Obama, Camp Suggest Tax Code Changes Could Be Key to Transportation Investment

President Obama this week proposed a four-year, $302 billion transportation bill that he said could be partially funded through a corporate tax overhaul, a plan Congressional leaders have already said is unlikely to gain traction this year. He also joined a chorus of voices warning that hundreds of road and bridge projects around the country could be stopped in their tracks if Congress fails to renew the Highway Trust Fund. Meanwhile, House Ways and Means Committee Chairman Dave Camp offered up his own plan to rework the tax code this week, which he believes could yield $126.5 billion to fund infrastructure investment. I also have updates this week on state transportation revenue activities, public-private partnerships and multi-modal strategies.

Obama’s Transportation Plan

During remarks Wednesday at the Union Depot train station in St. Paul, Minnesota, the President outlined a plan that includes:

  • A $302 billion, four-year transportation reauthorization bill, providing states, local governments and construction workers with certainty they haven’t had in several years. The plan would provide $63 billion to fill the funding gap in the Highway Trust Fund. “Fix-it-First” investments would receive priority, according to the plan.
  • Of the $302 billion, $206 billion would be used to invest in the nation’s highway system and road safety, $72 billion in transit systems and expanding transportation options, $19 billion in dedicated funding for rail programs, $9 billion for competitive funding to spur innovation, more than $2.6 billion to support the creation of ladders of opportunity for construction workers and others, and $10 billion for a new freight program.   

The President is proposing using $150 billion in one-time transition revenue from business tax reform to help fund the plan but also said he will work closely with Congress and listen to their funding ideas.

The President cautioned about what’s at stake later this year if Congress fails to come up with a plan to rescue the Highway Trust Fund.

“We could see construction projects stop in their tracks, machines sitting idle, workers off the job,” he said.

In addition, the President used the occasion to launch the latest competition for $600 million in federal TIGER grants to help fund high-impact transportation investments around the country.

Camp’s Tax Reform Bill

On the same day the President issued his proposal, House Ways and Means Committee Chairman Dave Camp offered tax reform legislation that included $126.5 billion his office suggested could be set aside to “fully fund highway and infrastructure investment through the (Highway Trust Fund) for eight years,” The Hill newspaper reported.

With a gas tax increase seeming to have little chance in an election year, some saw the dueling tax reform-funded proposals as a positive sign that Republicans and Democrats might be able to reach an agreement on transportation funding this year, The Washington Post and Streetsblog USA reported.

U.S. Secretary of Transportation Anthony Foxx, who spoke at an AASHTO meeting in Washington this week, said “It’s a big deal to have folks like (House Transportation & Infrastructure Committee) Chairman (Bill) Shuster, (Senate Environment and Public Works Committee Chair Barbara) Boxer, (House Ways & Means Committee) Chairman Camp and their ranking members seriously talking about a way to go forward here, particularly in light of the crisis that’s looming in the Highway Trust Fund.”

But there do appear to be substantial differences between the two approaches to work out.

By the way, Boxer and Shuster were also among the speakers at the AASHTO meeting this week.

Reaction to the President’s Plan

AASHTO’s Executive Director Bud Wright was among those weighing in on both the Obama and Camp proposals this week.

“We are encouraged by (both proposals),” he said in a statement. “It is good news that the Administration and Congressional leadership in both houses are looking seriously to invest in transportation and maintain the solvency of the Highway Trust Fund and the programs it supports.”

Associate General Contractors of America CEO Stephen Sandherr said in a press release “It is encouraging to see President Obama pushing for a long-term bill to fund desperately needed highway and transit investments. … We expect this proposal will stimulate the debate about the best way to fund the federal program. We are also encouraged that (Camp) acknowledges the coming Highway Trust Fund crisis in his tax reform discussion draft.”

Larry Hanley, international president of the Amalgamated Transit Union, also applauded the President’s call to address the Highway Trust Fund issue and move towards a new authorization.

“Our nation needs a comprehensive transportation bill that sets forth a major urban agenda to address our exploding urban populations, worsening traffic jams, young people forgoing cars and stressed public transit systems,” he said in a statement. “The president’s proposal to invest $72 billion in transit systems and expanded transportation options sends a clear message to Congress that public transit matters to the American people.”

James Corless, Director of Transportation for America, said “We are encouraged to see the threat to our nation’s transportation network begin to get the attention it deserves. …With the current transportation program expiring at the end of September, we look forward to working with Congress and the Administration on a fully funded program that promotes innovation, rewards initiative and gives local communities the latitude to solve their infrastructure challenges.”

