July | August 2017


Federal Transportation Bill Allows States To See The Road Ahead

by Sean Slone
"After 10 years of uncertainty and 36 short-term extensions, it’s wonderful to start the year with a five-year transportation bill,” U.S. Secretary of Transportation Anthony Foxx said to applause at the Transportation Research Board annual meeting in Washington, D.C., on Jan. 13.
Signed into law by President Obama on Dec. 4, 2015, the Fixing America’s Surface Transportation, or FAST, Act authorizes federal highway, highway safety, transit and rail programs through fiscal year 2020 and provides $305 billion in funding from the Highway Trust Fund and the General Fund. The legislation is the first long-term surface transportation bill passed by Congress since 2005.
None were happier to see the bill pass than state transportation officials.
“It is great as a department commissioner … to have some long-term funding prospects,” said John Schroer of the Tennessee Department of Transportation at the 2015 CSG National Conference in Nashville, Tenn., on Dec. 11.
For Tennessee, a state that relies on the federal government for 55 percent of its transportation budget, the FAST Act will have a significant impact.
“My federal budget is about $950 million a year,” said Schroer, who served as the 2015 vice chair of the CSG Transportation and Infrastructure Public Policy Committee. “The FAST Act will give us about $300 million more (over the five years). That’s nothing to sneeze at. That’s about $60 million more in additional funding (annually). … So for us, that’s a good-sized project.”
Perhaps more importantly, the federal legislation will help alleviate some of the uncertainty that prompted Tennessee—a non-debt state—to postpone transportation projects in recent years. Knowing what the next five years will bring from Washington also lets states know how much they have to come up with on their own to meet their transportation needs.
Tennessee is among a number of states this year looking at ways to increase state transportation revenues. Schroer and Gov. Bill Haslam toured the state last year to try to build
support for a revenue measure. The state last raised its gas tax in 1989. Since then, Schroer noted, the cost of paving a road has gone from $30,000 a mile to more than $100,000 a mile.
But the FAST Act also will be important for states that do have debt capacity and that already have addressed their own state transportation funding needs. Iowa, for example, was one of eight states that raised gas taxes in 2015.
“The stability and assurance are probably the biggest benefits (of the FAST Act) for states and certainly for Iowa,” said Stuart Anderson, director of the Planning, Programming and Modal Division at the Iowa Department of Transportation. “In Iowa, we have for the last four or five years fully programmed our expected federal funding. Some states for various reasons haven’t been able to do that. … The FAST Act doesn’t allow us to program more federal funding, but what it does do is it takes the risk out of the equation.”
While the FAST Act will create greater certainty for states and bring modest increases in highway and transit funding over the course of the bill—5 percent and 8 percent in the first year, 15 percent and 18 percent in 2020, respectively—some believe it was a missed opportunity to provide more sustainable funding for the Highway Trust Fund by raising the federal gas tax.
Instead, Congress maintained its philosophy of recent years of relying on general fund dollars to supplement gas tax revenues coming into the trust fund. While the 18.4 cents-a-gallon gas tax is expected to bring in $40 billion in revenues for the foreseeable future, the current $51 billion in spending commitments will rise to $59 billion a year under the FAST Act.
“At the end of 2021 … we’re going to have anywhere from $17 billion to $20 billion in annual shortfalls,” said Alex Herrgott, deputy staff director for the U.S. Senate Environment and Public Works Committee. “So if you’re going to do another six-year bill, you’re going to need about $120 billion, which is the equivalent of about a 20 cent gas tax increase. … We couldn’t even get 5 cents through.”
That’s why Herrgott and others believe the FAST Act may be the last bill of its kind. The good news for now, Herrgott said, is that the FAST Act has established a “new normal” for the federal program.
“Nobody five years from now in my mind is going to have an easy time cutting back into the meat of what we were able to establish,” he said. “We now have this unanimous bill that folks ordinarily would have voted against for spending purposes (but who) voted for it, press-released it and are campaigning on it right now.”