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For Federal Transportation Investment, a Difficult Prognosis

» A new plan for the country’s transportation financing system from Congressman John Mica would cut spending significantly — but Democrats have yet to provide a serious counter-proposal.

With everyone from Mitch McConnell to Barack Obama arguing — no matter the evidence to the contrary — that the federal budget must be constrained in order to save the American economy, it is perhaps no surprise that the long-expressed hopes of a greatly expanded transportation bill have fallen to the wayside.

The revealing today of House Transportation and Infrastructure Committee Chair John Mica’s (R-FL) plan for a six-year, $230 billion reauthorization bill is the latest evidence that support in Congress for expanded investment in the U.S. transport network is weak. Though the bill is by no means final — Senate Environment and Public Works Committee Chair Barbara Boxer (D-CA)’s own two-year plan, slightly larger (and with $12 billion in missing revenues), was partially revealed yesterday — the writing is on the wall: At least for now, expecting any improvement in federal funding for transit or even highway programs is unrealistic.

The current federal transportation authorization legislation, SAFETEA-LU, has already been extended several times and will expire on September 30th this year.

Mr. Mica’s proposal would provide $35 billion for surface transportation in fiscal year 2012, rising to $42 billion in 2017. Existing funding provides $51.5 billion, so this would represent a draconian one-third cut in federal spending so that expenditures on transportation match the funding received from federal fuel taxes. It has been clear since last November that the GOP would push for this funding cut once it took control of the House.

Mr. Mica argues that a loosening up of red tape and increasing private investment would make up the difference, a questionable assumption.

The specific distribution of funds to transit or highways has not been enumerated, but the current shares (about 20% for transit and 80% for highways) will be maintained. This would mean a cut from about $11 billion for transit today to about $7 billion. What does this mean? Fewer dollars in the urban formula program means fewer new buses and rail cars for transit agencies across the country. Less money for state of good repair means a decline in the number of renovations of aging railway tunnels and viaducts or bus depots. A loss for the New Starts program means the end of several major capital expansion projects nationwide.

The Administration’s high-speed rail program, already under siege by a siderodromophobic GOP, is axed in the proposal. Livability grants, too fuzzy for the mobility-oriented Mr. Mica, also appear to have been taken out of funding consideration.

Compared to the heady days of early 2009, during which the Congress approved billions of dollars in additional funding for transportation in the stimulus bill, this represents quite a turnaround. And even early this year, President Obama announced that he would push for a $556 billion six-year transportation bill that would more than double annual national expenditures on public transportation (he wanted $128 billion in 2012 alone) and introduce significant support for a high-speed rail program. Though Mr. Obama continues to articulate support for a major infrastructure initiative, he has been unable to put forward a proposal that would fund such a project.

Democrats, sitting in the minority on the House Transportation and Infrastructure Committee, were quick to lambaste the proposal. They argued that the significant reduction in spending on transportation that the Mica proposal would entail would result in a significant loss of jobs. And indeed they would. But in Washington, where the mood has shifted sharply away from the idea that government might be able to aid the advancement of the economy, even these committee Democrats were unwilling to propose a funding mechanism that would actually finance the bill they would introduce if they were able.

This is ultimately the handicap that has restrained any increase in expenditures on transportation; as is made explicitly clear in the document that adjoined the bill, the Highway Trust Fund — the fuel tax-filled bank account that finances surface transportation in this country — is broke, and the situation is worsening. While it might make sense for Mr. Obama and Ms. Boxer to propose larger bills simply because the country’s infrastructure is in a deplorable condition, without any way to finance them, how can they be approved by the Congress? Both have relied on promises of future “revenue sources” but ruled out an increase in the gas tax or the implementation of a vehicle miles-traveled fee. When cherished entitlement programs are on the cutting block because of a general unwillingness to expand the nation’s debt, how can an increase in the deficit to pay for transportation be defended?

Stuck with limited resources, then, Mr. Mica’s bill is the only approach that seems realistic. But even ignoring the overall spending amounts, the bill is quite problematic.

Though Mr. Mica’s specific approach is not yet apparent since the full legislation has yet to be released, the bill outline does state that “The percentage of available formula funds for transit programs that benefit suburban and rural areas” would be increased. The low down: Urban transit systems — the agencies that serve the vast majority of transit users — would suffer the ridiculous indignity of having their already smaller pot of funds be cut even further to benefit the less cost-effective, least valuable public transportation systems.

Eliminating red tape in the federal approval process is another of Mr. Mica’s priorities, and indeed, there may currently be more studies and years required to move forward with a transportation project than necessary. But it is difficult to believe that cutting off a few years from the planning process for new road or transit projects will make up for billions of dollars in lost financing for new buses or trains.

