Highway and Transit Funding: The Awkward Dance Continues

SURFACE TRANSPORTATION UPDATE
June 19, 2015

By Ann Warner
Managing Partner, Ann Warner LLC
Time is ticking on the Federal-aid Highway Program. The current Moving Ahead for Progress in the 21st Century Act (MAP-21) extension expires July 31st.

Drafting a Long-Term Bill
The Senate Environment and Public Works Committee, which has jurisdiction over the Federal-aid Highway Program, is set to mark-up a six-year re-authorization on June 24th. Details are few as to what this measure may include regarding policy initiatives and whether or not the measure would be consistent with current spending levels.

It seems as if Democrat and Republican staffs to the Senate Banking, Housing and Urban Development Committee (jurisdiction over public transportation) and the Senate Commerce, Science and Transportation Committee (safety) are drafting their respective titles for a six-year bill as well.

In the House, the intent of Transportation and Infrastructure Committee continues to be the same: a long-term bill.

Finding the Money
U.S. Rep. David Reichert (R-WA), Chairman of the House Ways and Means Select Revenue Measures Subcommittee has scheduled a June 24 hearing focusing on the repatriation of foreign earnings as a source of funding for the Highway Trust Fund (HTF).

This announcement follows a June 17 hearing during which the Ways and Means Committee discussed various options to fund the HTF in the long-term. It was clear with Chairman Paul Ryan’s opening remarks that the House Republican Leadership continues to strongly oppose raising the federal gas tax to help address both short and long-term funding problems. The Committee also acknowledged that it will take time to figure out and decide upon viable long-term solutions. Witnesses were:

• Chad Shirley, Deputy Assistant Director, Microeconomic Studies Team, Congressional Budget Office, whose testimony focused on the account balances of both the HTF and
• the Mass Transit Account, projected solvency status, and estimated revenues needed to continue the current MAP-21 authorized/contract authority levels. He offered an interesting statistic stating that private financing of public infrastructure projects only accounts for less than 1% of all highway spending over the last 25 years.
• Robert Poole, Director of Transportation Policy and Searle Freedom Trust Transportation Fellow, Reason Foundation. His prepared and oral testimony focused on the need to transition into different funding mechanisms, notably a mechanism based on Vehicle Miles Traveled (VMT). He also suggested a better utilization of existing federal tolling programs, which could include penalizing those states that have not participated in these programs.
• Bill Graves, President and Chief Executive Officer, American Trucking Associations. His testimony and remarks concentrated on the importance of the federal gas tax, saying it is still the most effective way to raise revenue and it needs to be raised.

On June 18, the Senate Finance Committee held its hearing, entitled “Dead End, No Turn Around, Danger Ahead: Challenges to the Future of Highway Funding.” Consistent with previous statements, Chairman Orrin Hatch (R-UT) acknowledged in his remarks the gravity of a continued difficult situation but reiterated his commitment to finding a long-term funding solution(s). Witness were:

• Dr. Joseph Kile, Assistant Director for Microeconomic Studies Division, Congressional Budget Office, Washington, DC. His testimony was similar to what his CBO colleague, Shirley, stated during the House Ways and Means Committee hearing the day before.
• The Honorable Ray LaHood, Senior Policy Advisor, DLA Piper, Washington, DC. Testifying as a co-chair of Building America’s Future, Secretary LaHood highlighted the steps that have been taken by the states whether that be: 1) state gas and/or sales tax increases; 2) new bond initiatives; 3) testing pilot programs featuring new state funding mechanisms; or 4) passing laws enabling private sector participation. He expressed frustration that the U.S. Congress has not been able to take action even though the states – many of them with a no-tax culture – have been able to successfully make the difficult decisions.
• Mr. Stephen Moore, Distinguished Visiting Fellow, The Heritage Foundation, Washington, DC. His testimony focused on the need to devolve the federal highway program by gradually reducing the level of the federal gas tax and allow the states to pay for their respective transportation infrastructure. This approach was met with strong opposition from several Committee Members and Secretary LaHood.

Similar to the House Ways and Means Committee, the Senate Finance Committee announced a second hearing to be held on June 25th entitled, “Unlocking the Private Sector: State Innovations in Financing Transportation Infrastructure.” Scheduled witnesses are:

• The Honorable Mitchell E. Daniels, Jr., President, Purdue University, West Lafayette, IN.
• The Honorable Shailen P. Bhatt, Executive Director, Colorado Department of Transportation, Denver, CO.

Summer Ending
Even if Congress does make progress prior to July 31st on a long-term funding solution(s), realizing it AND agreeing upon a six-year re-authorization bill will be extremely difficult to achieve by July 31st.

Chances are there will be another short-term extension either through the fall or through December which could allow Congress to finalize a six-year bill and the corresponding funding solution(s). If not, then we are looking at 2016 – the Presidential Election Year which provides its unique set of uncertainties and difficulties.

This column is adapted from an article written for Arizona Eye on D.C., the newsletter of Total Spectrum Arizona.

— Posted on June 19, 2015 at 2:54 pm by Ann