even though there are some very good ideas in this draft, Downey pointed out that adequate funding on the surface transportation front remains a significant obstacle.

Earlier this year, the White House released its proposed Fiscal Year 2012 budget proposal, which included a six-year, $556 billion surface transportation reauthorization proposal. If enacted, this bill would be more than 60 percent above the inflation-adjusted levels of SAFETEA-LU.

Included in this new six-year plan are: funding for highways, transit, highway safety, passenger rail; a National Infrastructure bank, which would be allocated $30 billion in loans and grants to support individual projects and broader activities of significance for the Nation’s economic competitiveness; and a proposal to boost transportation spending by $50 billion above current law spending in the first year of the authorization for roads, railways, and runways, among other components, among other items.

Ken Orski, author of Innovation Newsbriefs, wrote in a recent edition that the Transportation Opportunities Act “merely restates the proposals already revealed in the President’s FY 2012 Budget request. But more importantly, the draft has been ignored by Washington stakeholders and political observers because it has been judged to lack political savvy and realism.”

Orski also pointed out that there is a significant financial disconnect when looking at the desired amount of funding for future bills compared to what is currently available. He made this clear by noting how transportation-related tax revenues are expected to average only $38 billion/year, for a six-year total of $230 billion according to the latest Congressional Budget Office estimates.

This tally, as expected, falls well short of desired legislative levels. And with the Federal Government repeatedly showing little or no interest in increasing the gasoline tax, the current primary funding source, it stands to reason that funding will remain an obstacle for the foreseeable future.

In March, various transportation interests met on Capitol Hill this week for a two-day hearing hosted by the House Transportation and Infrastructure Committee’s Subcommittee on Highways and Transit, which focused on pending surface transportation reauthorization.

According to Committee officials, the objective of the hearing was “to seek suggestions from the transportation community on how to streamline and consolidate programs, cut red tape to speed up the infrastructure approval process, and create jobs through wise investment of limited resources.”

A transportation infrastructure expert recently told LM that without a viable funding mechanism in place, the future for transportation infrastructure funding is likely to remain in its current situation.

“We are transitioning into a new environment; the stimulus package contained a great deal of transportation funding and that is running out so there is more urgency, especially on the state side to get a transportation bill done,” said Payson Peabody, of counsel, at Washington, D.C.-based law firm Dykema Gossett PLLC. “In Congress the picture is seen as less favorable as there is no appetite for an increase in the gas tax, especially with the current situations in Libya and the Middle East, which has contributed to spikes in oil prices. The administration’s budget is still written under the old rules of the game, with a $500 billion-plus price tag for reauthorization. And there is no way to get to that figure without a substantial gas tax increase. So the administration and Congress do not seem to be on the same page.”

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