Bemoaning the lack of funding for transit and transportation in general is a worthwhile endeavor, but the real challenge continues to be whether any significant group of politicians of any stripe can be convinced of the need for revenue generators. In other words, without new taxes to fund the transportation program, the argument that the nation’s infrastructure is inadequate will never really matter.

If leaders in Washington have failed to advance on these matters, local and state leadership could fill the gap — if they so desire.

Though Mr. Mica’s bill would not introduce an infrastructure bank (one of Mr. Obama’s repeated goals since he entered office), it would expand funding for TIFIA grants and loans, offered by the Transportation Infrastructure Finance and Innovation Act. One billion dollars would be appropriated annually to use federal dollars to leverage private-sector investments, which would then be paid back either through user-generated fees or dedicated taxes applied at the local level.

The value of this approach was demonstrated yesterday, when Los Angeles announced that it had received a $640.8 million low-interest TIFIA loan to begin work on its Westside Subway project. The money will eventually be paid back by sales tax receipts collected in L.A. County over the next 30 years. The extension, which would bring trains eight miles from the existing Wilshire/Western station to the V.A. Hospital in Westwood, will cost a total of $5.3 billion, so the loan is just a starting point, but it is a good one, since if all financing is lined up, it will allow completion in 2022, instead of 2036, the soonest possible without any sort of loan.

Would this program, in association with Mr. Mica’s plan to open newly built federally funded Interstate highways to tolling, be enough to “double” funding for transportation, as he has suggested? It seems unlikely — at least in the long term. While the TIFIA loans will make it possible to advance construction more quickly, they will have to be paid back eventually, using local sales taxes — which won’t be usable for projects twenty years from now. Some private investors may choose to jump on board, but getting private sources to contribute to public transit projects while saving money overall has been a notoriously difficult process in our day and age.

Mr. Mica’s proposal is not the law yet, but more endowed alternatives to it have yet to have their funding sources adequately described by Congresspeople willing to raise the specter of increasing taxes. We’re waiting.

59 replies on “For Federal Transportation Investment, a Difficult Prognosis”

The idea with the loans using local tax funds doesn’t sound like to bad of a idea in that if you dig out something like a subway tunnel though sold rock and it takes 30 years to pay back the loan while the subway tunnel is used and needed a 100 years in the future it sounds like a good idea.

As for tolling Interstates that only makes sense if you are going to spend the money raised from those tolls on that very same interstate such as in the case of Interstate 81 in Vriginia where you need to widen sections of it though very mountain rocky areas would make sense. In that if you look at Vdot’s list of highway projects

The interstate 81 widening project which will add two new truck lanes in a six mile section of interstate are going to set the state back 75 million dollars while if you look at the rest of the highway projects on the list the secound biggest and the small ones range in size from 11 million dollars to $400,000 for bridge replacements and other projects so the interstates are real money pigs.

If they want to keep going with these four and five billion dollar widening projects on Interstate 95 in Vriginia they should add tolls to them to make them pay for themselves.

I think in some ways Mica is presenting the reality of status quo. In some respects, this truly needs to be out there. The scary part, it could easily be the template on what to expect after 2012.

I am disappointed in Mica’s limited tolling proposal by keeping it to new lane miles only. He needs to go all in or not; unfortunately, I believe they need to toll the interstate system outright if no one has gumption to find a new revenue source for surface transportation.

I really think he is keeping our same borning car only mono culture socity the way it is with nothing new or ground breaking going on. Now we can’t have any idea ideas in that it might be too scarry for the Tea Parters.

Right on, “aw”. I agree 100%.

Let’s raise everyones’ income taxes (especially for that notoriously overfed, undertaxed 1% and corporations; and capital gains; and let’s have a financial transaction tax on securities trades) so the US can be an industrialized nation again.

But that would be smart, responsible, and rational…



Yes a difficult situation, the reality under current transportation funding structures and political reality is that you can’t really starve the autocentric beast for more and more lane miles without impacting transit funding.

What I think is a path forward but most likely unrealistic is if Obama/Senate could horse trade for multi year stand alone funding of Amtrak/HSR and a National Transportation Bank/TIGER grants by closing tax loop holes in return for opening up domestic oil production and approving the Canadian oil pipeline expanion currently held up by the state department. Or tie a portion of oil tax revenue to transportation funding that Mica won’t support outright. Call it the Energy and Economic development job growth bill. That would open a way for House/Senate to reconcile a deal while giving an avenue to support intercity rail and livability grant application so popular under the TIGER program

In other words, creativity beyond a loan guarantees is going to be needed by the Obama administration. Sooner the better.

