House Proposal Erodes Credit Ratings, Ties Hands of American Communities

Posted by Content Coordinator on Thursday, February 9th, 2012


On February 3rd, the House Ways and Means Committee approved the tax title for the House Surface Transportation Authorization bill. The Ways and Means title removes the Mass Transit Account in the federal Highway Trust Fund that was created by the Reagan Administration, to provide dedicated, multiyear funding for public transit investments. The Ways and Means action also transfers the funds in the Mass Transit Account to the Highway Account; replaces the current Mass Transit Account with a new “Alternative Transportation Account” funded with a one-time cash infusion of $40 billion from the General Fund. Funding from the new Alternative Transportation Account would fund the federal transit program in fiscal years 2013 through 2016, as well as the Congestion Mitigation and Air Quality program and several other Federal Highway Administration programs.

New and Dedicated Revenues Must Bolster Highways and Transit Together

As transit agencies around the nation grapple with constrained local and state budgets, they have made significant improvements to the customer experience, reconnecting younger generations with transit in a way not seen in the post WW-II era. As ridership continues to increase and new advances, such as real-time transit arrival data reach a tipping point, now is not the time for the federal government to end its role as a dependable partner. The changes proposed by the House Ways and Means committee threaten to derail transit’s contribution to the nation’s recovery, and would have the following deleterious impacts on public transportation:

  • Hinders the ability to plan long-term, multi-year projects
  • Makes transit managers subject to the politics of annual federal appropriations, rather than providing service to their communities
  • Discourages state, local and private-sector investment
  • Increases the cost of borrowing

Both the Highway Trust Fund and its Mass Transit Account are in need of additional revenues. Such revenues should bolster both accounts, while maintaining dedicated motor fuels taxes as the base funding for both.

Reliance on General Funds Creates Inefficiency

The Reagan Administration supported creating the Mass Transit Account and funding it from motor fuel taxes because: 1) a surface transportation system requires multimodal mobility solutions; and, 2) dedicated funding encourages more efficient and effective multi-year planning.

The House bill undermines multimodalism and dedicated funding; instead, it provides public transportation a one-time infusion of $40 billion in federal General Funds. At the end of this authorization bill, the account would be left with a zero balance and no source of revenue. With pressure to cut general fund spending from the recent deficit deal, federal support for a transit program could well be on a track toward sunset. Further, the initial $40 billion in funding falls far short of the $52 billion program authorizations in the account, setting the program up for chaos.

The end result of the House proposal is a return to the pre-Reagan era of ad-hoc, inefficient federal investment. Furthermore, the General Fund infusion approach erodes the purchasing power of appropriations by eroding the ability to leverage non-federal funding. State and local governments are more inclined to devote funding to projects that have secure, long-term federal funding.

Download full report (PDF): House Proposal Erodes Credit Ratings, Ties Hands of American Communities

About the American Public Transportation Association
“To strengthen and improve public transportation, APTA serves and leads its diverse membership through advocacy, innovation and information sharing. APTA and its members and staff work to ensure that public transportation is available and accessible for all Americans in communities across the country.”

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