State Officials Offer Guiding Principles & Priorities for Federal Transportation Reauthorization

State officials have plenty of thoughts on what should be in the next authorization of federal transportation programs. Last week they used a variety of venues to once again let Congress know their priorities for the successor to SAFETEA-LU, the 2005 authorization legislation that officially expired in 2009 which has been operating under a series of temporary extensions since. But many wonder whether a new bill that is expected to be substantially more limited in scope and dollars than past efforts can come close to meeting state wish lists.

 State & Local Officials Offer Guiding Principles

Four organizations representing state and local elected officials last week offered up a list of “Guiding Principles on Surface Transportation.” The National Governors Association, National Conference of State Legislatures, National Association of Counties and National League of Cities released the document, which says that any new national vision for surface transportation requires a strong partnership among all levels of government and should follow seven principles:

1. Funding and Finance: The groups support the continuation of the “user pays” principle to guide transportation funding and believe all options must be on the table for evaluation, including tolling and public-private partnerships because adequate and reliable sources of revenue to supplement existing motor fuels and sales taxes are needed. The organizations oppose federal limits and conditions on tolling and public-private partnership agreements.

2. Certainty and Stability: The organizations support federal funding mechanisms designed to maintain reliable, long-term funding certainty which allows state and local governments to engage in long-term, multi-year projects that respond to interstate commerce transport needs.

3. Program Reforms: The organizations support preservation of core federal surface transportation programs, while recognizing the need for program reforms. They are opposed to earmarks, but support maximum program and funding flexibility given the diversity of geography, population and priorities around the country.

4. Project Delivery: The organizations encourage federal efforts to streamline project delivery that reduce project approval and completion time and improve efficiencies while preserving the intent underlying critical environmental, planning and design, and procurement reviews.

5. Metropolitan and Non-metropolitan Mobility Needs: The organizations support a strong federal role in funding transportation solutions for metropolitan and non-metropolitan areas across the country. They emphasize the importance of tailoring strategies for congestion relief in different parts of the country, addressing access and connectivity needs, improving highway safety and the condition of bridges, and responding to the increasing demand for transit solutions in all communities.

6. System Performance: The organizations support outcome-oriented performance measures developed by states and localities that are clear, measurable and fair. They encourage federal incentives to reward positive outcomes in areas like congestion mitigation and safety, and oppose prescriptive federal policies focusing on preemption and unfunded mandates.

7. Safety and Security: The organizations believe all levels of government must cooperate to improve the safety and mobility of the surface transportation system, protect the environment and ensure the security of transportation assets throughout the country. They oppose the use of federal sanctions and monetary penalties to enforce federal safety standards.

State DOT Officials Testify on Their Priorities

Many of the themes in those guiding principles were echoed in the comments of state department of transportation officials from around the country who testified Thursday before the Senate Environment and Public Works Committee, one of the Senate panels with jurisdiction over authorization legislation. Here’s a sampling of what they had to say (based on prepared written testimony):

Brian Searles, Secretary, Vermont Agency of Transportation

“Both the quality and quantity of the transportation systems that serve small states and rural areas have steadily eroded for many decades. Economic and demographic shifts, coupled with long term underinvestment, have all had detrimental impacts on mobility, economic opportunities and the quality of life of rural residents…

While most states have a backlog of deferred paving projects, these backlogs are particularly pronounced in small states and rural areas that receive a disproportionately smaller share of federal transportation transfers, even with the minimum set-aside supplements.

States with severe winters and temperature variations are even more prone to exacerbated roadway maintenance costs. The corroding effects of salt and liquefied snow removal agents, coupled with continued freeze and thaw cycles and the wear and tear of snow removal for highway safety, add significant cost to roadway maintenance budgets.

Due to sprawling land use patterns that date back to farm economies in existence for over 200 years, residents of rural states travel longer distances to worksites and needed services, such as healthcare and employment training…

The demographic trends of rural areas are also different from urban areas, and exacerbate transportation challenges. Most rural states are aging, with the share of residents 65 and over accounting for a significantly higher rate than their urban counterparts. As older residents require more transportation services (i.e. transit services to medical appointments), providing those services to sparsely populated areas will cost even more in the future…

Vermont is currently involved in a federal pilot study that I believe is critical to ensure the efficient flow of freight to other states. Our federally allowed interstate weight limit is currently 80,000 lbs, substantially lower than neighboring jurisdictions. Through a combination of grandfathered regulations (New York), federal exemptions (New Hampshire), and raised weight limits (Quebec), Vermont now finds itself an island among its neighbors. The lower interstate weight limit has resulted in heavy trucks using the state highway network. Many state roadways were not designed to handle heavy trucks, particularly through village centers and historic downtowns. This is impeding interstate and international trade, as well negatively affecting the quality of life of many rural communities…

