Two Bold Predictions

Posted by Ken Orski on Monday, May 3rd, 2010

Innovation NewsBriefs
Vol. 21, No. 8

Two bold predictions concerning the future of the federal surface transportation program have caught our eye in recent days. Both have come from respected veterans of the transportation scene so they cannot be lightly dismissed as speculations of some anonymous bloggers.

The first prediction comes from Pennsylvania Governor Ed Rendell, a longtime advocate of greater investment in transportation infrastructure. “I have a prediction for you,” the Governor said at an April 6 press conference called in the wake of the federal rejection of the state’s application to toll Pennsylvania’s Interstate-80. “When there is a reauthorization they (the Feds) will lift the ban on tolling. There is no appetite for raising the gasoline tax and it [tolling the Interstates] is one of the only ways for us to maintain these highways.”

The other prediction comes from former Secretary of Transportation, James Burnley. Since leaving the Department of Transportation in 1989, Burnley has remained an active player on the transportation scene as a regulatory lawyer. “I started saying a year ago that we were facing four years of short-term extensions of existing programs, and I am sorry to say this is a prediction that I believe will come true,” Burnley said in an interview with DC Velocity, a local online newspaper. He went on to say that it will be difficult to raise the gas tax in a more Republican-leaning Congress next January. “What worries me is that the whole concept of the trust fund is breaking down,” Burnley stated. “You can’t make the argument with a straight face that the trust should be…walled off from the appropriations process while at the same time getting huge sums of money from general revenues…By 2013, we could find the whole notion of the trust fund obsolete.”

In fact, both predictions— the tolling of Interstate Highways and increased reliance on general revenue appropriations to support the federal surface transportation program— have been a subject of an ongoing debate in the transportation community for some time.

Interstate highway tolling has been discussed extensively in two online discussions — the National Journal’s Transportation Experts Blog (week of August 17, 2009) and IBTTA’s “Tolling Points” blog (week of April 11, 2010). Over 30 transportation professionals took part in the two online exchanges. The question of Interstate highway tolling was also a subject of a poll conducted by the trade publication “Roads & Bridges” (October 2009) and of a recent editorial in “Better Roads” magazine (April 2010).

Political and professional opinion on tolling is divided, with neither proponents nor opponents scoring a decisive advantage. But Governor Rendell’s prediction has given the prospect of Interstate highway tolling the kind of plausibility that it had not enjoyed before.

Interstate Tolling Comes in Different Flavors

The degree of controversy surrounding Interstate tolling varies with the type of facility to be tolled and the purpose to which tolls are to be dedicated. Least controversial is the tolling of new lane capacity within existing interstate highway corridors. The so-called “managed lanes” and “high-occupancy toll (HOT) lanes,” authorized in the surface transportation law (Section 1121 of SAFETEA-LU), are being implemented in a number of jurisdictions. Examples include HOT lanes on the Capital Beltway (I-495), Interstate 95 in Northern Virginia, Florida’s I-595 and the Dallas I-635. Many others–some of them taking the form of full managed-lane networks– are in planning stages.

Next in the degree of acceptance is the tolling of existing Interstates to fund specific reconstruction needs or to reduce congestion on urban Interstates. These approaches have been authorized on a pilot basis in three congressionally sponsored programs — the Interstate System Reconstruction and Rehabilitation Pilot Program (Section 1216 of TEA-21, reauthorized in SAFETEA-LU) which allows up to three existing Interstate facilities to be tolled to fund reconstruction or rehabilitation of Interstate corridors (two out of the three slots have been allocated); the Interstate System Construction Toll Pilot Program (Section 1604) which authorizes up to three Interstate facilities to be tolled for the purpose of financing construction of new Interstate capacity (one slot has been allocated;) and the Express Lanes Demonstration Program which permits introduction of tolling on up to 15 highway facilities to demonstrate the use of pricing to manage congestion or reduce vehicle emissions in non-attainment areas (five slots have been allocated.) While all three programs are limited in scope and number, the weight of professional opinion favors giving states greater leeway to toll the Interstates. Most interest groups likewise support tolling provided toll revenue is dedicated to capacity  improvements. Thus, there is good likelihood that the next transportation reauthorization will lift current limitations—at least in metropolitan areas— so that tolling can be used more widely by state and local authorities to manage congestion on crowded urban interstates.