Meanwhile, Tea Party favorite Sen. Mike Lee of Utah offered this: “Today, the president has offered the country the same old idea: send more money to Washington where the special interests get their cut, the politicians get the credit, and future generations get the bill. … All states and localities should finally have the flexibility to develop the kind of transportation system they want, for less money, without politicians and special interests from other parts of the country telling them how, when, what, and where they should build.”

More on the Highway Trust Fund and Reauthorization

  • Laura Litvan of Bloomberg News wrote this week that ideas for rescuing the trust fund seem to get rejected almost as fast as they are suggested.  
  • Ben Adler of Grist writes that “Obama has a good transportation plan. Now we just need to raise the gas tax to pay for it.”
  • Penelope Lemov of Governing magazine talks with transportation expert Kenneth Orski about “The Future of Financing Infrastructure.”
  • The U.S. Department of Transportation has issued a new report to Congress entitled “2013 Status of the Nation’s Highways, Bridges, and Transit: Conditions & Performance.” Based on 2010 data, the report estimates that all levels of government would need to spend between $123.7 billion and $145.9 billion annually to maintain and improve the condition of roads and bridges alone (along with an additional $24.5 billion per year for transit). In 2010, federal, state and local governments spent $100.2 billion on roads and bridges (including $11.9 billion from the Recovery Act) and $16.5 billion to maintain and expand transit systems.
  • One thing having an impact on gas tax revenues (and thus the Highway Trust Fund): stagnating numbers for per capita driving. According to the December 2013 volume of the Federal Highway Administration’s “Traffic Volume Trends,” the number of vehicle miles traveled on U.S. highways increased last year by only around 0.6 percent—a rate of increase slower than the 0.7 percent rate of population growth in the country. There is more about what it all means or could mean from transportation policy this week from The Atlantic Cities blog, Streetsblog USA, and the State Smart Transportation Initiative.
  • Dennis Lytton of the Georgetown Public Policy Review argues in favor of a national infrastructure bank.
  • Connecticut: Gov. Dannel Malloy is asking Congress to act quickly to address the impending shortfall in the Highway Trust Fund. In a letter to Congressional leaders, the governor wrote “we need Congress to continue to provide stable and predictable federal funding in order to keep our commitment to an improved and modernized transportation infrastructure that meets the needs of our citizens, creates jobs, and fosters economic growth.”
  • North Dakota: State department of transportation director Grant Levi warned recently his state stands to lose almost a quarter of a billion dollars if Congress fails to pass a new federal highway bill and rescue the dwindling Highway Trust Fund this year, the Forum News Service reported. “In 2015, there will not be any federal program unless Congress takes some action and adds some additional resources,” he said.

State Activity on Transportation Revenues

  • California: State Senate President Pro Tem Darrell Steinberg has proposed a tax on consumer fuel purchases of gasoline, oil, diesel, ethanol and natural gas with the money raised going to mass transit projects and households making less than $75,000 annually, the Associated Press reported. The plan would alter how money is raised and spent under a provision of the state’s 2006 greenhouse gas emissions law, AB32.
  • Iowa: A recent Waterloo Cedar Falls Courier editorial argued in favor of a proposed gas tax increase to help the state do something about a $215 million annual backlog in road repairs. A House subcommittee has approved a bill to increase the tax by 10 cents over three years.
  • Kentucky: In his proposed budget, Gov. Steve Beshear has recommended raising the statutory floor of the gas tax to help stabilize the state’s road fund. A portion of the gas tax is calculated at 9 percent of the average wholesale price and can only increase by 10 percent in any 12-month period. The rate has increased the full 10 percent every year since 2004 as the price of gas has risen. But this January the average wholesale price dropped and the rate fell by 1.5 cents. The governor’s budget would raise the floor back to the level it was prior to the decrease.
  • Maryland: A member of the House of Delegates is proposing that Maryland join the other 33 states that already have a state infrastructure bank, The Frederick News-Post reported. Del. Galen Clagett testified before a House committee this week about his bill that would establish such a bank monetized with funds from corporate income tax revenue, any other state appropriations and investment earnings. Local governments or private entities would be able to apply for loans from the bank to finance transportation projects.
  • New Hampshire: The sponsor of a proposed gas and diesel tax increase said recently if his bill fails, he will work to reduce maximum truck weight limits below 104,000 pounds, the Associated Press reported. Sen. Jim Rausch said the move would not be retaliation against a trucking industry that has opposed the measure but would simply address a reality that if there isn’t more money to maintain the state’s roads, something else has to be done and lessening the wear and tear of heavy trucks could be one strategy. Rausch said this week he plans to propose a change to his bill that would make it a one-time, four-cent increase and remove a provision to index future increases to the rate of inflation, The New Hampshire Union Leader reported. The New Hampshire Business and Industry Association, which represents more than 400 companies in the state, has expressed support for the one-time increase but opposes automatic increases.
  • Oregon: It looks like plans to revive the Columbia River Crossing project without funding from Washington state won’t come to fruition during this legislative session, The Oregonian reported.
  • Virginia: Gov. Terry McAuliffe has signed legislation to repeal the state’s $64 annual fee on hybrid vehicles that was part of the transportation funding bill passed last year, the Associated Press reported. Meanwhile, The Daily Press reported that the executive director of the Hampton Roads Transportation Planning Organization said recently that over the next 26 years, his part of the state likely will have more than $25 billion to address its transportation needs thanks to new funding generated regionally and statewide as a result of last year’s transportation funding bill.
  • Washington: State Sen. Steve O’Ban argued in a recent op-ed for The Seattle Times that reforms some say are needed to bring transparency at the state department of transportation shouldn’t be held hostage while lawmakers consider a gas tax increase. “Without serious reforms, any chance of repairing and improving the state’s transportation system is probably doomed,” he wrote. “Without serious reforms, any chance of repairing and improving the public’s trust is surely doomed.”
  • Wisconsin: Assembly Speaker Robin Vos and Minority Leader Peter Barca both expressed support this week for tolling as a better way to pay for roads than gas taxes, The Journal Times reported. But they acknowledged that toll roads probably won’t become a reality in Wisconsin anytime soon since tolling existing interstate capacity would require a change in federal law. Wisconsin factors into Dan Vock of Stateline’s recent article on whether Congress could consider lifting the ban when it writes a new surface transportation bill.