It has become clear that formula funds are insufficient to meet the current and future transportation system needs of small states and rural areas. Public-private partnerships and tolls, particularly those that rely on heavy use, are not viable in rural areas…

In order to ensure the viability of small state and rural area transportation systems, we need to reinvent funding mechanisms and not be too dependent on per-gallon gas tax. If this means user charges (i.e. per-mile) it must also be sensitive to the needs of low-income rural residents who drive long distances for work and other services, and cannot afford the latest fuel-efficient vehicles…

There is a need to streamline federal funding and the regulatory process to allow flexibility in shifting funds between modes, including the ability to use more federal funding towards the operations of rural public transit systems and passenger rail…

I would also encourage you to support major regional and national initiatives that have transportation advantages of connecting small states and rural areas to larger cities.”

Michael Lewis, Director, Rhode Island Department of Transportation

“Additional federal funding is needed to bring our infrastructure into a state of good repair and to help in the state’s economic recovery. Even without additional funding, the new authorization bill can help by providing flexibility. Now is not the time to tie our hands and limit the use of transportation dollars and assets.

It is imperative that the Federal government, first, continues to invest in highways, as well as transit, second, address the needs of metropolitan, suburban, and rural areas, and, finally, to meet preservation and capacity needs. Increasing funding for transportation is a sound investment in rebuilding the nation’s economy…

Increasing flexibility to the states for tolling, public-private partnerships to allow commercial use of the transportation rights-of-way, and innovative financing is essential to allow states to leverage the assistance we get from federal funding. Maintaining a strong federal partnership with the states is also essential to our success. We must recognize the unique challenges facing each state, while working towards our common goal.”

Gary Ridley, Secretary, Oklahoma Department of Transportation

“The conditional deficiencies of a long underfunded national transportation system cannot be resolved by the States alone. Unfunded federal mandates, federal regulation and federal bureaucracy stifles efficiencies, redirects transportation dollars to other fringe or completely unrelated initiatives and unnecessarily delays critically needed transportation improvements.

The costs of implementing transportation system improvements can be significantly reduced through the thoughtful consideration of measures that focus the project delivery process, thereby allowing for more transportation generated dollars to find their way to the Nation’s core infrastructures…

Certainly, when properly vetted and administered, a variety of financing methodologies can be utilized to successfully deliver significant transportation improvements that might not be financially viable otherwise. The utilization of GARVEE, TIFIA, P3s, Build America Bonds, infrastructure banks and other such methodologies have proven effective in financing certain, well-defined transportation system needs. In addition, simple tolling can also be very effective and is the purest representation of a public-private partnership. Bond holders finance the initial transportation improvements and the public’s use of the facilities provides for a reasonable return on their investment…

The return on transportation system investments must be a primary consideration of performance measurement and the results should be honestly and accurately communicated to the Congress, our state officials and our citizens…

Composite performance measures should be utilized when possible that can accurately reflect and report the overall condition of the transportation system, component or element by considering multiple condition factors.”

John Cox, Director, Wyoming Department of Transportation (representing the transportation departments of Idaho, Montana, North Dakota, South Dakota and Wyoming)

“As transportation departments serving predominantly rural states, we are concerned that the rural perspective is not presented in many discussions concerning authorization of surface transportation programs…

Many have spoken of the importance of doing more with each dollar. One way to do this is to provide each state with increased flexibility to direct scarce funds to their highest priorities. Set asides, narrow categorical programs, and other restrictions should be eliminated or reduced and replaced with broader eligibilities, funding flexibility and fewer regulatory and program restrictions…

New legislation should simplify and streamline the Federal surface transportation program. Similarly,proposals that would add to already extensive statewide planning requirements and other suggestions that would complicate program and project delivery should not be included in new legislation.

The current ratio between highway and transit program funding should be maintained. Formula programs, compared to discretionary or allocation programs, should be given increased funding emphasis…

We would have particular concern if any new discretionary programs were structured in a way that made it unrealistic for rural states to participate financially. New programs limited to projects in large metropolitan areas or to extremely expensive projects would not be accessible by our states and would represent an approach to discretionary funding that lacks urban-rural balance.

We have similar concerns that infrastructure bank/fund proposals would end up being relatively inaccessible for projects in rural states and that funds could not be put to work as promptly under such a program as they would be under formula programs…

We support a well-functioning freight system and we certainly think we advance this goal in implementing the highway programs in our states. We will review any proposal to establish a "freight program" to consider whether it is fair to rural states, such as by not being focused on congestion relief projects. There are many types of projects that can assist effective freight movement, including improvements to routes in rural areas that help people and goods traverse long distances. For example, to better serve agriculture and the nation, projects that facilitate truck to rail transfers at grain terminals and other locations should be eligible for funding through formula programs.”

