Senate Transportation Plan Gets a Hearing; States Consider Funding Options

The U.S. Senate Environment and Public Works Committee released a three-page outline of a bipartisan bill to authorize federal transportation programs Tuesday and held the first hearing on the plan Thursday. There is also news this week about state efforts to find new sources of revenue to fund transportation, including public-private partnerships.

As previously announced, the Senate proposal, which is known as MAP-21 (“Moving Ahead for Progress in the 21st Century”) would authorize Federal-aid highway programs for two years at current spending levels, indexed to inflation. But that would mean a $12 billion gap between currently expected Highway Trust Fund revenues and the bill’s expenditures. It’s up to the Senate Finance Committee to come up with a plan to fill that gap and it’s still unclear where that money would come from. A decision on how to do it will likely have to wait for resolution of the debt limit debate.

The MAP-21 outline details plans to consolidate 87 federal programs under the previous authorization (SAFETEA-LU) down to less than 30. States would have the flexibility to fund transportation activities that don’t receive dedicated funding. Following some concern that that meant bicycle and pedestrian programs would not receive dedicated federal funding, committee chairman Barbara Boxer announced that dedicated funding for those programs remains in the full bill.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which provides direct loans, loan guarantees and lines of credit to large transportation projects of national or regional significance, would get a boost in funding from $122 million to $1 billion annually.

Performance outcomes would be a key focus for the highway program under the plan but states would set their own targets for improving safety, road and bridge conditions, congestion and freight movement. The proposal calls for steps to accelerate delivery of transportation projects by reducing red tape in environmental reviews and other planning procedures.

Environment & Public Works Committee Holds Hearing on Proposal

The MAP-21 proposal was the basis for a hearing Thursday on Capitol Hill (you can see archived video of the hearing here and read opening statements from Senators and witnesses here). Among the witnesses was Nevada Department of Transportation Director Susan Martinovich, who is President this year of the American Association of State Highway and Transportation Officials (AASHTO).

“While the States would prefer the more typical six-year reauthorization bill, two years of stability at current funding levels is a vast improvement over what we have had with six extensions over the past two years,” Martinovich told the panel. “This provides the opportunity to make a down payment on the long-term bill the States need. We thank you for your recognition of the need for long-term stability while addressing the need for maintaining current funding levels over the short term.”

Martinovich also praised the expansion of the TIFIA program and provisions to reduce environmental hurdles for transportation projects and accelerate project approvals.

Infrastructure Bank Proposals Get the Spotlight

Like the authorization plan introduced by House Republicans two weeks ago, the MAP-21 proposal does not include plans for a national infrastructure bank, emphasizing instead the TIFIA expansion. But two competing Senate proposals to create such a bank were the subject of a Senate Commerce Committee hearing Wednesday. You can watch video of the hearing and read witness statements here. There is also coverage of the hearing from Reuters, Streetsblog Capitol Hill and the AASHTO Journal.

“By using a competitive, merit-based selection process and coordinating or consolidating many of (the U.S. Department of Transportation’s) existing infrastructure finance programs, the infrastructure bank would have the ability to spur economic growth and job creation for years to come,” Assistant Secretary of Transportation for Policy Polly Trottenberg told the panel.

Commerce Committee Chairman Jay Rockefeller and Ranking Member Kay Bailey Hutchison have each pitched separate infrastructure bank proposals.

States Seek New Revenues to Fund Transportation

Several items crossed my desk this week about states seeking new revenues to fund transportation:

