Lawmakers, Administration move on highway funding reauthorization

Road and bridge construction stakeholders are tracking two major developments in Washington, D.C., as the Highway Trust Fund balance dwindles and the current federal highway funding program expires at the end of September.

The Senate Environment and Public Works (EPW) Committee released a bipartisan, six-year surface transportation bill that would maintain spending on federal-aid highways at current levels plus inflation. The $252 billion bill would authorize new spending on freight programs, add award grants for states’ best practices that save time and costs, and maintain low-interest TIFIA infrastructure loans at current levels, according to the National Stone, Sand & Gravel Association.

EPW Chairman Barbara Boxer (D-Calif.) and ranking member David Vitter (R-La.) announced in a statement that the “MAP-21 Reauthorization Act” would provide states and localities with certainty and create jobs. It authorizes $38.4 billion out of the Highway Trust Fund for fiscal year 2015, FY 2016–2020 outlays climbing with inflation from $39.2 billion to $42.6 billion. TIGER grants, currently funded at $600 million, would drop to $400 million, but the bill would add a program authorized to spend up to $125 million per year for awards to states that show special innovation or efficiency.

As expected, NSSGA Government Affairs staff notes, the draft bill does not include a new funding plan, as that jurisdiction lies with the Senate Finance Committee. Chairman Ron Wyden (D-Ore.) convened a hearing to study the various options and proposals on the table in order to come up with about $18 billion per year of new revenue to fund the EPW bill. Any final bill would have to merge the EPW and Finance Committee plans with forthcoming titles from Senate Banking and Commerce committees to address transit and highway safety needs.

Associated General Contractors of America CEO Stephen Sandherr offered an encouraging take in a statement on the EPW measure: “The fact that a new highway and transit bill proposed by Sens. Vitter and Boxer received the bipartisan backing of the Senate Environment & Public Works Committee shows members of both parties understand the value of investing in our aging surface transportation systems. This bill will make it significantly easier for state and local transportation officials to plan for and fund projects to rebuild bridges, repair roads and improve transit options. More important, it continues the work started in the prior transportation law of streamlining the federal review process so new projects can be reviewed and approved within a more reasonable time frame.

“Senators and representatives from both parties should follow the Committee’s lead and swiftly pass this vital economic measure before the current legislation expires at the end of September. They also must act now to keep the federal Highway Trust Fund solvent for years to come. As our national highway system ages and many roads and bridges exceed their life span, members of Congress need to figure out how we are going to cover the growing costs of maintaining and expanding these critical public assets. If we don’t, too many businesses and commuters will be forced to bear the cost of more traffic delays, crashes and vehicle repairs as billions of dollars worth of construction projects come to a halt this summer.”

AGC members, he concluded, “Will continue to participate in the Hardhats for Highways campaign that is designed to educate members of Congress about the many local economic benefits of investing in our roads, bridges and transit systems. Construction workers and owners participating in this campaign have sent nearly 6,000 messages to 406 members of Congress urging their support for a new surface transportation bill and new revenues for the Highway Trust Fund. We will continue to make our case across the country and in D.C. until we have sustainable, robust funding in place and a new federal transportation law enacted.”

Grow America Act
Days prior to the EPW bill release, U.S. Transportation Secretary Anthony Foxx floated a four-year funding proposal to Capitol Hill, where House and Senate members face looming deadlines to avoid the ensuing economic uncertainty and job loss if the Highway Trust Fund runs out of money this summer. His Grow America Act lays the foundation for long-term competitiveness, rebuilding crumbling roads and bridges while providing certainty for local and state governments and addressing the country’s future needs. The proposal would increase annual federal highway and public transportation investment upwards of $10 billion and $7.5 billion, respectively, from FY 2015–2018.

“Failing to act before the Highway Trust Fund runs out is unacceptable and unaffordable,” said Secretary Foxx. “This proposal offers the kind of job creation and certainty that the American people want and deserve … Members of both parties are already working together to solve these challenges, and I look forward to continuing our discussion and to supporting and building on the good work that’s already been done.”

Secretary Foxx had joined President Obama earlier this year to announce a plan to address the nation’s infrastructure deficit with a $302 billion, four-year surface transportation reauthorization proposal. As outlined in the FY2015 budget, it would invest in the national infrastructure network, increase safety and efficiency, and provide greater access to ladders of opportunity—all without adding to the deficit, the Administration contends, by relying on the president’s proposed pro-growth business tax reforms.

