Federal Transportation Bill Reflects State Government Wish List, but Fails to Address Long-Term Future

The federal surface transportation bill known as MAP-21, which President Obama signed into law July 6, 2012, authorized programs and funding for two years. In addition to providing at least a modicum of greater certainty for state transportation agencies, the legislation incorporates important policy changes: consolidating and streamlining existing programs to give states added flexibility, including provisions designed to accelerate the delivery of projects, moving ahead with a performance-based approach to transportation investment and providing a boost to a popular credit assistance program that could help some states tackle expensive projects. State transportation officials from four states in different regions of the country say while many of these policy changes are welcome, much remains to be done to ensure MAP-21’s success and to ensure the next federal bill addresses the long-term future of the federal transportation program.
 

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About the Author

Sean Slone is program manager for transportation policy at The Council of State Governments. He staffs CSG’s Transportation Public Policy Committee and writes about transportation policy for CSG publications, such as Capitol Ideas magazine, the Capitol Comments blog and Capitol Research policy materials. He is the author of two CSG national reports: Transportation and Infrastructure Finance (2009) and Shovel-Ready or Not? State Stimulus Successes on the Road to Recovery (2010). His work also appeared in the 2010, 2011 and 2012 volumes of The Book of the States.


Some Greater Certainty for States
Congress passed legislation to authorize federal surface transportation programs for two years June 29, 2012. Known by the acronym MAP-21—which stands for Moving Ahead for Progress in the 21st Century—the legislation came as something of a surprise to state officials, many of whom may have assumed Washington’s partisan gridlock of recent years and lack of agreement on how to sustain the federal program long term would certainly doom the bill during a contentious election year. It followed nearly three years during which Congress simply extended the previous authorization legislation—known as SAFETEA-LU—a total of 10 times.
 
“It was literally day to day and nobody knew what was going to come out of it,” Rhode Island Department of Transportation Director Michael Lewis said of the pre-MAP-21 period during a February 2013 telephone interview. “There was obviously all the discussion (in early 2012) around how the House was looking at a six-year (bill) with a reduced level of funding and the Senate was looking at two years. There was a lot of heat and smoke and energy being spent wondering what was going to happen, if anything was going to happen.”1
 
Indeed, many state transportation officials saw the passage of MAP-21 as a welcome relief after months of fearing the worst. It came just months after Congressman—and eventual Republican vice presidential nominee—Paul Ryan had proposed a budget that would have cut transportation spending by 25 to 35 percent.2
 
“When we saw that future, we were more than happy to accept just a two-year bill that kept us mostly level while the rest of this gets sorted out,” said Paula Hammond, who retired in March 2013, after a 34-year career at the Washington State Department of Transportation, the last six as secretary. 
 
The legislation also ultimately included many policy changes long sought by state governments that seem likely to have an impact long after the legislation expires in the fall of 2014.
 
“MAP-21, I think, did a couple of things,” Hammond said. “It provided some stability for two years as the recession works its way through. But I think more importantly, what MAP-21 did was start shifting the policy framework for how federal transportation funds will be spent.”3 
 
For other state DOT officials, though, MAP-21 did little to relieve their anxiety as they work to plan transportation projects that won’t actually be built for years.
 
“In our world, two years is not much better than six months,” said Tennessee Department of Transportation Commissioner John Schroer. “Quite frankly, all (MAP-21) is, is another extension.”4
 
Where past authorization bills had been five-or six-year bills, MAP-21 is two years for one major reason: Congress was only able to put together the funding for that long. The Highway Trust Fund, on which many federal transportation programs rely, has seen dwindling revenues from the federal gas tax in recent years as fuel efficiency has improved and other factors have taken their toll. Congress has had to make several general fund transfers in recent years just to keep the trust fund solvent. MAP-21 relies on another general fund transfer of $18.8 billion as well as an additional $2.4 billion from the Leaking Underground Storage Tank Trust Fund.
 
But beyond the expiration of MAP-21 in September 2014, there is no agreement about what happens next: whether Congress would transfer additional general funds to again shore up the trust fund, whether they would raise the gas tax to bring in additional revenues, whether they would cut funding for programs and projects or whether they would seek new revenues from other sources.
 
“The lack of certainty around the federal contribution is a very disruptive force … as we’re trying to plan long-term, integrated transportation investments,” said Hammond.
 
Program Restructuring Brings Greater Flexibility for States
MAP-21 restructured core highway formula programs, created a couple of new ones and eliminated a long list of discretionary programs. Most projects that previously fit into those discretionary programs are now eligible under other programs.
 
