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Obama stresses need for increased transportation funding

By Jeff Berman, Group News Editor
August 31, 2011

With federal transportation funding slated to expire on September 30, President Barack Obama today pointed out the perils of that scenario if that comes to fruition.

In a speech at the Rose Garden, Obama said that if surface transportation capital were to expire, it would impact thousands of American workers and millions of Americans who drive on the country’s roads and bridges every day.

“At the end of September, if Congress does not act, the transportation bill will expire,” said Obama. “This bill provides funding for highway construction, bridge repair, mass transit systems, and other essential projects to keep our people and our commerce moving quickly and safely. If we allow the transportation to bill to expire, over 4,000 workers will be immediately furloughed without pay. If it is delayed for just ten days, it will lose nearly $1 billion in highway funding; that is money we can never get back.”

The President added that it is inexcusable to let this bill expire and put more jobs at risk in an industry which has already been severely impacted. A new transportation bill focusing on infrastructure development and job creation is expected to be a major component of Obama’s address to Congress on September 6.

What’s more, he noted that it is inexcusable to cut off necessary investments at a time when the nation’s highways are choked with congestion, with so many bridges needing repair, commuters needing public transportation, and when travel and shipping delays cause businesses millions of dollars every year.

New proposals for transportation funding have been proposed by members of Congress on both sides of the aisle this year.

In July, the Senate’s Senate’s Committee on Environment and Public Works unveiled an outline for its take on new legislation.

Entitled Moving Ahead for Progress in the 21st Century (MAP-21), this bipartisan proposal, led by Senator Barbara Boxer (D-CA), EPW Chair, and James Inhofe, R-OK, is for a two-year bill, $109 billion bill that would keep funding at current levels that were intact during the previous six-year, $286 billion SAFETEA-LU, which expired in 2009 and has been kept afloat since then through a series of continuing resolutions.

This 2-year bill would come at a cost of roughly $109 billion, whereas the House bill, led by T&I Committee Chair John Mica, is a six-year, $230 billion bill.

The EPW bill is comprised of various freight- and supply chain-related components, including:
-a National Freight Program that provides formula funds to states for projects to improve the movement of freight on highways, including freight intermodal connectors;
-a National Highway Performance Program that consolidates the Interstate Maintenance program, the National Highway System program and part of the Highway Bridge Program into a single program that focuses on the most critical 22,000 miles of roads in the country; and
-leveraging Transportation Infrastructure Finance and Innovation Act (TIFIA) program to help communities leverage transportation resources through federal credit assistance and increase annual funding from $122 billion to $1 billion. TIFIA provides Federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance.

This bill was positively received by Mort Downey, Coalitions for America’s Gateways and Trade Corridors (CAGTC) Chairman former deputy Transportation Secretary under President Clinton Mort Downey.

“The release of a framework for a Senate surface transportation bill is good news in a number of respects,” said Downey. “It represents solid bi-partisan agreement—a rare commodity in today’s Washington politics.  At a time of constrained resources, it sets a goal of retaining current investment levels.  And, from the point of view of CAGTC, it answers the call for dedicated investment into our freight network.  Lots of steps lie ahead—working out the resource issues with the Senate Finance Committee, incorporating input from other Senate groups including the Senate Commerce Committee, and getting to consensus with the House of Representatives against a firm deadline of September 30 when the existing taxes and programs expire.”

While Mica’s bill is calling for fewer dollars over a longer period, it also is calling for funding for the highway, transit, and highway safety programs at levels consistent with the amount of revenue being deposited into the Highway Trust Fund (HTF), whose revenues are derived from the federal gasoline tax—which has not increased since 1993.

The House T&I Committee made its case clear for this approach, explaining that in 2010 the HTF brought in $135 billion in revenue, while more than $50 billion in spending was authorized from the HTF. And in the last three years, Congress has transferred about $35 billion from the U.S. General Fund into the HTF in order to keep the HTF solvent, with the HTF expected to run out of funding by 2013.

This bill also has its own freight- and supply chain-related components, including:
- providing additional funding for TIFIA;
-encouraging states to create and capitalize State Infrastructure Banks to provide loans for transportation projects at the state level;
-creating a faster and more predictable application process for Rail Rehabilitation and Improvement Financing loans;
-trying Harbor Maintenance Trust Fund expenditures to revenues, ensuring fees paid by shippers go to channel maintenance; and
-encouraging short-sea shipping by prohibiting double-taxing of vessels shipping goods between domestic ports, among others.

“Both of these bills represent a significant move to something more realistic that could win approval, but the goals have also shifted,” said Payson Peabody, of counsel, at Washington, D.C.-based law firm Dykema Gossett PLLC. “The Mica bill goes the furthest in terms of relying on HTF revenue for programs, and the Boxer bill is set on maintaining existing spending on top of needing an additional $12 billion to close the funding gap [to ensure funding is at $109 billion]. Finding another $12 billion is more realistic than a $500-plus billion bill which has been proposed by President Obama and former T&I Chair James Oberstar.”

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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