We’re in quite a pickle. With a Presidential election coming up in 2012, no transportation legislation will get passed next year as politics switches focus to not pursuing any new directions. The election also has effects on the current climate in transportation, and leaves no politician willing to raise revenues, be it the gas tax (not raised in 19 years) or something more innovative. There could be a chance of new revenue streams being passed in 2013, but it’s nothing up for discussion right now.
With no new revenues, we are stuck at the point where we are holding tightly onto our baby SAFETEA-LU, reauthorizing her to keep the transportation system with funding until Congress can get a new bill together. The source of transportation money, the Highway Trust Fund, which is funded by the gas tax, is running dry because the revenues from the gas tax are less than what SAFETEA-LU authorizes for spending. In order to keep the transportation money coming in, Congress has dipped into the General Fund.
Currently both parts of Congress are trying to put a bill together. Because this is a spending bill though, the legislation traditionally comes out of the House. The Democratic Senate and the Presidential administration, meanwhile, both have given their ideas for a new bill, the former essentially keeping funding at SAFETEA-LU levels, the latter, makes the levels higher. The Republic House committee for transportation, led by John Mica, has finally showed the bill that would likely be the starting point for discussions. You can get it here.
This bill is for six years, and keeps funding only at the level at which the Highway Trust Fund can pay out. With no additional revenue, it means funding drops about 30% from SAFETEA-LU levels. This is actually quite a reasonable viewpoint. It recognizes there is only so much transportation money to spend, and then spends it at a responsible rate. Especially at a time where government money is hard to come by, asking for more money from the General Fund (because we won’t raise revenues through a gas tax etc.), would be irresponsible. By proposing a bill at this level, it certainly will get the attention of those not willing to raise revenue, and show them what that means to their states’ transportation money.
For the moment though, here’s what would be best. A six-year bill brings us past two presidential elections before we get the opportunity to raise revenues again. That’s a long time to exist at a 30% cut to current transportation funding. A reauthorization of SAFETEA-LU would be a bad idea because it would cause the Highway Trust Fund to get depleted, or force Congress to borrow from the General Fund. This just paints transportation as a greedy industry, and makes us more enemies. What would be preferable, would be to adopt a fiscally responsible bill like Mica’s, but only for 2 years. Get Congress past the Presidential election, and give an opportunity to think about new revenue once the election commotion has died down. Meanwhile, we spend responsibly, while also learning what such deep cuts to funding really looks like in the field. It certainly might set a fire underneath a “No Additional Revenue!” congressman, and get them to consider a change to our revenue stream.
For a right view read: The Anti-planner
For a left view read: The Transport Politic
I think you’re right about much of this. I think the “no new revenue” folks only feel that way because we have not seen how little revenue the gas tax actually creates. Maybe if we had to gut all transportation spending for two years, the gas tax could be raised (and pegged to the price of gas- but let’s not be too hopeful).
Six years of this would be an unmitigated disaster. But two might be instructive.
I agree that a 2 year bill should be adopted and then new 6 year legislation should be drafted after the next presidential election. However, I think the 2 year bill should maintain SAFETEA-LU funding levels. I share some of the views expressed by Robert Puentes in this Brookings Institution paper.
I particularly enjoyed his table showing the increasing number of earmarks in transportation legislation throughout the years. Since transportation legislation traditionally enjoys bipartisan support it should be no surprise that in the past it was a logical place for our lawmakers to put in earmarks. However, it seems that those times are coming to an end and hopefully we will move to a performance-based funding mechanism, e.g., some sort of transportation trust fund as opposed to separate highway and transit accounts that allocates funds based on need as opposed to minimum funding levels.
In the meantime, I understand it is fiscally irresponsible to authorize more funds than the federal gas tax can bring in. However, SAFETEA-LU was poorly drafted legislation in terms of outlays versus expected revenues. See this GAO report. As originally drafted, the legislation would have drawn the HTF down to $0.4 billion, and that was without the Great Recession! In retrospect, the federal gas tax should have been increased on some sort of time period basis, e.g. annually, biennnially, or somehow indexed to inflation, i.e. the producers price index, to account for increasing construction and labor costs.
Furthermore, states need to move away from the concept of donor and donee states. See another GAO report. With the exception of Texas, and this may have changed with updated data, every state received more funds than it contributed to the HTF because general funds were used to augment the HTF.
All this goes to show that as a Nation we have worked ourselves into a precarious position. Many states depend on federal money for transportation projects simply to maintain our existing infrastructure, much less increase capacity. The HTF is a prime example of this. Pure and simple, the gas tax should be increased or some alternative financing mechanism, i.e., VMT, should be implemented as to create a self-sufficient transportation funding mechanism. As an industry, it seems irresponsible to continually seek money from the general fund. Given my long-winded response I would be surprised if you are still reading.