“I think the shrinking or the elimination of a lot of very distinct and controlled programs into fewer numbers gives us good flexibility,” said Hammond. “It’s definitely confusing to learn a whole new set of terminology, but we in our state have had a very inclusive process with our cities and counties and (metropolitan planning organizations) on how we will split up and share the federal money where there’s discretion (allowed).”
 
Schroer believes the restructuring is a significant improvement.
 
“Last year, we got funded in 100 different fund codes and that’s ridiculous,” he said. “We designed our program to fit within codes so that we didn’t leave any dollars on the table. The last thing that we want to do as a state is to leave any federal dollars in Washington. … I like the fact that it’s more streamlined and it’s more flexible and that we don’t have to spend quite as much time trying to channel our objectives to fit certain fund codes.” 
 
But Rhode Island’s Lewis, who is serving as the 2013 President of the American Association of State Highway and Transportation Officials, known as AASHTO, noted that the elimination of a set-aside program called Transportation Enhancements, which funded numerous bike and pedestrian facilities around the country among other things, wasn’t popular in all circles.
 
“Some of the advocates of nontraditional transportation feel like maybe they were left out,” he said. “We don’t see it that way because I think we have the flexibility to include those projects under the (new Transportation Alternatives) program. But I think it gives us some greater tools as a state to go back to the advocates of those kinds of projects and say, ‘listen, (in) a state like Rhode Island that has a greater than 20 percent structurally deficient bridge count, we’ve really got to think about where we put the money that comes to the state that has the greatest effect on the overall economy of the state.’ Generally people understand if you don’t have your bridges in good shape, bike paths are difficult to get to.”
 
Environmental Streamlining and Accelerating Project Delivery 
Congress also incorporated into MAP-21 a series of provisions designed to accelerate transportation project delivery and to streamline environmental review processes, which some believe have become major contributors to project delays.
 
According to a 2011 Congressional Research Service report, major highway projects can take 10 to 15 years to plan and build.5 MAP-21 seeks to accelerate projects in a number of ways: allowing more phases of a project to run concurrently, encouraging earlier collaboration among state and federal agencies, reducing and consolidating paperwork and bureaucratic requirements, and establishing new deadlines and penalties for delays in permitting processes.
 
The legislation seeks to streamline the environmental review process required under the 1970 National Environmental Policy Act, which put in place an interdisciplinary, environmental impact-focused approach to project planning and decision-making for projects that receive federal funding.6
 
In addition, MAP-21 includes provisions aimed at increasing innovation and improving efficiencies in government operations, contracting, right-of-way acquisition and construction. Many of those provisions mirror strategies already in use in a number of states and promoted as best practices by a Federal Highway Administration initiative called Every Day Counts.
 
“There’s a recognition that we need to be more streamlined and we can’t be talking about a project for 10 years because the opportunities are lost,” said Rhode Island’s Lewis. “We can’t afford to have the resources spent on projects that languish for decades and don’t go anywhere. There’s no silver bullet (in MAP-21), but I think it is supportive of a movement and a recognition that we need to move projects in a way that actually can affect the travelling public in a beneficial way more quickly without giving up the environmental and (societal) protections that the NEPA process instills.”
 
Michigan Department of Transportation Director Kirk Steudle believes MAP-21’s project acceleration provisions can make a difference.
 
“The (provisions) that require the participating agencies … to actually work together and move a project along faster, I think, are absolutely essential,” he said. “I’m coming from a state where our system is largely built. We’ve got to build some additions to it and some modifications, but we don’t have a lot of big environmental documents that are out there that are getting hung up. … But I think for the states that have those big environmental documents, getting them to the finish line faster, I think, is going to be tremendous.”7
 
Tennessee’s Schroer said the environmental process has been a significant contributor to project delays in his state.
 
“While there are a lot of good things that come out of that (process), I think the pendulum has swung too far in one direction,” he said. “If you go back to the year 2000 or 1998 and look at what we had to do environmentally back then and what we have to do now, it has increased exponentially and the delivery of projects has slowed in a corresponding manner.”
 
Others have learned from experience that redundant document requirements can slow up projects considerably and the ability to not have to reinvent the wheel for each one can make a difference in reducing project delivery times.
 
“We’ve had the ability even before MAP-21 to test some of these same kind of provisions especially in the environmental streamlining area,” said Washington state’s Hammond. “We had an example on our (State Route 520) corridor where we were allowed to work some of our environmental impact statement/NEPA documents along with some of the pre-design (documents) and it shortened a year or two out of the entire length of time it took to get projects to construction.”
 
