With Time Running Short for Highway Trust Fund, State Transportation Officials and Business Interests Call on Congress to Act
The chair of the Senate Environment and Public Works Committee said this week that Congress is running out of time to act to avert insolvency for the federal Highway Trust Fund as state transportation officials and leaders of state chambers of commerce warned of the consequences if that were to come to pass. But there still appears to be no agreement in sight about how to fund a trust fund fix and a long-term surface transportation bill. I also have the usual roundup of news items and resources on MAP-21 reauthorization, state transportation funding activities, public-private partnerships and tolling and state multi-modal strategies.
EPW Chair Boxer Still Wants Six-Year Transportation Bill; Funding Still Elusive
Thursday’s Senate Environment and Public Works Committee hearing included a stern warning from Chairwoman Barbara Boxer that time is short for Congress to prevent bankruptcy for the federal Highway Trust Fund. Boxer said Congress can’t afford to wait until the trust fund runs out of money later this year and noted that the impact of that anticipated shortfall is already having consequences.
“Already states are cutting back on the construction projects they planned to go forward with this spring, and this trend will only continue to get worse as we get closer to insolvency,” Boxer said, according to The Hill newspaper.
Boxer said her plan is for the committee to pass a long-term surface transportation reauthorization bill that provides six years of funding certainty this spring.
But the Congressional Budget Office has projected that $100 billion will be needed in addition to incoming gas tax revenues to fund a six-year bill at current funding levels. Finding a source of revenue for that $100 billion remains an open question. The Senate Finance Committee is charged with coming up that part of the bill and Boxer said she is working with leaders of all the committees of jurisdiction to craft the successor to 2012’s MAP-21.
Among those testifying at Thursday’s hearing were two state transportation officials: Rhode Island DOT director Michael Lewis and Vermont Deputy Transportation Secretary Sue Minter.
In his written testimony, Lewis expressed his concern that the loss of federal funds if the trust fund goes belly up could mean the loss of an entire construction season for his state.
“Rhode Island’s highway improvement program is completely dependent upon federal highway funding,” he said. “The total highway program for Rhode Island averages $240 million annually, with $200 million each year from HTF apportionments. There is no state-funded highway improvement program in Rhode Island. … The uncertainty of whether federal funding will be provided in FY 2015 has forced Rhode Island to virtually halt the advertising of all new highway projects. Only emergency projects and projects with funding from prior years are being implemented until federal funding beyond 2014 is assured.”
He went on to express why others should be concerned about these developments for his small state as well.
“Losing an entire construction season due to the uncertainty of federal funding has the potential to put smaller contractors who rely on steady highway construction work out of business,” he said. “But the health of Rhode Island’s transportation system is not just a local issue. The state is a key corridor between New York City and Boston—and part of a national network of roads vital to the movement of goods and people throughout the country.”
In her written testimony, Minter told the committee that: “Vermont is one of several states that recently raised its state gasoline and diesel taxes in order to stabilize our transportation budget. However, this increase in the tax rate was to make up for the years of revenue declines from reduced gas consumption arising from the improvement in vehicle efficiencies and the decline in vehicle miles traveled. … All states continue to need the federal government to play a role in funding essential investments to sustain our national transportation system.”
C-SPAN covered this week’s hearing, which can be viewed here in its entirety.
Also this week: the CEOs of more than 30 state chambers of commerce signed on to a letter to Congress calling on them to take action to address the nation’s transportation infrastructure needs.
“As you begin the task of constructing the next surface transportation bill,” they write, “we ask that you consider these critical principles: at minimum, a five-year authorization to provide predictability and certainty to a sector of our economy that needs stability and growth; dedicated federal funds to ensure the solvency of the Highway Trust Fund; flexibility for states to invest in transportation infrastructure as they deem necessary; and freedom for states to choose their own funding options.”
While noting that some states have addressed transportation investment on their own in recent months, the chamber CEOs write that “state action alone is not enough.”
“Even with increased state revenues and innovative mechanisms, such as public-private partnerships, there are projects of national significance that cannot be completed without federal assistance.”
Further Reading: MAP-21 Reauthorization & the Future of the Highway Trust Fund
- AASHTO has put together a dynamic infographic website that tells the story of how upcoming trust fund shortfalls will impact transportation, communities and the economy. You can check it out here.
- Former U.S. Transportation Secretary Ray LaHood told National Journal recently that he expects Congress to pass a short-term extension of MAP-21 rather than a more long-term fix and comprehensive bill. “They’ll take some money out of the general fund,” he said. “They’ll limp through the election, and then I don’t know what will happen after that.”
- In a recent piece for Forbes, Robert Bowman writes about why Congress is unlikely to pass and the President is unlikely to support a gas tax increase to shore up the trust fund. He talked to Joshua Schank, President and CEO of the DC-based Eno Center for Transportation, a frequent speaker at our CSG Transportation Policy Academies. Schank tells Bowman: “Those expecting the President to come to the rescue of user-based funding are out of excuses. It is now the official policy of this Administration to use general fund-based revenues to fund surface transportation in lieu of raising user taxes, and this has been Congress’ de facto policy since 2008.” Schank also expects a short-term patch this year to come from general fund revenues and a full reauthorization bill to have to wait until 2015. Even then, he thinks a gas tax increase is unlikely to be part of the solution. “It’s not necessarily the death knell for user-based funding, but the bell is tolling,” Schank said.
