November | December 2014

 

 

 

 



There’s Hope for a Transportation Funding Bill in 2014, but not all Convinced

By Sean Slone, CSG Program Manager for Transportation Policy
A rare bit of bipartisanship on a water resources bill that sailed through both the Senate and the House recently is giving some in Washington, D.C., hope that Congress could reach agreement on a new surface transportation authorization bill—and perhaps funding to pay for it—before the current one expires next fall.
“The water resources bill, despite the fact that I think seven or nine conservative groups … wrote a fiery letter saying what horrible pork this is, passed the House of Representatives 417 to 3,” said Polly Trottenberg, Under Secretary for Policy at the U.S. Department of Transportation, at a recent CSG Transportation Policy Academy in Washington, D.C. “I think that shows fundamentally (with) transportation and infrastructure there is a lot of bipartisan support for it. … Even though there are a lot of pretty bitter divisions right now here in Washington.”
But delivering a successor to MAP-21, the 2012 legislation that authorized federal transportation programs, likely won’t be as easy. Congress must try to come up with a more permanent fix for the bankrupt Highway Trust Fund that has had to be propped up in recent years with multiple transfers from the general fund. The trust fund’s revenue source, the federal gas tax, hasn’t been raised in 20 years and is producing declining revenues. 
“The funding challenge is just profound,” said Trottenberg.
Some in D.C. are looking to neighboring Virginia and Maryland for possible solutions. In September, U.S. Senate Environment and Public Works Committee Chair Barbara Boxer said she favored a plan to do away with the per-gallon fee at the pump and replace it with a wholesale oil tax. Virginia eliminated its per-gallon excise tax earlier this year and added a sales tax on the wholesale price of gas, as well as a transportation-dedicated increase to the state’s sales tax on other products. Maryland kept its gas tax in place, but indexed it to inflation and approved a phased-in sales tax on fuel. 
Matt Garrett, Virginia’s assistant secretary of transportation, said from the very beginning of discussions about a transportation bill, Gov. Bob McDonnell wanted to find a way to replace Virginia’s gas tax, which had not been raised since 1986.
“He did not believe that just indexing the gas tax would be a long-term solution,” Garrett said. “Given that it took 27 years to get something done (this) time, we really wanted to … do something that we won’t have to deal with this issue for a really long time to come.”
Joshua Schank, president and CEO of the Eno Center for Transportation, a D.C.-based think tank and nonprofit foundation, told lawmakers it’s not written in stone that it’s necessary to have a user-fee-based system, like a gas tax, to fund transportation.
“I know that it feels like it is because almost every state does it and the United States federal government has done it since 1956,” he said. “But if you look at the rest of the world, no one else does it. … Most (developed) countries collect gas taxes that are far higher than ours… (and) they use those taxes to fund the general treasury and transportation competes like everything else for money.”
Emil Frankel, a visiting scholar at the Bipartisan Policy Center and former assistant secretary for transportation policy during the George W. Bush administration, said President Barack Obama’s personal leanings also might make a divorce from the user fee concept a possibility at the federal level.
“(Obama) has talked about transportation infrastructure more consistently, persistently than any President since Dwight Eisenhower,” Frankel said. “But he doesn’t seem to be much of a believer in using user-based funding to support the program. This Democratic president seems to be as strongly opposed to a gas tax increase and other user-based funding mechanisms as his predecessor, my boss, President Bush.”
Ultimately, Schank believes the challenges of finding a sustainable revenue source while dealing with massive deficit issues makes it unlikely that Congress can pass a new authorization bill on time in 2014. Others say it’s those latter concerns that could provide a window of opportunity, perhaps as part of a grand bargain that would somehow incorporate infrastructure investment.
“I think there’s pretty good agreement that getting some kind of a stand-alone Highway Trust Fund revenue fix as part of the reauthorization bill is going to be a very, very tough slog,” said Joung Lee, associate director for finance and business development at the American Association of State Highway and Transportation Officials.
Frankel, though, is pessimistic about the prospects of any such agreement taking shape in 2014; he predicts extensions for the next two or three years, then another short-term bill, all paid for with what Frankel says are ill-advised, unsustainable transfers from the general fund. Such a delay in the next authorization bill is likely to have profound consequences for states and their infrastructure, warned Sarah Kline, research director for the D.C.-based advocacy coalition Transportation for America and a former Senate staffer who worked on previous transportation bills.
“I think that the impact on projects, the increased costs to states and localities from having to borrow more because there’s a risk of whether the federal funds are actually going to come in, there’s a cost to that, a cost to the delay and even the uncertainty of federal funding,” she said.
That’s why many are hoping Congress will be able to find inspiration in state efforts like the one this year in Virginia.
“This was a true compromise and it was a true bipartisan effort,” said Virginia House Speaker William Howell. “I like to tell people now that this is how Washington should work. … We do have the ability to reach across party lines and reach across the aisle. We do have the ability to come up with compromises.”

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