The most controversial is a proposal to institute generalized tolling throughout the entire Interstate Highway system. Proponents of this approach view this as the most logical answer to the growing inadequacy of motor fuel taxes and the most effective means of raising large sums of money to finance the nation’s long-term investments in surface transportation. However, opponents to this approach probably outnumber its advocates. A prominent (and highly vocal) opponent is Rep. James Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee. His view is shared by many transportation industry spokesmen, such as Bill Graves, President of the American Trucking Association, Robert Darbelnet, President of AAA and Greg Cohen, President of the American Highway Users Alliance.

There appears to be little chance that a sweeping authority to toll the Interstates will be enacted by Congress any time soon— no matter how urgent the need for additional transportation revenue may be. Which leads us next to Secretary Burnley’s speculation ….

Will Annual Appropriations Replace Multi-Year Authorizations?

Will the prospect of diminishing income to the Highway Trust Fund and the political difficulty of increasing fuel taxes drive Congress to abandon the multi-year authorization in favor of propping up the Trust Fund with periodic appropriations? This is what Congress has done de facto since the expiration of the transportation authorization in October 2009. To keep the Trust Fund solvent, Congress has transferred a total of $34.5 billion in general revenue into the Highway Trust Fund in three separate appropriations. As Secretary Burnley speculated, we could soon find the whole notion of the trust fund obsolete as appropriations are required to supplement Trust Fund revenues on a regular basis to satisfy the nation’s mounting surface transportation needs.

Objections to using General Fund revenues to fund the highway program rest on two grounds: (1) that their use undermines the user-pays principle; and (2) that it means a potential loss of contract authority, i.e. the ability to enter into multi-year funding commitments in advance of appropriations. While the user-pays principle is not without merit, it has been already substantially weakened in recent years as the Highway Trust Fund assumed additional funding responsibilities for mass transit , for other non-highway programs (walkways, bike paths, scenic trails, etc ) and, most recently, for promoting the “livability” agenda. Today, as much as 25 percent of the Highway Trust Fund revenue is spent on non-highway programs.

Is There Still a Need for Contract Authority?

The case for retaining contract authority has likewise been weakened by recent changes in policy. Traditionally, the case for contract authority has rested on the need for states to orderly manage costly multi-year construction projects. Contract authority and multi-year funding guarantees have helped state DOTs to avoid year-to-year fluctuations in program levels and have minimized the attendant uncertainty when planning for large multi-year construction projects. The need for multi-year funding assurances were indeed justified when the nation was building the Interstate Highway system and planning other major infrastructure projects extending over several years, such as Boston’s “Big Dig” or the expansion of the Woodrow Wilson Bridge on I-95 across the Potomac. But, if we correctly read the signals coming from this Administration, the age of large capacity-expansion projects is over. Implementing bicycle networks and other small-scale “non-motorized” and “livability” projects do not require large multi-year funding commitments or a long planning-design-construction cycle. Routine road maintenance and system preservation activities to keep highways in good repair likewise do not need advance multi-year budgeting. With Transportation Secretary LaHood announcing “the end of favoring motorized transportation at the expense of non-motorized transportation” and urging state transportation agencies  to give “the same priority to walking and bicycling as is given to other transportation modes,” and with the Administration adopting a “fix-it-first” policy in preference to expanding highway capacity, it can be argued that contract authority and multi-year transportation authorizations are less necessary—or, indeed no longer required.

Interstate highway tolling, greater reliance on general revenues and the diminishing relevance of multi-year authorizations and the Highway Trust Fund are truly provocative ideas. Whether Congress and the transportation community are ready to embrace these ideas remains to be seen. But we commend Governor Rendell and Secretary Burnley for having the confidence and foresight to raise these possibilities—“unthinkable” as they may appear at first sight.

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 21st year of publication.

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One Response to “Two Bold Predictions”

  1. Nathanael says:

    What does require large multi-year commitments are the nation’s necessary railway upgrades.

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