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$11.4 Billion Cut in Federal Transportation Spending Recommended

Posted by Larry Ehl on Monday, October 8th, 2012

Transportation Issues Daily

The fiscal cliff and automatic budget cuts could be avoided by cutting$11.4 billion from federal transportation spending in 2013 and $187 billion over ten years. The recommended reductions from Taxpayers for Common Sense are part of a $2 trillion package of cuts to “inefficient, ineffective, or wasteful” programs and projects that would solve the fiscal cliff and prevent the indiscriminate automatic, across-the-board budget cuts. The cuts are detailed in a new report, “Sliding Past Sequestration.”

Here are the transportation pieces of the $2 trillion in spending cuts.  Click on the report link above to read about recommended cuts to Army Corps programs.

 Eliminate the following:

General fund transfers to Highway Trust Fund: $109.6 billion over ten years

In recent years, Highway Trust Fund (HTF) balances are increasingly unstable due to reduced growth in vehicle miles travelled and increased fuel economy of the nation’s cars and trucks. In a series of short‐term fixes since 2008, Congress made three transfers totaling $34.5 billion from the nation’s general revenues to keep the HTF in the black, and the most recent reauthorization (MAP‐21) relies on another almost $20 billion Treasury bailout. Even with these transfers, the Congressional Budget Office estimates that current spending levels will exceed gas tax revenues by $110 billion between 2014 (when MAP‐21 expires) and 2022. This difference would have to be made up by additional transfers from the General Fund because federal law prohibits the HTF from incurring negative balances. Use of general revenues adds to the nation’s trillion‐dollar deficits, undermines the “user‐fee” basis of the trust fund, and provides no incentive for the efficient building or maintaining of the transportation network. Congress should either locate new revenue sources to shore up the HTF or downsize the federal highway program so that spending matches revenues.

 General fund transfers to Airport and Airway Trust Fund Cut: $50.0 billion | $5 billion

According to the Government Accountability Office, Airport and Airway Trust Fund revenues have fallen short of Federal Aviation Administration estimates in nine of the last 11 years. To make up the difference, Congress annually transfers approximately $5 billion each year to cover the shortfall instead of cutting spending or improving how revenue estimates are done. As a result, collections will fall short of spending by $50 billion over the next decade.

 Airport Improvement Program Grants to General Aviation Dominated Airports Cut: $22.0 billion | $2.2 billion

The Federal Aviation Administration’s (FAA) Airport Improvement Program (AIP) — supported largely by airline ticket taxes — provides planning and development grants for large and small airports. The program includes general aviation airports that serve only recreational, cargo, and corporate jets, not the airline passengers or airlines that ultimately pay the taxes. This cross‐subsidy shifts money away from crowded commercial airports that struggle to expand under chronic congestion and outdated infrastructure. Congress should discontinue program grants for general aviation airports.

 Advanced Technology Vehicles Manufacturing Program Cut: $4 billion | $4 billion

The federal government provides several incentives to buyers and producers of electrical vehicles (EV) to encourage their production and purchase, including a $25 billion direct loan program for manufacturers of automobiles and automobile parts. According to the Congressional Budget Office, Congress appropriated $7.5 billion to cover the subsidy costs of loans made by the program, and of that amount approximately $4 billion still remains unspent. It should be noted that taxpayer savings from eliminating future loans from this program could end up being even higher, as any loan carries the risk that it will not be repaid. In that case, the taxpayer burden would be the subsidy cost plus the loan itself.

 Essential Air Service (EAS) Program Cut: $1.86 billion | $186 million

The Essential Air Service (EAS) program was launched as a temporary program in the late 1970s to ease the transition to airline deregulation by subsidizing commercial flights to the nation’s rural airports. Many of the cities served by this program can be found within reasonable driving distance from airports with unsubsidized flights. For example, the 50 minute flight from Lebanon, New Hampshire to Boston, Massachusetts receives a subsidy of $287 per passenger when it’s only a little over an hour drive to another large airport, Manchester‐Boston Regional Airport. Other EAS flight subsidies can amount up to $1,000 per passenger. Eliminating this program from the FAA’s budget has the potential to save $1.86 billion over a 10‐year period.

 Tax Credits for New Plugin Electric Drive Motor Vehicles Cut: $1.86 billion | $39 million

The federal government provides several incentives to buyers and producers of electrical vehicles (EV) to encourage their production and purchase. One such incentive is an up to $7,500 income tax credit for the purchase of a new EV, depending on the capacity of the vehicle’s internal battery. This tax credit was created in the American Recovery and Reinvestment Act of 2009 (stimulus). The Joint Committee on Taxation estimates the cost of this tax expenditure to be $1.86 billion between 2013 and 2019.

 Taxpayers for Common Sense also suggests eliminating funding for the following projects. This is a little misleading, I think, because this is funding that’s not yet allocated to these projects as far as we know.

