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LaHood is less than bullish on prospects for a long-term transportation bill

By Jeff Berman, Group News Editor
April 07, 2014

The fact that the intersection of transportation and federal policy is potentially standing in the way of true signs of progress was evident in a conference call featuring former Department of Transportation Secretary Ray LaHood that was hosted by investment firm Stifel Nicolaus late last week.

Now serving as a Senior Policy Advisor at the global law firm, DLA Piper, LaHood was DOT secretary for four and a half years before stepping down last July.

In his comments on the call, LaHood outlined the myriad federal transportation issues having an impact on freight transportation and logistics processes, with the top issue on his list the pending expiration of the current version of the federal transportation authorization MAP-21.

“MAP-21 was passed as a two-year bill and that two years has quickly come and gone and set to expire at the end of September,” he said. “More importantly, the Highway Trust Fund (HTF) actually is slated to run out of money before then, possibly by late August. The prospects of passing a transportation bill in time for the expired bill really are very dim…I don’t see that happening. No bills have been introduced by the committee of jurisdiction in either house, and even though there have been some hearings and some discussion, there were 26 extensions of the last federal transportation bill (SAFETEA-LU) before MAP-21 was passed. In an election year and given that it was so hard to pass the two-year MAP-21 bill that it is highly unlikely there will be a transportation bill passed by the end of September, which leads me to believe there will be an extension of the current bill and when the HTF money runs out this summer, then Congress will have to transfer money from the U.S. general fund into the HTF.”

LaHood made it clear that when it comes to transportation in the U.S., the news is very bleak, as MAP-21 lacked true definition, vision, and opportunity for long-term planning in the way a five- or six-year bill, which had traditionally been passed by Congress, did.

And Congress had traditionally passed transportation bills of that length prior to passing MAP-21.

“The current Congress is not in a mood to pass a multi-year transportation bill and is certainly not in a mood to try and figure out how to fund infrastructure in America,” he said. “The gas tax…needs to be raised and has not been since 1993, when it was raised under President Clinton and a Democratic congress and with a great deal of debate part of the money was used for deficit reduction. And along with it not being raised since 1993, people are driving less often and driving more fuel-efficient cars. We have a real deficiency in the pot of money that has been used for a long period of time to keep America number one on infrastructure, which we are not any longer. We are number 16.”

What’s more, even though this past winter had what LaHood labeled a “brutal effect” on every road in America, and coupled with not keeping up on needed road maintenance translates into a state of terrible repair for infrastructure all over America, with a high number of bridges in a state of bad repair and many roads that were hard hit by the winter are in far worse shape potentially than at any other time in the country’s history.

This is the reason why many organizations, including Build America’s Future and others, are encouraging industry stakeholders to call on Congress for a multi-year bill that really gives real definition and view and vision for transportation and to fund it.

“It does not all have to come through the HTF,” he said. “But the gas tax has been our pot of money used to build the country’s infrastructure and interstate. We need to raise it but we can also look at other forms of funding like vehicle miles traveled, tolling, public-private partnerships, the TIFIA loan program, or the TIGER program, which Congress has funded at $500 million. I believe it is going to be difficult to accomplish much legislatively this year, given the abysmal record of Congress addressing big issues.”

But one area where Congress has been productive, he said, is the WRDA (Water Resources Development Act) bill, which passed in both the House and Senate and is currently in a conference committee.

This bill would enable ports to use the harbor maintenance tax to improve ports over the next ten years for things like dredging up to 50 feet in order to accommodate large vessels coming through the Panama Canal and handle larger ships.

In a Q&A session following his initial remarks, LaHood was asked what his take was on transportation not being viewed as a top priority in Congress, even though it is viewed as the backbone of the economy.

LaHood observed that on many occasions President Obama has cited infrastructure as a job driver and a way to improve the economy, as noted in the White House’s recent call for $302 billion in infrastructure spending in its four-year transportation reauthorization bill, which would be paid for, in part, by using $150 billion in one-time transition revenue from pro-growth business tax reform “to address the funding crisis facing our surface transportation programs and increase infrastructure investment. This amount is sufficient to not only fill the current funding gap in the Highway Trust Fund (HTF), but increase surface transportation investment over current projected levels by nearly $90 billion over the next four years,” said the White House in February.

But even with such high ambitions, LaHood explained that the possibility of this coming to fruition is limited, saying it appears Congress will not be taking action on any major legislation between now and the mid-term elections later this year.

“That does not change the fact that we need a multi-year, comprehensively funded transportation bill, and voters need to make their case to their elected representatives about it,” said LaHood.

MAP-21 does have some freight-related components even though historically there has not been a definitive freight transportation policy in the form of legislation geared toward optimizing freight flows within the U.S. for trade and to stimulate economic development and manufacturing, noted Stifel analyst John Larkin on the call.

With that as the backdrop he posted to question to LaHood of whether trade could take on a larger role in a longer-term bill as it is key to underpinning economic growth.

In his response, LaHood explained that Senator Maria Cantwell (D-Wash.) proposed a title in MAP-21 to develop a national freight policy, which received a lot of attention and debate but ultimately was not included in the bill, due to a lack of funding.

“During that debate, I made a commitment to Senator Cantwell while I was still serving as DOT Secretary that I would establish a national freight group within DOT and we took a number of recommendations from people around the country, including members of Congress, and before I left DOT last July, we created a freight policy council, which has meeting regularly and is made up of people from the freight sector [in all modes] with the goal of developing a national freight policy and hopefully will come up with a good plan.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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