July | August 2017





The Future of the Federal Role in Transportation

By Sean Slone, CSG Program Manager for Transportation Policy
When the current federal surface transportation authorization bill, known as MAP-21, expires at the end of September, it likely will be replaced with a status quo plan.
Both the Obama administration and the Senate Environment and Public Works Committee recently have opted for a status quo approach to the role the federal government traditionally has played in sustaining the nation’s transportation system.
But a chorus of voices is once again advocating for a radical rethinking of those traditional federal and state roles in the transportation arena. Some see 2014 as a turning point since the federal Highway Trust Fund, which finances more than $50 billion a year in highway, bridge and transit projects, also appears past due for restructuring.
“The problem is the gas tax,” Rohit Aggarwala, an adviser to former New York City Mayor Michael Bloomberg and professor at Columbia University, wrote in a piece for Bloomberg View last year.
“(The gas tax) has declined in value drastically since it was last increased in 1993—even as the price of gas itself has tripled. As a result, both the main Highway Trust Fund and its transit account (often called the transit trust fund) are bankrupt.”
Aggarwala will be among the presenters on a CSG Policy eCademy, “Future of the Federal Role in Transportation,” 2-3 p.m. May 29.
The trust fund’s highway account is expected to dip below the critical $4 billion level as early as July. If Congress doesn’t act and the fund is allowed to dwindle that low, the U.S. Department of Transportation says it would be forced to slow reimbursements to states—more than 117,000 road and transit projects could be delayed and as many as 700,000 construction jobs could be put at risk.
While a gas tax increase could shore up the trust fund—at least temporarily—many believe such a move is highly unlikely to win bipartisan support in an election year.
Aggarwala advocates raising the gas tax, but says Congress, in its current polarized state, has been unable to do it. So he offers another option.
“A strong, smart, well-funded federal program would be great,” he wrote. “But if Congress can’t pass one now, it should just get itself out of the way, by eliminating the federal gas tax entirely and cutting Washington’s role in surface transportation.”
Aggarwala argues such a move would actually lead to more investment in infrastructure, enhance state autonomy, streamline decision-making and encourage greener transportation policies since without federal transportation dollars, many car-centric states would choose to reduce spending on new roads.
But Emily Goff of the Heritage Foundation, who also will participate in this month’s webinar, believes part of the problem is that too many Highway Trust Fund dollars have gone to fund too many nonhighway projects in recent years.
Congress allocated $809 million in the 2013 fiscal year for bicycle and walking paths, sidewalks, community preservation initiatives and other items Goff believes have little to do with the people who pay the federal gas tax
“Not only are these spending diversions unrelated to surface transportation policy, but they do little to mitigate traffic or shorten commutes,” Goff wrote in an April 2014 backgrounder brief for Heritage co-authored with Matthew Grinney. “There is no reason for the federal government to direct the funding for inherently local decisions like these.”
Goff and Grinney noted that some Republican members of Congress recently have proposed measures that would either lower the gas tax and eliminate federal mandates on states or allow states to opt out of the federal highway program.
“Today’s federal highway program contradicts the logic of the Constitution, which reserves to the state and local governments authority over purely local affairs, by imposing federal mandates that dictate how states can spend their gas tax dollars and manage transportation projects,” they wrote.
The Heritage team advocates that Congress eliminate transportation alternatives and mass transit from the federal highway program in the next highway bill.
“These activities are of local, not federal, concern,” they wrote. “… Transportation decisions should be brought closer to the citizens because state and local governments know much better than Washington what their priorities are.”
David Levinson, a professor at the University of Minnesota, also believes Congress should rethink and reprioritize what the Highway Trust Fund is used for. Levinson, another participant on this month’s webinar, co-authored a brief for the Brookings Institution’s Hamilton Project in 2011 with a title that gives a good idea of his position: “Fix It First, Expand it Second, Reward It Third: A New Strategy for America’s Highways.”
Levinson and co-author Matthew Kahn of UCLA propose that all revenues from the existing federal gas tax and tolls be redirected away from construction of new transportation projects and go “primarily to repair, maintain, rehabilitate, reconstruct and enhance existing roads and bridges.”
But new projects wouldn’t be left entirely high and dry under their proposal. They proposed a Federal Highway Bank to provide state funding to build new and expand existing roads. Funding would be contingent on strict performance criteria, such as a cost-benefit analysis.
“States would be required to demonstrate an ability to repay the loan through direct user charges and by capturing some of the increase in land values near transportation improvements,” they wrote.
The third prong of the duo’s proposal would involve rewarding states and local governments that exceed performance standards and achieve socially desirable outcomes on transportation projects in such areas as capacity, safety, equity and environmental improvement. A newly created Highway Performance Fund would reward states with subsidized loans and performance bonuses.
Performance and rewards are also a key focus in the policy proposals of the Washington, D.C.-based advocacy coalition Transportation for America. The organization’s director, James Corless, will be the fourth participant on this month’s webinar.
A publication on the group’s website believes the next authorization bill should “(e)stablish a national program of merit-based grants to help state and local applicants accomplish projects that fix existing infrastructure and improve critical links for moving people and freight.
“Within states, give local communities increased access to federal funds, through mechanisms such as state-administered competitive grants or additional sub-allocation of funds, to help them meet pressing local transportation challenges; and reward communities that take action to address long-term transportation challenges—such as raising local revenues—with opportunities for additional funding,” says the publication, “Building on MAP-21: Renewing a Federal Commitment to Transportation.”
Unlike others, however, Transportation for America also argues in favor of replenishing “a stand-alone transportation trust fund with dedicated revenue for all modes of surface transportation” and providing “a multi-year commitment of funds to give states and local communities the certainty they need to undertake major projects.”
“Even as the nation’s trust fund teeters on the brink of insolvency, lawmakers in Congress need to pass a new federal transportation bill,” the brief reads. “These challenges, as difficult as they are, present an opportunity to re-evaluate—and reinvigorate—the federal transportation program in ways that will boost today’s economy and ensure future prosperity.”

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