The Grow America Act is based on that plan, and represents a number of proposals that have historically attracted bipartisan support:

Addressing the Highway Trust Fund shortfall and providing an additional $87 billion for the nation’s backlog of deficient bridges and aging transit systems;

Increasing safety across all modes of surface transportation, and raising civil penalties the National Highway Traffic Safety Administration can levy against automakers who fail to act quickly on vehicle recalls;

Providing certainty to state and local governments that must engage in long-term planning;

Reducing project approval and permitting timelines while delivering better outcomes for communities and the environment;

Bolstering efficient and reliable freight networks to support trade and economic growth; and,

Creating incentives to better align planning and investment decisions to comprehensively address regional economic needs while strengthening local decision-making.

“Grow America makes the sizable investment needed to improve our country’s roads and bridges,” affirms Deputy Federal Highway Administrator Gregory Nadeau. “Improving U.S. infrastructure is a national priority, and will ensure America’s economy remains robust for generations yet to come.”

In the face of current uncertainty of federal transportation investment, many states have postponed or canceled needed transportation projects altogether, U.S. DOT officials note, adding that without additional investment, deficiencies in the nation’s infrastructure will cost businesses more than $1 trillion every year in lost sales.  Despite this growing need, the Highway Trust Fund, which provides most of the federal support for state transportation projects, is on track to start bouncing checks as early as August.

Highway Trust Fund Ticker
Acknowledging a limited stream of federal gasoline and diesel fuel tax receipts, the U.S. Department of Transportation closely tracks the Highway Trust Fund balance’s downward trajectory.

Taxing maneuvers
The Grow America Act does not contain a specific, dedicated revenue proposal, according to an American Road Transportation Builders Association (ARTBA) analysis. The proposal calls for transferring $150 billion in revenue from a rewrite of the nation’s corporate tax laws to the Highway Trust Fund. While that concept for replenishing the fund is similar to what House Republicans have advocated, the trust fund’s revenue crisis will materialize in a matter of months and Congress will not be considering tax reform in 2014. For FY 2015, the Administration proposes an obligation limitation for the federal highway program of $47.3 billion, a $7.0 billion increase over FY 2014’s $40.3 billion ceiling. The limitation would grow in subsequent years.

Only three major changes are proposed in Grow America Act to the existing Moving Ahead for Progress in the 21st Century (MAP-21) highway program structure:

First, the Administration proposes to create a new Fixing and Accelerating Surface Transportation (FAST) program, which would provide $500 million each year of the bill to generate long-term systematic innovations and reforms in surface transportation.

Second, the Administration would upgrade freight policy with dedicated funding of $10 billion over four years.

Third, the Administration proposes a “Fix-it-First” initiative called the Critical Immediate Investments Program. It would allocate $13.4 billion over four years to “reduce the number of structurally deficient Interstate Highway System bridges, target safety investments and support a state of good repair on the National Highway System.” Funding for all three is included in the highway total.

Total highway funding, including the FAST proposal and funds not subject to the obligation limitation, would be $48.6 billion, up from $41.0 billion in FY 2014. The total would grow to $51 billion by FY 2018. Part of nearly $200 billion allocated for the Highway Program, the proposed $10 billion “Multimodal Freight Investment Program,” growing from $1 billion in FY 2015 to $4 billion in FY 2018, consists of two elements. A “Multimodal Freight Incentive Program” would apportion half the funds among the states by formula for capital projects on approved state freight plans, with 40 percent of a state’s funds for in-state improvements and 60 percent for cooperative improvements involving at least one adjacent state.

Remaining funds would be reserved for the Transportation Secretary to fund the “National Freight Infrastructure Program,” which would provide grants to states, local governments, metropolitan planning organizations and public transportation authorities on a competitive basis for projects that reduce freight costs, remove bottlenecks, improve safety or increase the state of good repair of the freight network. Funds could be used for improvements to any element of the national freight network, including roads, rails, landside infrastructure on ports and airports, and intermodal connectors.

The proposed freight program recognizes that the federal government has an important role in facilitating safe and efficient freight movement in the United States as ARTBA articulated with its proposed 2007 Critical Commerce Corridors national goods movement program. Of concern, however, is that the proposal would, for the first time, allow revenues deposited in the Highway Account of the Highway Trust Fund to be used for improvements to railroads and ports.

