Deep divide evident in highway reauthorization debate

Republicans and Democrats are already at loggerheads over the draft of a six-year surface transportation funding reauthorization proposal released by the House of Representatives’ Transportation and Infrastructure Committee yesterday

Republicans and Democrats are already at loggerheads over the draft of a six-year surface transportation funding reauthorization proposal released by the House of Representatives’ Transportation and Infrastructure Committee yesterday. While Republicans are seeking to cap spending at roughly $35 billion per year, Democrats are preparing to issue a two-year reauthorization counterproposal that would beef up spending by an additional $6 billion annually.

In a public hearing on Capitol Hill, Committee Chairman John Mica (R-FL) said there are several “big items” driving his six-year reauthorization proposal: that it’s a multi-modal initiative, that is should “live within its means” in terms of funding, and that it aims to “streamline” the process for approving highway, rail and maritime infrastructure projects.

“Given U.S. House rules and budget constraints, this proposal maximizes the value of our available infrastructure funding through better leveraging, streamlining the project approval process, attracting private sector investment, and cutting the federal bureaucracy,” Mica said.

“More short-term extensions or a two-year bill are recipes for bankrupting the Highway Trust Fund (HTF),” he stated. “These options will cut the legs from under our states and hamper their ability to move forward with many needed, large-scale projects. This long-term plan is the only fiscally responsible proposal and will ensure the continued solvency of the HTF.”

Mica’s comment regarding a “two-year bill” is a reference to a proposal Senate Environment & Public Works Committee Chairman Barbara Boxer (D-CA) has been working on since last June. Her proposal includes a beefed-up Transportation Infrastructure Finance and Innovation Act (TIFIA) program on top of current funding levels – totaling some $6 billion in additional costs annually, equating to $12 billion over two years.

Mica noted his committee’s proposal authorizes approximately $230 billion in transportation funding over six years for highway, transit, and highway safety programs – complying with House Rule 21, which does not permit authorization of more funds than those collected.

Those HTF receipts are expected to amount to $37 billion in FY 2011 according to the Congressional Budget Office (CBO)— $31.8 billion to be credited to the Highway Account and $5.1 billion to the Transit Account, according to testimony by Joseph Kile, CBO Asst. Director, before the Senate Finance Committee this May.

Projecting this flow of revenue into the future, the HTF could be expected to receive approximately $220-230 billion over the next six-year period, 2012-2017. That’s assuming CBO's projection of a modest 1% annual growth in HTF revenue due to a rise in travel, without any increase in the rate of fuel taxation, according to C. Kenneth Orski, a public policy consultant and 30-year veteran transportation expert.

“No doubt, limiting future budget authority to tax revenues flowing into the Highway Trust Fund will necessitate significant cuts in spending [and] a figure of 30% is commonly cited as the expected reduction,” he noted.

“However, current expenditures have been inflated by a massive injection of stimulus funds from the American Recovery and Reinvestment Act of 2009— a total of $44 billion, including $27.5 billion for highways, $6.8 billion for transit and $8 billion for high-speed rail,” orski stressed. “A more accurate measure would be to compare the expected FY 2012 funding with pre-stimulus funding levels. In this comparison, the highway program would suffer a drop of 17%.”

Democrats, however, believe the Republican transportation funding proposal is “controversial” and “inadequate,” and went on to hold a separate press event condemning it.

“While we have yet to see much of the details of this legislation, based on the funding levels alone, it appears that this bill can best be called the ‘Republican Road to Ruin’ because it would take our nation in the wrong direction,” said Rep. Nick Rahall (D-WV), the Transportation and Infrastructure Committee’s ranking Democrat.

“The dramatic, mindless cuts proposed to surface transportation programs will destroy nearly 500,000 American jobs next year alone, undermine our nation’s long-term economic competitiveness, and jeopardize our economic recovery,” he added.

Rahall also said the six-year proposal also ignores what he termed the “well documented and long neglected infrastructure” spending deficit in the U.S.

“China currently spends 9% of its gross domestic product (GDP) per year on infrastructure investments, India spends 5% [but] the U.S. only invests 1.9%,” he stressed.

Yet Mica noted increasing the amount of transportation infrastructure investment would require more revenue and thus a tax increase – a step he said Congress will not take at this point in time.

“Congress will not support a gas tax increase, and this [draft] proposal does not raise taxes,” he explained. “Without an increase in revenue, other current options, such as a two-year bill, the Administrations’ proposal, or extending expired law at the current funding levels, all lead to the Highway Trust Fund going broke by 2013.”

Mica and John Duncan, Jr. (R-TN), chairman of the highways and transit subcommittee, also publicly invited Democrat committee leaders who are asking for higher spending levels to appear with them before the Ways and Means Committee to discuss revenue issues.

Industry groups, while generally supportive of Mica’s six-year reauthorization proposal, remain concerned over how reduced funding will impact U.S. transportation networks in the future – especially in terms of freight throughput.

“With a long-term, six-year funding period, provisions to streamline the permit process for new projects and a multi-modal focus, this bill is a significant step in the right direction,” said David French, senior vp-government relations for the National Retail Federation (NRF). “Nonetheless, there is significant concern that by relying on the constraints of the current HTF, it does not provide sufficient funding to meet the existing and future needs of the U.S. infrastructure.”

“Unfortunately, the [U.S.] transportation system has suffered from decades of underinvestment to the point that is has become inflexible and a drag on the economy,” added Matthew Shay, NRF’s president and CEO.

“The growing inefficiencies and bottlenecks in the system increase costs and make it increasingly more difficult for American companies to grow their businesses and create the new jobs essential to continued economic recovery and future growth,” he noted. “Congress and the Administration need to move as quickly as possible to improve and expand transportation infrastructure to handle growing freight needs, and to find the funding necessary to achieve that goal.”

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