Emphasis on Performance Measurement and Management
MAP-21 continues a transition to a performance and outcome-based transportation program that has been germinating at the state level for years. As part of the national program, states will invest in projects to achieve individual targets that are expected to make progress toward national goals in safety, infrastructure condition, congestion reduction, system reliability, freight movement and economic vitality, environmental sustainability and reduced project delivery delays.8
 
Steudle said performance measurement has been a focus in Michigan since the mid-1990s. “We’re right on board trying to figure out how to enable this to go forward on a national level,” he said. “We need to be able to say, ‘this is what we got for these billions of dollars invested in the road and bridge network and transit network.’ We need to be able to say, ‘here’s what you will get and with the level of funding, here’s what you can expect.’ Whether it’s going up or going down in a particular category.”
 
The Washington State Department of Transportation, now seen as leader in performance management, began operating that way in 2001, said Hammond.
 
“I think it’s right for the federal government now to get on that same model of accountability and performance-based investment,” she said. “I think all of us at state DOTs agree that the public wants accountability. The public wants to know how tax dollars are spent and it’s appropriate to make investment decisions based on performance data and performance measurements.”
 
Lewis of the Rhode Island DOT also expects the focus on performance to pay dividends down the road.
 
“It’s going to provide us a vehicle for better articulating to the public and to elected officials the value of investment in infrastructure, the efficiency or lack thereof of certain investments, and the cost/benefit of certain investments, so that I think we’re going to be able to over time make a much better case for targeted investment and with a rate of return,” he said.
 
But Lewis also noted that not all states are at the same level in developing performance measures.
 
“There are some states that are further along than others in every aspect,” he said. “I don’t think there’s any one state in the country that is first in all areas. But there are certainly states that are leaders in performance management. Missouri has long been a leader. I think North Carolina has a good system. So there are role models to go out and for the states that are further behind to be able to catch up and quite frankly that’s what Rhode Island is doing. We steal with pride. We will take best practices from around the country and implement them.”
 
Popular TIFIA Program Doesn’t Benefit All
MAP-21 provided a significant increase in funding available for the Transportation Infrastructure Financing and Innovation Act, or TIFIA, program. First created in 1998, the program provides federal credit assistance to eligible transportation projects in the form of secured loans, loan guarantees and lines of credit.9 The Government Accountability Office reported in 2012 that as of April, the U.S. Department of Transportation had, since 1998, executed 27 TIFIA credit agreements for 26 projects with project sponsors such as state DOTs and transit agencies. Demand for the program had surged considerably since 2008, with requests exceeding budget resources by more than 10 to 1, GAO said.10
 
MAP-21 authorized $750 million in the 2013 fiscal year and $1 billion in 2014 for the program. Funding had topped out at $122 million in previous years. A $1 billion TIFIA authorization will support about $10 billion in actual lending capacity, according to the Federal Highway Administration. In addition to providing the cash infusion, MAP-21 requires that 10 percent of the funding be set aside for rural projects, increases the share of eligible project costs that TIFIA can support, and revamps the application process to allow assistance to be awarded at any time of year.11
 
Paula Hammond said Washington state has benefited from TIFIA in the past.
 
“We’ve been able to access in the last year $300 million of TIFIA funds (for the SR-520 project),” she said. “We got an interest rate of 2.99 percent, which was far better than had we bonded that money ourselves.”
 
Hammond said MAP-21’s funding increase for the TIFIA program has the potential to benefit more states and could play a role in another big ticket project in Washington.
 
“We have a project with Oregon that is a replacement bridge on Interstate 5 that crosses the Columbia River and we’re … looking at going after $1 billion of TIFIA funds to help lower the cost of financing for that project,” she said. “So I think it’s great, especially in the absence of federal grant funds, where there’s not a way for the feds to give large grants like these. This kind of borrowing is almost a supplement to that because it helps us lower our financing costs and helps our money go further.”
 
In Rhode Island, TIFIA could play a role in helping the state address deteriorating conditions on its bridges, Lewis said.
 
“I think that’s where it comes into play when you have large, capital intensive projects, complex projects that are made up of multiple financing strategies,” he said. “We’ve got to develop a plan that addresses our deficient bridges in a relatively predictable period (of time) and that goes beyond what our likely federal apportionment will be and TIFIA may very well play into that strategy.”
 
But others caution against seeing TIFIA as a savior for transportation.
 
“TIFIA is useful because it’s a low-interest loan, (but) the key word there is it’s still a loan,” said Michigan’s Kirk Steudle. “Our problem is we’ve come up with all these fancy financing tools but we just fundamentally don’t have enough money to pay back the bill. … The TIFIA loan, I think, is going to be a very worthwhile tool. We just have to remember what it is.”
 