XpressWest (formerly DesertXpress) High Speed Rail – Nevada and California Cut: $6.5 billion

The XpressWest project would connect Victorville, CA (approximately 85 miles from Los Angeles) with Las Vegas, NV. The $6.9 billion project has asked for a $6.5 billion direct loan through the federal Railroad Rehabilitation and Improvement Financing (RRIF) program, which would be more than ten times the amount ever awarded through the program. Questions have also been raised regarding the ridership and revenue forecasts upon which the application is based. This project has taxpayer disaster written all over it, and the loan application should be rejected.

Interstate 73 Project – South Carolina Cut: $2.4 billion

The $2.4 billion interstate — no more than 50 miles from an existing, high‐capacity U.S. highway — will be the most expensive transportation project in South Carolina’s history and is estimated to shorten current travel times to the Myrtle Beach region by no more than 15 minutes. Furthermore, simply upgrading the parallel highway would meet every goal being outlined by the interstate proponents yet cost only $150 million. With only 33 percent of South Carolina’s existing roadways in “good” condition, taxpayers are left wondering why South Carolina is pushing to build this wasteful, federally funded interstate while neglecting long‐needed repairs.

Knik Arm Crossing – Alaska Cut: $1.5 billion

The sister project of the now infamous “Bridge to Nowhere” would link Anchorage to the sparsely populated area around Point McKenzie in the Mat‐Su Valley. The project can only be built with a public private partnership, which would be paid for through the collection of a bridge toll, and a large loan guarantee from the federal Transportation Infrastructure Finance and Innovation Act (TIFIA) program. But traffic estimates appear overly optimistic, and therefore the expected toll revenue is almost sure to fall short of paying for the project for many years after it is built. This would likely leave federal taxpayers on the hook for untold millions of dollars to make up the shortfall.

Columbia River Crossing – Oregon and Washington Cut: $1.25 billion

This project would construct a highway‐transit bridge over the Columbia River to ease Portland‐bound commuter congestion. The $3.6 billion project is estimated to reduce morning commute times by only 60 seconds. Furthermore, state transportation departments are justifying the project with an estimated 45 percent increase in vehicle crossings by 2030, a percentage based on 2005 fuel prices. With substantial portions of the project to be paid for with tolling the new bridge facility, local leaders and stakeholder groups are sounding alarm over the project’s faulty traffic projections. Federal taxpayers have already footed $110 million to make these flawed analyses. Congress should deny state requests for one‐third of the project’s billion dollar price tag and require more cost‐effective alternatives.

Outer Bridge Portion of Ohio River Bridges Project – Indiana and Kentucky Cut: $550 million

The outer, or eastern, bridge portion of this project would be a new interstate highway (I‐265) and Ohio River bridge in the eastern suburban area of Louisville. It would connect the Gene Snyder Freeway in Kentucky (KY 841) to the Lee Hamilton Highway in Indiana (State Road 265). The project, which the Environmental Protection Agency calls “redundant”, is a developer’s dream. It would open up vast quantities of land in Indiana for development. Ground was very recently broken on this project, meaning there is still time to stop it before it devours an enormous chunk of taxpayer dollars.

Juneau Access Road – Alaska Cut: $500 million

The Juneau Access project would consist of a new 50‐mile road out of Juneau connecting to a ferry terminal for the last 18‐mile journey to connect to either Haines or Skagway, with driving access to the interior of the state. Due to the treacherous terrain, the road would be closed at least one month every year, and the journey would likely require several days of driving in each direction from most parts of Alaska. In addition, the challenging terrain makes construction difficult at best and raises significant questions about cost overruns and project feasibility. Most of the funding for this project has not yet been identified, but proponents assume that the vast majority will come from federal taxpayers.

Gravina Island Access – Alaska Cut: $300 million

Yes, the “Bridge to Nowhere” lives on. Though the bridge project was cancelled by then‐Governor Sarah Palin in late 2007, the state completed construction of the $26 million 3‐mile Gravina Access Highway, which would have served as the bridge access if the bridge was built. To avoid having to pay back to the federal government the money it spent on this “highway”, the state is conducting an assessment of the project to show how it will utilize the newly constructed road. The assessment is underway, but this charade should be stopped once and for all, and taxpayers assured that this monstrosity is killed for good.

Charlottesville Bypass (VA) Cut: $244 million

The proposed Charlottesville Bypass is a 6.2 mile, four lane limited access highway intended to act as a reliever route for the congested U.S. 29 corridor. This bypass is extremely expensive as compared to other similar projects and will cost almost $40 million per mile. Furthermore, state transportation officials found that none of the bypass alternatives would have much, if any, impact on the “F level of service” rating on the existing U.S. 29 corridor. More fiscally responsible alternatives such as overpass and design improvements to U.S. 29 have shown promise of achieving the same goals without the local opposition that has developed against the bypass. Congress should block any federal funding for this wasteful roadway.

Larry Ehl is the founder and publisher of Transportation Issues Daily. In the public sector, Larry was Federal Relations Manager for Washington State DOT; Chief of Staff to US Senator Slade Gorton; and was twice elected to the Edmonds School Board.

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