The hypocrisy of Rep. Mica is overwhelming. He’s proposing to slash funding in this transportation bill but at the very same moment he’s providing hundreds of millions (billions?) of dollars in earmarks for SunRail (, a project of questionable value.

It is also about time that people start holding the GO(B)P accountable for trying to gut New Starts funding at a time when gas is $4 per gallon.

Their is some method to the madness when it comes to Sunrail if you want to take a different perspective. In other words, As a means to transfer capital to a private freight railroad indirectly.

Florida is bridging the funding gap to deepen Port of Miami to 50′, which favors larger container ships to come through the Panamana Canal and go directly to Gulf and East Coast ports instead of the west coast. Port of Miami and Port of Everglades (Ft. Lauderdale) have advantage of being the cheapest and quickest ports to deepen on the Southeast Coast. However, they are also the farthest ports to the inland prize of Atlanta. However, a similiar investment in CSX rail infrastrucure will give the respective ports competitive rail pricing from both CSX and Florida East Coast/NS instead of being captive to the more direct route of FEC/NS (why would they charge less if they don’t have too).

Rep. Mica’s bill actually makes a lot of sense. If you’re a CEO, it probably doesn’t really matter if you’re late arriving to the office because of an inadequate transportation system and hedge-fund managers and oil company executives can still travel by corporate jet.

However, they do notice when their employees can’t get to work or their business is imperiled by poor infrastructure. This is what was happening in Wisconsin a few months ago (and might still be happening—I don’t know what the ultimate endgame was): various chambers of commerce protested cuts to transit funding because they saw it as an inconvenience for their workforce. Even more shocking was that funding for local road repair was cut to the bone, and logging companies feared they wouldn’t be able to run their trucks.

Unfortunately, the sort of general business advocacy that promoted general improvements like transportation infrastructure has been superseded by narrower rent-seeking by individual businesses or sectors, so they don’t tend to move on issues like infrastructure until it directly threats their livelihoods (and by which time it might be too late).

What I find shocking is how places that we call thrid world or primtive are going on mega building spres while we as a so called first world county sit around and complain about how things wheren’t as good as in the 1950’s.

Industrial companies notice.

However, the economy has become “financialized”. The paper-pushers neither notice nor care that there is no real value behind the paper they’re pushing. Hence all the fraudulent “mortgage-backed securities”. Financial scammers can run a bubble just as well in a third-world country with no infrastructure as in an industrialized country, unfortunately.

Remember that even though federal programs fund a large part of urban transportation projects, on the whole, federal transportation policy mostly serves to funnel money out of dense, urban states into rural areas.

With a smaller federal role in transportation funding, and a corresponding increase in the state and local role, wouldn’t it seem that this would result in a refocusing of transportation money on the denser urban areas instead of the rural areas?

I doubt it—most states have the same urban-rural dynamic of the feds and it might be hard to come up with ways to raise revenue there since most states and municipalities don’t have much fiscal flexibility or as good a credit rating as the feds. Even the tax raises approved by voters in places like LA, Denver and StL still rely on the expectation of federal funds.

One option I remember being floated for HSR funding was a tax on imported oil, which would do a better job at shielding consumers from a price increase than a straightforward increase at the pump; it also has the advantage of sounding nativistic. However, it will probably have to wait until the Democrats retake the House or the ghost of Nelson Rockefeller spooks the Republicans into moderation.

I liked the “siderodromophobic” term.
But seriously, the lack of public investment in transportation and infrastructure is ironically going to make the federal government even more unpopular with voters. (I say voters instead of “the people” because not everyone is voting) When the voters are taxed through taxes (duh) and inflation (which acts like a tax on both wealth and income), it is infuriating to see their money go away overseas to fund nation-building and the like. Honestly, if we ended our overseas nation-building and bailouts, these cuts won’t be necessary and we might be able to EXPAND funding for transportation. As Dennis Kucininich (D-OH) said, “Obama Is Demonstrating More Of An Interest In Nation Building Abroad Than Rebuilding Here At Home!”
Also, you might say that the federal government can expand its debt to fund more transportation funding, this is something I have a hard time agreeing with, and you’re not going to be able to win an election saying such things. Keep in mind that one of the things that pissed people off about Bush was that he was exploding the deficit like there was no tomorrow. I remember seeing posters from DEMOCRATS during the 2008 election saying “Get us out of Iraq, out of Debt.”

The Republicans, of course, WANT to make the federal government less popular. They are deliberately wrecking it.

Obama’s behavior is harder to explain.

