Struggling Postal Service Floated As Potential Source for Highway Funds
With the federal Highway Trust Fund expected to run short of money to pay its bills as soon as July and no agreement in Congress on how to ensure the fund’s stability going forward, some are now floating the idea that projected savings from changes at the U.S. Postal Service could be tapped as a funding source. I also have a look at the new Government Accountability Office report on managerial and transparency concerns with the TIGER discretionary grant program. Plus the usual roundup of links to articles and reports on MAP-21 reauthorization and the future of the Highway Trust Fund, the legacy of MAP-21, state activity on transportation revenues, public-private partnerships and tolling and state multi-modal strategies.
Um, What Now? Money-Hemorrhaging Post Office as Transportation Funding Source
Bloomberg reported this week that some House Republicans are looking to the troubled U.S. Postal Service for a possible way to shore up the dwindling Highway Trust Fund. The idea is to use possible savings from revamping the agency’s operations. The revamps could include ending Saturday mail delivery, cutting door delivery in favor of centralized mailboxes, allowing the Postal Service to increase the cost of stamps faster and increasing insurance premiums for postal workers.
Not surprisingly, the plan is meeting with a hefty dose of skepticism.
“Using an American institution to pay for the Highway Trust Fund is simply ludicrous,” said Jeanette Dwyer, president of the National Rural Letter Carriers Association.
“This legislative maneuver makes no sense,” Frederic Roland of the National Association of Letter Carriers told Bloomberg.
“The long-term financial prospects of the Postal Service are fairly grim, so the idea that you could take money from that and not further exacerbate one problem in order to try to do a temporary Band-Aid on the other one borders on bizarre,” said former Capitol Hill staffer Scott Lilly, who is now a senior fellow at the Democrat-leaning Center for American Progress. “(Congress is) looking desperately under every pot and crevice to come up with some money to pay for an extension of the trust fund. … They will have a terrible message to take home to their constituents this fall if they don’t find it.”
Oregon Congressman Earl Blumenauer, who has supported raising the federal gas tax, told Politico this week “people toss out ideas, that's fine … (but) this is not one that gets to where we need to go, and it's a bad idea on a number of levels.”
GAO Report Questions TIGER Program Decision-Making
One of the topics that came up on our webinar yesterday on the Future of the Federal Role in Transportation was a new report from the Government Accountability Office that says the U.S. Department of Transportation in 2013 failed to document key decisions in the awarding of grants under the federal TIGER program (the acronym stands for Transportation Investment Generating Economic Recovery).
The report said DOT did not document their decisions to: accept and review applications received after the published deadline, advance projects with lower technical ratings instead of more highly-rated projects, and change the technical ratings of lower-rated projects selected for funding to the highest technical rating category.
GAO said that “an absence of documentation of such decisions can give rise to challenges to the integrity of the evaluation process and the rationale for the decisions made.”
The independent agency recommended additional accountability measures for management of the TIGER program “including clear procedures for addressing late-arriving applications and for documenting and approving major decisions in the application evaluation and project selection process.”
Senate Environment and Public Works Committee Ranking Member David Vitter, who requested the GAO review, said in a statement the findings showed “a clear lack of transparency in the decision-making process and a mishandling of the management of the program” and that both the application and the selection processes “are major concerns because they lack any merit-based structure.” Vitter had previously complained that much more in TIGER grants went to projects in Democratic congressional districts than those represented by Republicans.
TIGER grants have proven wildly popular since first being awarded in 2009. Another $600 million in grants are set to be dispersed in the coming months. It was recently announced that the latest application round yielded 797 eligible forms (up from 585 in 2013) requesting 15 times more ($9.5 billion) than the funding available.
But the bill recently approved by the House Appropriations Committee to fund the Transportation and Housing & Urban Development departments for FY 2015 would cut the program down to $100 million (a floor amendment to beef up TIGER funding is expected when the bill goes before the full House next month) and the bipartisan Senate Environment and Public Works Committee authorization bill passed a couple of weeks ago included no mention of dedicated funding for the program.
On a somewhat related note, Stephen Lee Davis of Transportation for America posted recently about a bill introduced in Congress called the Innovation in Surface Transportation Act. The legislation, introduced by Reps. Rodney Davis (IL) and Dina Titus (NV) (a companion bill was also introduced in the Senate), would provide improved decision-making, responsibility and greater access to federal transportation funds for local communities.
“A constant refrain from the many local elected and business officials we’ve met with over the last few years is that they have little to no access to funds, or, no seats at the decision-making table,” Davis wrote. “This bill would fix exactly that while also spurring innovation, collaboration and efficiency through competition. Awarding funds through a panel of stakeholders and DOT experts will help steer investment toward projects with the greatest bang for the buck.”
In a piece last month for The Atlantic Cities, Davis’ colleague at T4America Beth Osborne, who not too long ago was deputy assistant secretary for policy at USDOT, said the next transportation bill should build on the success of TIGER in enshrining competition as a way to ensure the best projects move forward.
“Competition spurs innovation that formula funds never ever will,” she wrote. “Competition generates incredible excitement and a desire to outdo your neighbor. As a result, federal dollars are made to go farther, more non-federal funds are brought in from both public and private sources, and every penny is targeted to accomplish multiple goals.”
