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What Lies Ahead for Transportation in the 112th Congress?

Posted by Ken Orski on Monday, January 24th, 2011

Innovation NewsBriefs
Vol. 22, No. 3

As Congress gets back to business and awaits the President’s State of the Union address and his Budget Message, here is how informed observers view the prospects for transportation in the days ahead. Our prognosis is  based on published reports and informal conversations with members of the Washington transportation community, congressional sources and fellow journalists and reporters

Congressional action on transportation this year, including the shape of the next surface transportation bill, will be inevitably influenced by the changed political geography of the 112th Congress. Not only will the level of funding for transportation be dictated by new, fiscally conservative House majority , but the program priorities will be influenced by a newly elected GOP representation that largely hails from small-town and suburban America.

The freshly re-constituted House Transportation and Infrastructure (T&I) Committee is comprised of 33 Republicans and 26 Democrats, a net decrease of 16 members. Of the 33 Republicans, 20 are newly elected House members and only 13 are committee veterans with transportation experience. A majority of the new GOP members come from the heartland and none of them represent big city transit-oriented districts.  The closest to a major urbanized areas that any of the Republican members come from, are Oklahoma City and Charleston SC. The new chairman of the  House Highways and Transit Subcommittee, John Duncan, represents Tennessee’s conservative 2nd congressional district and the chairman of the House Transportation Appropriations subcommittee, Tom Latham, comes from a  rural district of Iowa.

Thus, the House transportation committees will likely focus on the traditional concerns of keeping roads and bridges in a state of good repair. They also will be under pressure  to stabilize the Highway Trust Fund (HTF) by bringing transportation expenditures in line with expected gas tax receipts.  Letting available resources determine the appropriate level of spending represents a change in congressional posture from years past when often poorly documented investment “needs” tended to dictate funding levels. Today, a heightened concern about the mounting federal budget deficit seems to have overshadowed concerns about deteriorating infrastructure and has led fiscal conservatives to conclude that living within the limits of the Trust Fund is both proper and necessary. How to strike a proper balance between the need to reduce the budget deficit and  the legitimate needs to preserve and improve the nation’s infrastructure will undoubtedly dominate the upcoming debate about the multi-year surface transportation authorization. With Congress opposed to raising the gas tax, attention will likely turn to alternative means of financing such as public-private partnerships, tolling, TIFIA, Private Activity Bonds and state infrastructure banks.

The flow of gas tax revenues into the Highway Trust Fund is expected to average $40-41 billion/year for the next several years according to the most recent  Congressional Budget Office projections (Highway and Transit accounts combined). Keeping spending within those limits will require shedding certain discretionary programs that are deemed to be of little national significance as, for example, various “transportation enhancement” activities that benefit local communities.  In the short term, the Trust Fund  will be supplemented by the unspent stimulus funds, thus softening the transition to a more austere spending regimen. The unspent ARRA funds still amount to about 50 percent of the originally allocated sum, according to Congressman Mica.

Transit is expected to maintain its customary share of  total spending  — although “New Starts,”  traditionally funded with general revenue, may receive a smaller allocation, given the increased influence of fiscal conservatives and a diminished presence of  city-oriented transit advocates on the current T&I Committee. Also likely to be curtailed will be support for high-speed rail (HSR), amid its cool reception in Wisconsin, Ohio, Iowa, Florida and other Republican-dominated state legislatures. A proposal by the influential Republican Study Committee (RSC), a caucus of 165 conservative Republicans, would eliminate all future high-speed rail grants.  Although House Transportation Committee chairman John Mica (R-FL) is generally supportive of rail and has talked of shifting more freight from roads to rail, he has been highly critical of the way the Administration has handled the high-speed rail program. He is likely to reorder the passenger rail priorities and reallocate any unobligated rail money to where, in his  words,  “it makes sense.” A likely beneficiary will be the Boston-to-Washington corridor. “Ignoring development of true high-speed rail in the Northeast Corridor would be a monumental failure,” Congressman Mica wrote last year (“U.S. Musn’t Squander High-Speed Rail Funds, The Hill, October 15, 2009.)

As of January 20, approximately $4.7 billion of the high-speed rail funds remained unobligated. This includes  $2.4 billion allocated to Florida’s Tampa-to-Orlando line and a number of smaller  HSR projects that remain stalled in contentious negotiations with the affected Class 1 railroads. The fate of the Florida project remains uncertain. Gov. Scott awaits the results of a feasibility study, due in February, before making up his mind. Along with Rep. Mica and Florida Senate President Mike Haridopolos, he reportedly feels that any remaining project costs  (estimated at  $280 million or $1.5 billion depending on who is doing the estimating) should be covered by the private partners to the project. While several private consortia have expressed interest in building and operating the high-speed line, they have remained silent so far as to their willingness to underwrite any construction overruns and operating losses. Undoubtedly, they too, are conducting  their own  “due diligence” analysis of the project’s construction costs and ridership estimates before committing themselves financially to the project.

Another U.S. DOT program expected to come under congressional scrutiny will be the discretionary “executive earmarks” like the TIGER grants. These grants have not been popular with Republican lawmakers, partly because of an alleged lack of  consultations between U.S. DOT and the lawmakers in making the awards.  Executive earmarks are likely to be curtailed if Mr. Mica’s review finds that the process of awarding the TIGER grants has lacked fairness and transparency. Also likely to suffer cuts (if not total extinction) will be the “livability” program.   The $4 billion Livable Communities Act, (S. 1619 and HR 4690) died in the 111th Congress and is unlikely to be revived. Its main supporters, Sen. Chris Dodd (D-CT) and Rep. James Oberstar (D-MN) are no longer in Congress and the new Republican majority is generally skeptical of the Administration’s fixation on the ill-defined concept of  “livability.”

Further economies could come from not pursuing the Administration’s proposal for a National Infrastructure Bank. This initiative has met with bipartisan opposition in the Senate because lawmakers do not want to create a new semi-autonomous body with powers to make capital grants. The lending function, they assert, can be adequately handled through existing financing mechanisms such as the TIFIA program (Transportation Infrastructure Finance and Innovation Act).  Earlier attempts by former  Rep. Oberstar (D-MN) to impose closer federal control and supervision over state-initiated toll concessions and other public-private arrangements will likewise be abandoned.

Chairman Mica’s resolve to make passage of a multi-year authorization a top priority increases the likelihood that a transportation bill will be brought to the House floor and approved during the first session of the 112th Congress. Once the bill passes the House, it will also likely pass the Democrat-controlled Senate. Few of  the 21 Democratic senators who are up for reelection in 2012 will not support  legislation containing badly needed money for transportation.  In the meantime, the short-term extension of the surface transportation program that expires March 4 will once again have to be extended. House Budget Committee chairman Paul Ryan (R-WI) will be authorized to set a ceiling on spending for the rest of the fiscal year.

This, in essence, is how informed opinion appears to view the prospects for the federal-aid transportation program in the 112th Congress. While the next authorization will, by all accounts, be more modest in size and less ambitious in its reach than many in the transportation community had hoped, at least the 112th Congress will offer the states a promise of stable and predictable multi-year funding, necessary for long-term investment decisions.

C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 22nd year of publication.

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