Until early December a near-term solution on the future of transportation infrastructure financing was little more than talk in Washington as politicians battled over varying proposals to ensure that the Highway Trust Fund - or something like it - continues to provide dollars for the nation's road and bridge projects.
Then on Dec. 8 President Obama announced that the administration would be crafting a multi-faceted plan to further stimulate job growth. The bill could end up on Obama's desk as early as the first quarter 2010, pushing consideration of the Surface Transportation Authorization Act of 2009 by Rep. James Oberstar (D-Minn.) back to at least mid-2010.
Part of that would be a $50-billion allocation for transportation infrastructure to be obligated within one year of the bill's passage. Light on details, the White House suggested the plan may be partially funded by repaid financial bailout money, negating a compromise proposal announced by Pennsylvania Gov. Ed Rendell and Sen. Richard Durbin (D-Ill.) that would have borrowed money from a multi-year program before it was actually put into place.
The compromise would have authorized billions in 2010-11 while deferring long-term funding solutions until after the mid-term elections. Although Durbin never said how much his plan would front-load, Rendell suggested the total investment would be about $150 billion.
Since highway user fees - particularly a gas tax of 18.3 cents/gallon - were last increased in 1993, the Highway Trust Fund's purchasing power has declined by more than 33%. User fees, including tolls and the gas tax, generate $35 billion annually (less than half of what's needed to maintain the highways), leading to calls for a controversial increase in the federal gas tax to 36 cents and a user fee system based on vehicle miles traveled.
Rendell believes Americans would support a tax increase if they knew the truth: 61% believe that the tax increases with inflation, according to a poll by the Building America's Future group."Had that been true, we'd be paying 44 cents/gallon," Rendell explains.
"One of the easiest options is to lift the cap on the number of federal aid highways that can be tolled by the states," Rendell says. "That wouldn't require Washington to make the difficult decisions." He also supports a federal capital improvement budget, but that idea lacks broad-based support in Congress.
Obama's Dec. 8 announcement further delayed consideration of the $500-billion, six-year House bill proposed by Oberstar to succeed SAFETEA-LU, which expired Sept. 30. The White House moved cautiously last fall to extend the surface-transportation funding program, passing two one-month extensions before announcing the jobs bill. As late as mid-November, the White House hadn't committed to any of the proposals to increase transportation infrastructure funding.
The U.S. Department of Transportation has assured Congress that the trust fund - which received a $7 billion transfer from general funds in August to remain solvent - has about $5 billion left, enough to provide uninterrupted funding through summer 2010.
Meanwhile, as the $30 billion of highway funding provided by the American Recovery and Reinvestment Act was keeping some projects active, the one-time $8 billion rescission of unobligated funds was a blow to an industry that desperately needs a long-term funding solution.
The Energy Independence and Security Act of 2007 made the SAFETEA-LU rescission much less flexible than rescissions in previous years. The rescission drew from funds that had accumulated over the past several years as states were required to set aside a small portion of their annual funding to ensure budgetary flexibility.
"This effort is complicated by the crowded congressional calendar, disagreements over the means of generating the revenues needed to make the necessary investments, and the toxic partisan environment in Washington," says Oberstar, chair of the House Transportation and Infrastructure Committee.
He joined House Subcommittee on Highways and Transit Chair Peter DeFazio (D-Ore.) and John Horsley, executive director of the American Association of State Highway and Transportation Officials, Dec. 2 to announce they'd identified 7,497 "ready-to-go" projects worth more than $47 billion that could be approved for funding within 120 days.
The immediate need for a long-term solution is evident especially in Oberstar's home state of Minnesota, which leads the nation with the highest share of congested urban roads during peak travel time: 76%. Additionally, poor road conditions, lost time and additional fuel from congestion costs each driver $1,501 annually, according to "Future Mobility in Minnesota: Meeting the State's Need for Safe and Efficient Mobility," released by The Road Information Program (TRIP) research group.
Obama's jobs bill is the best option for infrastructure managers until Oberstar's $500 billion, six-year bill moves on to the Senate. Obama's proposal encourages merit-based infrastructure investment that leverages federal dollars through a combination of grants and loans, similar to the recovery act's TIGER program, the $1.5 billion grant program designed to promote innovative cleaner transportation projects that feature bike-sharing and public transit.
Obama essentially endorsed a plan by Pennsylvania's Rendell to create a national infrastructure bank without actually referring to it directly. The bank would be a public-private partnership that would evaluate and finance the largest projects by securing low interest rates with federal money while leveraging the private funds for long-term investments.
But Obama is trading long-term infrastructure investment for short-term political success. Heading into what's likely to be a contentious mid-term election year, the administration has set its sights on turning the highly unpopular Troubled Asset Relief Program (TARP) into a popular one by creating even more jobs. That effectively would delay decisions about long-term infrastructure funding even further. "That will push the reauthorization of SAFETEA-LU back to after the 2010 election (Nov. 2)," Rendell says.
"This effort has considerable support among House Democratic leaders and within our Caucus," Oberstar says of his bill. "We need political will and leadership to find a long-term solution to financing surface transportation investments. Taking a partisan approach to this issue will only serve to undermine efforts to pass serious legislation addressing the nation's current economic crisis and the need to transform surface transportation programs."