MAP-21 Reauthorization & the Future of the Highway Trust Fund
- The U.S. Senate Commerce, Science and Transportation Committee has scheduled a hearing next week (June 3) on the reauthorization bill passed earlier this month by the Senate Environment and Public Works Committee, The Hill reported.
- Longtime transportation analyst Ken Orski writes about all the reasons “Hopes for a Long-Term Transportation Bill Are Fading” in his latest Innovation NewsBrief newsletter. Potential ways to fund such a bill including increasing and indexing the federal gas tax, using general funds to supplement trust fund revenue, wider use of highway tolling and corporate tax reform have all proven problematic or political non-starters. “Which leaves most observers agreeing with Sen. Johnny Isakson (R-GA) and several of his Senate colleagues that a short-term bill extending the current transportation program (MAP-21) into next year and funded with a relatively modest general funds appropriation, is probably the most one can expect from this deeply divided Congress whose attention is singularly focused on the upcoming November election,” Orski writes.
- According to Politico, some members of Congress are saying the best (and perhaps only) chance for a long-term bill this year would be in the lame duck session following the election. That’s because approving a bill with a $100 billion-plus price tag probably isn’t going to fly in an election year, 2015 will see a new Congress that will need time to get up to speed and very soon after that, the 2016 campaign season will kick into high gear.
- Alabama: The reconfiguration of interchanges on Interstate 10 in downtown Mobile is another of the projects around the country that could be delayed if nothing is done about the pending federal Highway Trust Fund shortfall, AL.com reported.
- Georgia: The Morris News Service reported recently on how two dozen transportation projects around the state can’t get underway because of the uncertainty surrounding the trust fund.
Legacy of MAP-21
- Former Deputy Transportation Secretary John Porcari argues in a blog post for Governing magazine this month that despite an emphasis in MAP-21 on speeding up project delivery and some promising efforts to re-engineer a bureaucratic system of review and approval processes, much more remains to be done. “Putting a major project forward by one or two years can yield tens of millions of dollars in savings—savings that can be invested into better community and environmental outcomes,” he writes. “This same process re-engineering that has been tested on a pilot basis should now be applied across the board.”
State Activity on Transportation Revenues
- Delaware: Delaware State News recently provided an update on the chances for a gas tax increase this year. In his State of the State address four months ago, Gov. Jack Markell proposed investing $500 million in the state’s Transportation Trust Fund over the next five years. But legislation directing how to pay for it has yet to be introduced and the state legislature is scheduled to adjourn June 30. The governor has proposed a combination of a 10-cent gas tax increase and $50 million in additional borrowing. But the gas tax idea has not proved very popular. Raising motor vehicle fees, tolling, increasing transit fees and wholesale gas taxes have all been mentioned as other revenue possibilities. But some Republicans are now saying they expect only a modest bond bill to make it through this session.
- Iowa: A recent Des Moines Register editorial looked at the political realities the state has faced in trying to raise its gas tax, which was last done in 1989.
- Massachusetts: Republicans say they’re going to try to make an election issue of the law passed last year that allows for automatic increases in the state gas tax, the Associated Press reported. The legislature in 2013 raised the tax by 3 cents per gallon and indexed the tax to inflation, which means it will automatically rise by the same annual percentage as the Consumer Price Index.
- Michigan: The state may be considering an increase in its gas tax but Michigan already has some of the nation’s highest fuel taxes and one of the lowest rates of investment in roads, Gannett Michigan noted this week.
- Minnesota: Transportation advocates in the state are hoping to get business interests onboard to push for a $6 billion transportation funding package in 2015, MINNPOST reported. Some believe a lack of support from the Minnesota Chamber of Commerce was one factor that doomed the chances for a proposed $750 million package this year. The Chamber instead sought stepped up reporting of efficiencies within the state DOT. Ultimately, lawmakers passed a requirement that the department identify 5 percent in cost savings in its 2015 budget, which freed up $50 million to be redeployed to transportation projects. They appropriated $15 million for cities and counties to repair potholes and spent $113 million on local road and bridge projects.
- Missouri: Gov. Jay Nixon has decided to place the proposed constitutional amendment to increase the sales tax to fund road projects on the ballot for the state’s primary in August rather than the November general election ballot, a move that has some concerned it won’t give supporters enough time to communicate the need to voters, The Missouri Times reported. Meanwhile, Missourinet reported this week on how some believe the success of efforts to improve the public’s perception of the Missouri Department of Transportation in the wake of voter rejection of a 2002 tax increase could be key to the success of this year’s effort. And finally, Mid-Missouri Public Radio reported that U.S. Sen. Claire McCaskill and Nixon, both Democrats, may come down on different sides of the transportation tax.
- New York: A March analysis from the Center for an Urban Future found that New York City will need almost $50 billion to overhaul its outdated infrastructure over the next five years and recommends tolling the now-free bridges over the East River and issuing residential parking permits to help raise the needed funds.