For a state like Tennessee that is unwilling to take on new transportation debt, the TIFIA program is likely to have little utility, Schroer noted.
 
“The reason why I don’t like it is because it’s the federal government encouraging state governments to take on more debt,” said Schroer, who chairs AASHTO’s Standing Committee on Finance and Administration. “Debt is what has our federal government in trouble. And so they’re pushing that and incentivizing states and taking money away from those states that don’t have debt to put it into states that do have debt and I think that’s the wrong way to go. The state of Tennessee will not have any general obligation debt or TIFIA debt under my watch.”
 
MAP-21 Implementation Challenges
As the state transportation officials spoke in February 2013, implementation challenges with MAP-21 remained. A freight program was included in the bill without the funding to pay for it. Similarly, a promised program to fund “Projects of National and Regional Significance” is subject to a $500 million appropriation from the general fund and will require more definition of the projects that qualify, officials said. The process of developing performance measures and goals is scheduled to extend long past MAP-21’s expiration date in 2014. And five months after the start date of MAP-21, federal transportation agencies were still hard at work writing rules and offering guidance to states on how to implement multiple aspects of the legislation.
 
MAP-21’s Successor and the Long-Term Challenge
While state transportation officials mostly laud the significant policy elements included in MAP-21, they say the debate over its successor in the months ahead must include how to stabilize long-term funding for federal transportation programs.
 
“I think at this point in time, we just need to talk money,” said Tennessee’s Schroer. “I’m happy right now with MAP-21. I think (Congress) did a great job and I think they put a lot of effort into it and they listened to state DOTs about what needed to be done.”
 
Michigan’s Steudle agreed.
 
“I would hope in (2014), we don’t have the whole policy debate again and that we allow the policies that are in place to actually get implemented,” he said. “I’m hopeful that we can let the policy stuff continue to run its course and not have that debate but talk about how are you going to fund this. I think that’s what the debate ought to be next year.”
 
But for Washington state’s Hammond, there is a broader issue that needs to be addressed as well.
 
“I think we’re at a turning point and I think it’s really important that the next transportation act clarify the federal role in state and local transportation,” she said.
 
One area in which that clarification may be especially needed, Hammond said, is the issue of which roads states are allowed to toll.
 
“Not all states care about it, but others are trying to find a way to both manage their traffic demand and fund big infrastructure projects by using tolling and I think the federal provisions are very tentative on that so far,” she said. “I think we need to be a little more aggressive in getting federal approval and guidance on that.”
 
Ultimately, Hammond believes, the role of the federal government in transportation and the future of transportation funding are two issues that need to be addressed in tandem.
 
“I think the federal involvement and control needs to match the level of investment that the feds make,” she said. “If we’re not going to have additional federal funds in the future and we’re going to start seeing that investment at the federal level drop, then we need to question what the federal role of transportation is in our state and how much oversight and how much control federal rules and regulations should have.”
 
Many are convinced that while completion of the interstate system provided motivation for transportation investment during the second half of the 20th century, the nation lacks a similarly galvanizing federal transportation purpose or project to tackle. But Rhode Island’s Lewis believes it’s important that policymakers and the public realize that progress made to date in the nation’s transportation system can easily be lost to neglect if solutions aren’t forthcoming soon.
 
“I have limited patience with people saying, ‘we built it once and so we shouldn’t have to pay for it again,’” he said. “How many of us are driving the first car we bought? This stuff has a service life and needs to be reinvested in and it’s a big ticket. But if we don’t invest in it, we can go back quickly to (what it was like) in the pre-interstate era. It’s not a future that any of us really want.”
 

Notes
1. Telephone interview with Michael Lewis. February 19, 2013.
2. House Budget Committee. “The Path to Prosperity: A Blueprint for American Renewal.” March 2012.
3. Telephone interview with Paula Hammond. February 13, 2013.
4. Telephone interview with John Schroer. February 13, 2013.
5. Congressional Research Service. “Accelerating Highway and Transit Project Delivery: Issues and Options for Congress.” August 3, 2011.
6. Council on Environmental Quality. “National Environmental Policy Act.” 
7. Telephone interview with Kirk Steudle. February 11, 2013.
9. Federal Highway Administration. “Transportation Infra-
10. Government Accountability Office. “Financing Program Could Benefit from Increased Performance Focus and Better Communication.” June 21, 2012.
11. Federal Highway Administration. “MAP-21—Moving Ahead for Progress in the 21st Century: A Summary of Highway Provisions.”
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