Public-Private Partnerships

  • Colorado: An op-ed commentary for The Denver Post argues that the public-private partnership to rebuild existing lanes and add managed lanes to U.S. 36 between Denver and Boulder is good for the state (see also last week’s blog post for more on the project).
  • Illinois-Indiana: At a recent briefing, state department of transportation officials for both states tried to assuage the fears of local farmers, first responders and others about the potential impact of the Illiana Expressway, a proposed bi-state tollway, on existing local roads, The Chicago Tribune reported.
  • Kentucky: Rep. Leslie Combs, a veteran of our 2013 CSG Transportation Policy Academy in Washington, DC, has introduced HB 407, legislation that would enable the use of P3s by state and local governments for the construction of a project or the completion of a service. The introduction of P3 legislation in Kentucky is bringing hope that a P3 agreement could eventually help build a new Brent Spence Bridge over the Ohio River between Covington, Kentucky and Cincinnati, WLWT reported. Ohio already has P3 legislation in place. Combs co-sponsored P3 legislation last year which failed to advance in the General Assembly.

Multi-Modal Strategies

Active Transportation

  • District of Columbia: The DC government wants to add nearly 19 miles of bike facilities in the city this year but that may be an overly ambitious goal, Washingtonian magazine reported.
  • Michigan: The State Smart Transportation Initiative reported recently on the city of Grand Rapids’ plan to ask voters to approve a local income tax extension to fund a proposed “vital streets” program to make improvements to the city’s sidewalk network. The tax extension will be up for a vote in May.
  • Oregon: The city of Portland is considering having taxpayers pay a $5-per-month street maintenance fee to help pay for $7.5 million in road and street safety improvements, KOIN News 6 reported.

Transit

  • Bus Rapid Transit: Yonah Freemark of The Transport Politic blogged this week about “Why More U.S. Cities Need to Embrace Bus-Rapid Transit.”
  • California: The Federal Transit Administration announced the signing of a $670 million construction grant agreement to help build the Regional Connector light rail transit line in downtown Los Angeles. The two-mile line will connect three existing transit lines. The connector will also receive a TIFIA loan of up to $160 million and $64 million in other U.S. DOT funds. State and local resources will be used to fund the remainder of the $1.4 billion project.
  • Indiana: There is concern that differences between the House and Senate versions of a bill to allow counties in Central Indiana to fund a mass transit system by raising income taxes with voter approval might derail the bill, The Indianapolis Star reported.
  • North Carolina: A light-rail system that would link Orange and Durham counties has won entry into the federal New Starts program and can now move forward with project development, The Herald-Sun reported.
  • Texas: The Dallas Morning News looked recently at the Downtown-Oak Cliff Streetcar, expected to open next year at a cost of $51 million. Meanwhile in San Antonio, an anti-streetcar movement has emerged, My San Antonio reported.
  • Utah: Legislators took the first step this week toward approving legislation to allow counties and some cities to ask voters to approve a quarter-cent sales tax increase to fund mass transit, The Salt Lake Tribune reported. The House Transportation Committee approved HB 388 on a 9 to 1 vote.

Ports

  • Panama Canal Expansion: Work has reportedly resumed on the multibillion-dollar Panama Canal widening project following a delay caused by a dispute over financing.