July | August 2017






Another Cliffhanger for Transportation Funding?

By Sean Slone, CSG Program Manager for Transportation Policy
WASHINGTON, D.C.—U.S. Secretary of Transportation Anthony Foxx began his speech at last week’s Transportation Research Board—commonly called TRB—meeting by showing a clip from “Raiders of the Lost Ark.” The one where Indiana Jones snatches the golden idol, but in the process triggers a chain reaction of crumbling walls, rolling boulders and other defense mechanisms.
His point?
“We’ve been moving from crisis to crisis,” he said. “I’ve been in this role for 18 months and over the course of that 18 months, we’ve had sequestration budgets that have constrained us, a shutdown that stopped us and a highway cliff—part one—that threatened to really stop work in states all across America. And even as we sit here today, we know that in a few short months—May 31 to be exact—we may be facing part two of the highway cliff.”
That’s when the federal Highway Trust Fund is expected to run out of money and an extension of MAP-21, the 2012 legislation authorizing the federal surface transportation program, will expire. It will come at a bad time for many state departments of transportation: the start of the all-important highway construction season.
But, of course, they’ve seen this movie before.
“We don’t know what’s going to happen May 31,” said John Schroer, commissioner of the Tennessee Department of Transportation and vice chair of CSG’s Transportation Public Policy Committee. “We didn’t know what was going to happen Aug. 1 (the last time the trust fund was due to become insolvent). We were all prepared for lots of things and trying to plan for lots of things and all (Congress) did was … kick the can down the road until May 31.”
The uncertainty about the May deadline and whether the federal funding will be there forced Schroer last fall to push back $400 million in projects from Tennessee’s 2015 bid list since the state relies on a pay-as-you-go approach to transportation funding.
Arkansas announced late last year it also was pushing back three projects valued at $30 million from a January bid letting. Additional projects could be delayed since another round of bids is scheduled for March.
“I think that May deadline … is even more troublesome than running out of cash in August because (of) our construction season coming up,” said Charlie Zelle, commissioner of the Minnesota Department of Transportation. “The uncertainty at that time of year, I think, is hard to describe to our (congressional) delegation and others. The fact that you don’t even know is already damaging. The damage has already started.”
While not every state has had to delay projects or bid lettings, the uncertainty is having an impact.
“We’re putting projects out the door right now for the spring/summer construction season and I don’t think everybody realizes that,” said Joan McDonald, commissioner of the New York State Department of Transportation.
Tony Tata, secretary of transportation for the fourth fastest-growing state in the country, North Carolina, says his state is full speed ahead—for now.
“If we don’t get the funding, there’s this cliff that we could drive right over and we’ll have to stop doing a lot of things,” he said. “I don’t think we’ll get to that and certainly I’m not being alarmist with our (congressional) delegation, but it is disconcerting that 48 percent of our budget hangs on what happens in May.”
State DOT leaders expect the most likely scenario is that Congress will pass another temporary extension at roughly current funding levels to get through the end of the fiscal year in September in hopes that a more permanent solution might be ready. But by then, the politics of 2016 likely will be in full swing. Schroer recalled that 2005’s SAFETEA-LU authorization bill was extended 10 times before Congress finally approved the two-year MAP-21 in 2012.
“It’s literally impossible to do a good job at what we do with those things (being) the case,” he said. “It is critical that Congress … wake up and smell the coffee. …We are facing a crisis. … We’re not crying wolf.”
But Schroer and others conceded that part of the reason the crisis has not reached critical mass is that states have been effective at doing what they can with what they have.
“I think state DOTs, we’ve become, to be honest, our worst enemy because … we’re becoming more efficient, we’re doing more with less, we’re being thoughtful about where funds are going,” said Minnesota’s Zelle. “We’re also doing a good job of (saying) ‘Don’t worry, we’ll make it work.’ … We’re getting to a point where … (how) do we create the urgency?”
New York’s McDonald said states should “continue to let decision makers know that while we are being efficient, that it’s not enough. We need more. … And it’s going to need to be a revenue increase.”
As to what that revenue increase might look like, Zelle has a couple of ideas.
“I think the motor fuel tax, as inefficient as it is, is probably the best near-term solution,” he said. “I like the idea of the states that go to a gross sales tax—which is really a gas tax that just adjusts every year. … And I think long-term … some kind of mileage-based (system). What are the systems, what are the (revenue) mechanisms of the future? That’s got to come from us states coming together and figuring it out.”
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