Public-Private Partnerships & Tolling
- Also receiving mention on this week’s webinar was a recent Associated Press article (by way of the Northwest Indiana Times) entitled “Shifts in privatization pose more risk to states.” The article argues that the shift to “availability payment” type P3s in this country comes with certain risks. Rather than seeing windfalls like the $3.8 billion one Indiana received in 2006 for leasing the Indiana Toll Road, states these days are more likely to see investors, who have been burned by projects that didn’t achieve predicted revenues, demand guaranteed fixed annual payments from the states before providing money for projects. This shift in the approach to privatization has forced officials in Indiana and Illinois to rethink how the 47-mile Illiana Expressway will be funded. NBC Chicago reported recently that Illinois Gov. Pat Quinn’s administration now wants state lawmakers to make the Illiana Expressway more attractive to private investors by guaranteeing that toll revenue shortfalls will be covered by dipping into the state’s road fund ahead of other projects. The NWI Times piece also quotes Robert Poole of the Reason Foundation who believes the shift in bargaining power means some states may need to put in some safeguards in the future, including possibly a cap on how much future revenue the states can dedicate to fixed annual payments. Poole also said residents should question officials when P3 deals are discussed about who’s responsible for what in the future, who is assuming the risk and how much they’re taking on.
- Diana Carew of the Progressive Policy Institute writes in a new brief that while public-private partnerships have been growing in recent years, their potential is mostly untapped. She cites a “lack of understanding, especially at the state and local level, of how PPPs work and how to structure deals that generate market returns while also serving public needs.” Carew notes that only a handful make extensive use of P3s, 26 states have no experience at all with them and 17 states have yet to pass laws to enable them to enter into P3s. Carew also offers three urgent priorities for Congress: passing legislation to enable states to issue more tax-exempt private activity bonds for P3 infrastructure projects, encouraging foreign investors to join in projects aimed at rebuilding economically vital infrastructure and setting up a national financing facility or fund to provide money and project finance expertise to infrastructure projects of national significance.
- Dan Vock of Governing writes about “Keys to Successful Public-Private Partnerships” in a recent column for the magazine. The column references the Eno Center for Transportation’s recent “Partnership Financing” report that I’ve mentioned before. Vock notes that the report recommends that state laws authorizing P3s should not be limited to just one project or type of project, should accommodate unsolicited proposals from the private sector, should not let projects be vetoed by the governor, legislature or the public after the financing and other planning processes have been completed, and should allow user fees such as tolls to be collected to support the projects.
- A new report from the global consultancy ARCADIS finds that while an impressive array of built infrastructure assets helped the United States generate $5.6 trillion of its 2013 gross domestic product of more than $15 trillion, the aging of that infrastructure is starting to have an impact on the returns rates generated by those built assets. But the report argues public-private partnerships could be a key part of the solution. You can view the report here and read a summary from the American Society of Civil Engineers’ magazine Civil Engineering here.
- Florida: A task force created to review P3s in the state and present recommendations and guidelines is expected to issue its report on July 1, JD Supra Business Advisor noted this week.
- The changing nature of public-private partnerships will be in the spotlight next month (June 17-18) at the InfraAmericas U.S. P3 Infrastructure Forum in New York City. CSG is proud to be a supporting organization for the event, which brings together state and federal public officials, infrastructure developers, investors, financiers and regional transportation authorities for a variety of panel discussions on the state of the P3 industry and networking opportunities. Sessions will focus on the “growing sophistication of structures and payment agreements,” “how to manage major risk elements in P3s,” and other issues. You can still register to attend the meeting here. You can also read my recent Capitol Ideas E-Newsletter article previewing the forum here.
State Multi-Modal Strategies
- District of Columbia: The D.C. Council voted this week to slash funding for the District’s future streetcar system, WAMU reported. Mayor Vincent Gray had sought to spend close to $900 million over the next six years on streetcars. The Council instead proposed putting $400 million into the 22-mile trolley network over the same time period. Council Chair Phil Mendelson said the DCDOT has not been spending the amount available on existing streetcar construction. And as The Washington Post noted, it doesn’t help that there’s still no target date for an opening of the first streetcar line and no announcement has been made about what the fare will be or how it will be collected. Gray lashed out at the Council following the vote, the Washington Business Journal reported. “What is the future of the streetcar program in the District of Columbia?” Gray said at a speech this week. “As of this moment, I really can’t tell you, but I hope that this doesn’t sound the death knell for something that was going to be a major addition to this city.”
- Minnesota: The Green Line light rail project in the Twin Cities, which is expected to begin service next month, is only the tip of the iceberg of the changes planned for the region’s transit system, a recent piece for MINNPOST said.
- Virginia: The Washington Metropolitan Area Transit Authority officially took control of the first phase of the Silver Line Metro extension from the Washington Airports Authority this week, Progressive Railroading reported. The line, which will run from the Wiehle-Reston East station to Largo Town Center, is expected to open sometime this summer. Work has already begun on the second phase, which will extend Metro’s reach to Dulles Airport and Loudoun County in Virginia.
- Blogger Todd Litman of the Victoria Transport Policy Institute offers a response to criticism of transit funding in a piece for Planetizen this week.