The Administration’s reauthorization proposal would provide a four-year total of $72.3 billion for public transportation. There would be a big jump in funding in FY 2015 to a total of $17.6 billion, up from $10.7 billion in the current fiscal. This would grow to $18.7 billion by FY 2018. Most of the proposed increase would be for the Formula and Bus Grant programs, which provide funds to transit agencies around the country for capital improvements and vehicle purchases.

Funding for the Capital Investment Grants (New Starts) program, which is the source of federal funds for major subway and light rail construction projects, would be increased to $2.5 billion in FY 2015 from $1.9 billion in FY 2014. This would grow to $2.9 billion by FY 2018, for a four-year total of $10.8 billion. In addition, funding for the New Starts program would be shifted from the general account to the Mass Transit Account, which means it would no longer require an annual appropriation.

The Grow America Act proposes two new transit measures. A Rapid Growth Area Transit Program would provide $500 million in FY 2015, and a four-year total of $2.2 billion, for bus rapid transit, while the transit part of the FAST program described above would have $500 million per year. The Administration also envisions transitioning the Highway Trust Fund into a multimodal Transportation Trust Fund (TTF). In addition to the existing Highway and Mass Transit Accounts, the TTF would include a Rail Account that would fund intercity and passenger rail improvements and a Multimodal Account that would fund competitively awarded surface transportation grants.

All surface transportation programs including those currently funded from the General Fund, such as the TIGER program and the transit Capital Investment program, would be moved into the TTF. The Administration proposes to reclassify this fund as mandatory spending, which would not be subject to the annual appropriations process. This reform would make the fund’s budgetary treatment comparable to that of Social Security and interest on the national debt.

To assure that the trust fund has sufficient revenues, the Administration proposes to inject a total of $150 billion into the Highway Trust Fund between FY 2015 and FY 2018, with the funds coming from the proceeds of proposed corporate tax reforms. Of this, $74.4 billion would go into the Highway Account, $51.6 billion into the Mass Transit Account, $19.1 billion into the Rail Account and $5 billion into the Multimodal Account.

As part of its surface transportation reauthorization plan, the Administration is proposing a major revamping of the federal programs that fund intercity passenger rail, including Amtrak. The current operating and capital investment programs for Amtrak would be replaced with two new entities. A proposed Current Passenger Rail Service program would provide funding for repairs to passenger rail and resources to continue long-distance rail service. A proposed Rail Service Improvement Program would fund development of high-speed intercity rail and rail safety improvements. The Administration requests $4.8 billion for these two rail programs in FY 2015, up from $1.6 billion in FY 2014, and a four-year total of $19 billion. Funds would come from the proposed Rail Account of the TTF. Federal investment in passenger rail has required separate legislation in the past and would be a new element in the surface transportation bill.

The Administration proposes to more than double funding for the National Infrastructure Investments program, popularly known as the TIGER program, from $600 million in FY 2014 to $1.25 billion in FY 2015. The same amount is proposed for each of the next three years, for a four-year total of $5 billion. Funding for the TIGER program, which provides competitive grants for improvements of national or regional significance in all transportation modes, is in addition to the regular highway and mass transit programs and has come from the general fund, not the Highway Trust Fund. Under the Administration’s proposal, the TIGER program would get its own National Infrastructure Investments Trust Fund, with the money coming from the new Multimodal Account of the TTF. The Administration is also proposing a new $4 billion competitive grant program focused on innovative projects to improve transportation performance, productivity and cost-effectiveness.

“We welcome the Administration’s involvement in the reauthorization debate through introduction of a multi-year reauthorization bill. It is essential that Congress act now to address the funding crisis facing the Highway Trust Fund and then move to pass a multi-year reauthorization bill before expiration of the current law on September 30,” said NSSGA Chairman Paul Detwiler III (New Enterprise Stone & Lime Co.)

NSSGA President and CEO Mike Johnson commended Foxx and the White House for coming forward with a multi-year reauthorization bill. “Funding to stabilize and provide future solvency to the Highway Trust Fund is essential,” he affirmed. “The provisions intended to further expedite permitting of projects and environmental reviews will also assist in moving forward many needed projects.”

“We are somewhat concerned the Administration is relying on business tax reform to fund the bill. While we support tax reform, it seems unlikely Congress will be able to pass major tax legislation before the end of the year,” Johnson observed. “There is broad agreement that an efficient and cost-effective surface transportation program is essential to economic growth, job creation and preserving America’s global competitiveness. The clock is ticking. Congress, working on a bipartisan basis, should meet with the Administration to deal with this pressing issue now.”