Further reading: CSG’s Capitol Research brief on Rural Transportation Needs.

John Cooper, Director, Alabama Department of Transportation

“If the number of funding categories was reduced and the states were provided flexibility to direct federal funding toward state defined priorities, it would allow us a better use of federal funds. For example, appropriations are provided for interstate maintenance, national highway system, surface transportation program, safety, congestion mitigation and air quality, large urban areas, small urban areas, counties, transportation enhancement, bridge replacement, rail highway crossings and other categories. It would enhance our ability to utilize our funds if the number of categories could be reduced…

We understand it will be extremely difficult to increase transportation funding at this time with the current economic situation. Therefore, it is important to allow increased flexibility to allow the states to use the funds available…

While we understand the funding difficulties facing Congress, we believe that eventually a solution will be realized. Until then, it may be appropriate to consider a shorter term reauthorization—say in the range of two years versus a six-year reauthorization—to allow us the opportunity to try to develop a “fix” to the funding dilemma. I realize that is contrary to the State’s normal position, but I don’t believe it is in our Nation’s best interest to develop long-term reauthorization principles without corresponding funding.”

Smaller Bill May Be a Possibility

Senate Finance Committee Chairman Max Baucus suggested last week that Congress may have to consider a much smaller highway-funding bill just as Cooper suggests because of a steep drop in revenue from the federal gas tax. Baucus said lawmakers may have to draft a two-year bill rather than a six-year one.

That could mean freezing funding for highway construction at existing levels or lower. State officials have said a drop in funding and any uncertainty about future federal funding levels could further hurt states and the struggling construction industry, which relies on stability to enter into long-term contracts for large infrastructure projects.

Senate Environment and Public Works Committee Chair Barbara Boxer has indicated she is determined to pass a six-year bill. But the falling gas tax revenues mean that lawmakers would need to come up with more than $200 billion either by increasing the tax or finding alternative revenues and there is currently no agreement in Washington on such a course of action.

CSG Webinar Now Archived Online

Our webinar last week on Federal Transportation Reauthorization was a rousing success with 60 state and federal transportation professionals from around the country joining us for the 90-minute session. Ronald Utt of The Heritage Foundation and Donna Cooper of The Center for American Progress both gave their thoughts on how the debate in Washington might take shape in the months ahead and what it could all mean for states. Now you can view their PowerPoint presentations or watch the webinar in its entirety on our website. You can also read a Capitol Ideas session summary here.

Of particular interest from the webinar: Utt’s assessment of problems with current federal transportation programs that would be unaddressed in any of the latest reauthorization proposals, his thoughts on how federal programs could be reformed and their goals sharpened, and his examination of recent performance audits in the states of Washington and Virginia that could hold lessons for state governments trying to seek greater efficiency in how transportation dollars are spent. Also, for policymakers, Cooper offers a list of action items on how to organize support and make the case for increased federal investment in infrastructure improvements.  

Public-Private Partnerships Focus of Upcoming Conference

Among the other issues Utt and Cooper weighed in on were public-private partnerships. While both see P3s as tools with great potential for helping states finance infrastructure, both say they are not a panacea for the nation’s infrastructure funding shortages. Nevertheless, both say now is the time for states to address P3 authority legislation (more than 20 states still don’t have the authority to enter into such agreements) and expanded tolling in order to take advantage of possible changes at the federal level that may be coming down the road.

There will be an excellent opportunity this summer for state officials pondering the P3 equation to learn more about them and potentially develop contacts in the infrastructure finance world. The InfraAmericas’ Seventh Annual U.S. P3 Infrastructure Forum will take place June 14-15 at the Grand Hyatt in New York City. CSG is a partnering organization for the conference, which will bring together state and federal public officials, infrastructure developers, investors, financiers and others to discuss opportunities for public-private partnerships in infrastructure in the United States. Registration is open now and special rates are available for public sector members. I’ll have more to say about the agenda for this exciting event very soon. Stay tuned and mark your calendars now.

ASCE National Infrastructure Summit

Donna Cooper’s former boss, P3/tolling proponent and former Pennsylvania Gov. Ed Rendell, will be among the speakers next week at a summit on advancing a national infrastructure improvement agenda hosted by the American Society of Civil Engineers in Washington, D.C. The summit gets underway Thursday, April 28th with a keynote address by former U.S. Senator Slade Gorton of Washington State. It will include a panel with business leaders discussing their strategies for the debate on infrastructure improvement. Other sessions will explore public views on infrastructure development, the role of policymakers in fostering leadership for infrastructure development based on past efforts at the state and local levels, and ideas for overcoming potential barriers such as funding and financing issues. I’ll be there for the meeting and report back on what I hear.