- North Carolina: At a recent North Carolina Chamber of Commerce conference, Gov. Pat McCrory and Transportation Secretary Tony Tata warned that neither the federal nor the state government is keeping up with the cost of transportation needs in the state, The News Observer reported.
- Oregon: A recent post on the Oregon Department of Transportation’s website explains what’s at stake for that state if Congress fails to come up with a trust fund fix: “The implications for Oregon are significant. Oregon receives over half a billion dollars in federal surface transportation funding each year. Because ODOT’s State Highway Fund resources are generally fully dedicated to debt service, highway maintenance, and agency operations, federal highway funds are the only source of funding for new construction projects that preserve and improve the state highway system. If Congress does not provide additional resources for the Highway Trust Fund, Oregon’s federal transportation funding could be cut by over $150 million per year—and the reduction in 2015 could be even larger. A federal funding reduction of this magnitude would force ODOT to cancel or delay a large number of projects in the Statewide Transportation Improvement Program (STIP).”
- In a brief this month, Heidi Crebo-Rediker, a Senior Fellow at the Council on Foreign Relations, argues that the federal government should create a new advisory unit within the Treasury Department to support state and local governments in deciding how best to use private investment to plug the infrastructure funding gap.
- For those seeking evidence of the need for infrastructure investment, there is the Report Card for America’s Infrastructure from the American Society of Civil Engineers (ASCE). This month marks the one-year anniversary of the launch of the latest version. There are plenty of ways to view the Report Card including smartphone and tablet apps. You’ll find it all here.
State Activity on Transportation Revenues
- Speaking of ASCE, I spoke last week via telephone to members of the organization’s state government relations committee about recent efforts by states to address transportation funding needs and the overall lower level of activity on that front in 2014 compared to 2013. You can read about what I had to say in this week’s issue of the Capitol Ideas E-Newsletter here.
- Indiana: Gov. Mike Pence this week signed legislation to release $200 million from a special transportation reserve fund created last year to use on road construction projects, Indiana Public Media reported. An additional $200 million could be released in December if revenue forecasts hold up and a state budget committee agrees to it.
- New Hampshire: The state Senate this week voted on a bipartisan basis to raise the state’s gas tax by 4 cents to fund highway improvements, including a wider I-93, The Eagle Tribune reported. The House gets the measure next. In 2013, that body approved a larger gas tax increase which eventually died in the Senate. Gov. Maggie Hassan expressed support for the Senate’s action this week. “Addressing our transportation challenges is essential for the success of New Hampshire’s people and businesses and for encouraging long-term economic growth,” she said.
- Texas: State Rep. Drew Darby told the San Antonio Mobility Coalition recently that a higher gas tax would be a more open and transparent way of dealing head on with the state’s transportation needs. Darby said Texas motorists are currently paying a $1500-a-year hidden “congestion tax” when you add up the costs of wasted gas, car damage and productivity lost to highway congestion.
- Washington: Some believe concerns that Gov. Jay Inslee might sign an executive order implementing a carbon fuel tax hurt the chances for the transportation funding bill that failed to make it through the legislature earlier this month, The Tri-City Herald reported.
Public-Private Partnerships & Tolling
- Kentucky: Legislation to enable P3s in the state passed the state Senate after lengthy discussion and some substantive changes. Under the Senate version of HB 407, P3 proposals would be required to use Kentucky based contractors and subcontractors. The bill also includes a prohibition on using tolls to fund construction of a replacement for the Brent Spence Bridge in Northern Kentucky. Officials said removing tolls from the finance plan for the bridge could all but kill the project, The Cincinnati Enquirer reported. In the absence of a funding plan, the Federal Highway Administration would be unlikely to move forward with environmental studies and other preparations for the project, according to Toll Roads News. Kentucky Transportation Secretary Mike Hancock gave his take on the tolling issue in a recent Enquirer op-ed.
- South Carolina: The state Transportation Commission is expected to approve a study on the potential impact of tolls to fund construction of I-73 through the state, The Sun News reported.
- The Reason Foundation has released its Annual Privatization Report for 2014, which provides an overview of 2013 activities on toll roads, managed lanes, privatization and P3s in surface transportation. You can find it here.
- Also, Reason’s Robert Poole has a new brief out on tolling entitled “Value-Added Tolling: A Better Deal for America’s Highway Users.” In it Poole describes modern advancements in all-electronic tolling, offers counter-arguments to concerns about tolling expressed by highway users and explains the principles of “value-added tolling,” which he writes is “a set of new policy proposals aimed at responding positively to the concerns of highway users.”
State Multi-Modal Strategies
- Indiana: Gov. Mike Pence signed legislation this week that will ask voters in six counties to decide this fall whether to increase income taxes to fund expanded mass transit, The Indianapolis Star reported.
- Ohio: Cincinnati Vice Mayor David Mann sounded sold on the economic development benefits of modern American streetcar systems after a recent visit to Portland, Oregon. Attendees at our 2013 CSG Transportation Policy Academy in Portland got to see exactly why that might be the case. Cincy Mayor John Cranley campaigned last year vowing to halt the city’s streetcar project due to its cost.
- Michael Lewyn of Planetizen looks at some criticisms of the American Public Transit Association’s recent report on transit ridership increases in an opinion piece this week. APTA also responded to critics in a recent post on its website.
- New York: The head of New York City’s bike share program resigned this week after Citi Bike came under fire for financial problems.