  • The Boston Herald reported that Massachusetts officials are considering a gas tax increase to help pay for road and bridge maintenance. Increased tolls and transit fares are also reportedly under consideration.
  • Seattle drivers might have to pay $100 more in city and county fees next year to register their cars, The Seattle Times reports. The Seattle City Council  is considering letting voters decide in November on an $80 annual fee, with some of the revenues going toward road repair, but most earmarked for pedestrian, transit, bicycling and neighborhood safety improvements. The King County Council, meanwhile, is expected to vote Monday on whether to allow voters to decide on a proposed $20 fee that would prevent service cuts to Metro Transit and that would only be in effect for two years. Voters or lawmakers could also be asked next year to consider a gas tax increase or other revenue source. An advisory group convened by the governor began meeting this week to consider options for funding several major infrastructure projects in the next few years. Washington State’s ideological struggle over tolling is described in this commentary from the Pacific Northwest news website
  • Pennsylvania Gov. Tom Corbett’s Transportation Advisory Commission issued its recommendations this week for creating additional revenues for roads, bridges and transit, The Philadelphia Inquirer reported. The commission said increasing the cost of titles, inspections, driver’s licenses and other documents in line with inflation could raise millions. They also recommended readjusting the wholesale gas tax, which was capped at $1.25 in 1993. If adjusted for inflation, the gas tax could increase by about 22 cents per gallon this year and bring in an extra $1.4 billion, the commission estimated.

The Role of Public-Private Partnerships

Tolls on the Central Texas Turnpike System have fallen more than $100 million short of covering debt and operating costs since the three-road system opened four years ago, the Austin American-Statesman reported this week. That’s meant the Texas Department of Transportation has had to provide almost 70 percent more in subsidies than originally planned for, in the process tapping state gasoline tax revenues that otherwise would be available for other highway spending. Ted Houghton of the Texas Transportation Commission, which governs the department, suggested it may be time for the agency to give up on managing toll roads and instead lease out even existing state toll roads to the private sector. “We need to get out of that business,” he said. “Find someone who knows how to market those roads, to operate them and collect the tolls. We do it as a sort of side business.”

Public-private partnerships (P3s) were the subject of the May-June issue of TR News magazine, a publication of the Transportation Research Board of the National Academies. In an article titled “Challenges Mount for Traditional Transportation Funding: Are Public-Private Partnerships a U.S. Solution?” Pamela Bailey-Campbell of Jacobs Engineering writes that there are several rules states should keep in mind to ensure that P3s are used effectively on transportation projects, including:

  • P3s are only part of the solution and cannot overcome systematic underinvestment in infrastructure.
  • Not all projects are good candidates for P3.
  • A P3 should be focused on delivering new or enhanced infrastructure, not on monetizing an asset to pay down a deficit in the operating budget of the general fund.
  • A P3 is a tool, not a goal in and of itself, and clear, realistic goals should be established for single projects and for a state’s entire P3 program.

On a related note, the American Road and Transportation Builders Association issued a white paper in May entitled “The Role of Private Investment in Meeting U.S. Infrastructure Needs.” It examines lessons learned from the nations’ experiences with P3s over the last 20 years and makes recommendations for increasing private investment in transportation projects in the future. Among the report’s findings:

  • P3s do not provide “new” or “free” money for building transportation projects.
  • U.S. tax policy is a hurdle for P3s.
  • P3s are best suited for large projects with a high probability for strong revenue generation over many years. But much federal and state transportation, environmental and fiscal policy discourages investments in new transportation capacity, which constrains the market for P3 projects in the U.S.

Virginia Transportation Secretary (and CSG Transportation Policy Task Force Vice Chair) Sean Connaughton is among the panelists talking about dealing with political risk in public-private partnerships in the United States in this video from Transport Finance Intelligence’s P3-TV.

Other Transportation News of Note

  • California has run out of money to pay $5,000 rebates it was giving drivers who purchased electric vehicles, The Los Angeles Times reports.
  • “Paved roads, historical emblems of American achievement, are being torn up across rural America and replaced with gravel or other rough surfaces as counties struggle with tight budgets and dwindling state and federal revenue,” The Wall Street Journal reported this week. “State money for local roads was cut in many places amid budget shortfalls.”
  • The Partnership for Prevention, the Safe Transportation Research & Education Center at UC-Berkeley and Booz Allen Hamilton have issued a new report called “Transportation and Health: Policy Interventions for Safer, Healthier People and Communities.” It highlights policies that could improve the environment and environmental public health such as promoting a reduction in vehicle-miles traveled through pricing measures; policies that could enhance community design and promote active transportation such as providing better connectivity for pedestrians and bicyclists; and policies that reduce motor-vehicle-related injuries and fatalities such as those that increase seat belt use.