Regarding debt. One of the things people don’t get is that government debt isn’t real. The government can print money. Congress simply chooses not to. Government “debt” is simply the government handing money, in the form of interest, to people who want a safe place to invest.

Inflation is the only problem with money-printing. And at the moment we NEED some inflation. With over half the population of the country net in DEBT, inflation would help the majority of the population by making it easier to pay off debts.

The trouble is that Congress and the Presidency are controlled by the minority of people who have big stockpiles of savings, the people who inflation would hurt. Therefore they ignore the needs of the majority of the population — the debt slaves.

And I say this as someone with big stockpiles of savings. Inflation would hurt me a little, but for the vast majority of my friends, it would be a huge boon, enabling them to pay off their debts and start getting ahead.

The only sort of inflation which is bad for everyone is food and fuel price inflation… and unfortunately we’re currently getting that WITHOUT general inflation. That’s caused by climate change and peak oil, and money-printing isn’t going to affect that one way or the other, unfortunately.

It’s sad that average voters are too ignorant to realize that a government program of printing money and inducing inflation would help most of ’em.

Raise the gas tax 15 cents (about 4% of the present price of gas, and amount no one would ever actually notice at the pump with the way prices fluctuate nowadays).

Revenue will now equal $65 billion per year. Problem solved.

Fixed percentage taxes are likely to exacerbate price variance. The real issue is to tie gas taxes to inflation of construction costs.

Or, if we really wanted to solve our funding problems, inflation of urban rail construction costs!

(Achingly glances towards Calgary)

I don’t agree with using ROAD taxes to fund RAIL infrastructure or the other way around, or using either road or rail taxes to fund airport construction.

The initial urban road systems were built the other way. In Denver, the streetcar system was charged 25% of road maintenance on one-way streets and 50% on two-way streets. This ratio was fixed very early on, when it approximated the real ratio of train to car responsibility for road tear, and was not changed even as car traffic increased exponentially.

The streetcars don’t need paved streets, though paved street are attractive for the streetcar’s passengers.

It wouldn’t be to bad to raise the gas tax five cents to three cents but any more then that and everyone will get up tight. If they did something like that it could free up a few more billion dollars to give us more time to think about what do to about it for general repairs but something else such as highway tolls to cover the super new projects on the highway department’s wish list.

Vdot though is domomated by several muti billion big buget interstate 95 and Interstate 495 widening in Northern Vriginia that are only less then 25 miles long eatch butthey are eatting most of the highway buget in the state.

Another money pit in Vriginia that needs tolls on it to pay it’s own way is the three billion dollar Coalfields Expressway project which is a 120 mile long four lane semi freeway though the middle of nowhere in West Vriginia and western Vriginia.

It is not a “middle of nowhere route”, but one aimed to create a new corridor for development, as the areas around DC are pretty full and they need to open some swaths of forest land to construction.

Sadly, the same electorate who misconceive the gas tax as a user fee, also misconceive tolls as a tax.

They’re the same people who believe in the Laffer Curve fairy. The one where you cut taxes to zero and the government is awash in revenue.

As James Howard Kunstler would put it, those people are the ones who believe you can get “something for nothing”, which is a huge logical fallacy and the financial world results in huge debts that can never be paid off.

Hilariously, in a bad way, these are the same people who *oppose* any proposal to simply repudiate or write off the debts — who made it *more difficult* for people to declare bankruptcy, who made it practically impossible to discharge student loans.

Total disconnect from reality.

This is off-topic, but the reason student loans are impossible (or almost) to discharge is to make them possible in first place. This preference (for creditor) towards student loans was a huge achievement, as it made possible for poor students, whose families couldn’t have collateral property to guarantee the loans, to attend college in first place.

There were student loans before the bankruptcy law was changed to make them non dischargeable.
The whole reason for student loans is that the states and Federal government aren’t supporting public colleges as well as they used to. College used to be free in someplaces. California and New York City were the major examples.
My brother-in-law just ran across his tuition bill for his state college. It was $125 a semester. Minimum wage at the time was 75 cents an hour. So you had to work full time for four weeks at minimum wage to pay tuition. Or eight weeks for a full year of two semesters. Through in books and the few fees that were required back then and you could pay for college on 400, 500 hours of work.

Creating debt slaves — which is what nondischargeable student loans have done — is not an achievement in any way, any shape, or any form.

Where the hell do you get this B.S. history, from the writings of Ayn Rand? Or which bankster do you work for? Or do you report for Fox News?

Student loans were being made by the billions of dollars by the federal government and universities and even from banks, until the too-big-to-fail banksters decided to loot that business.

So the banksters got their hirelings, the US Congress, to change the laws to make it difficult for anyone to get student loans except from banksters and then to make it so you will owe the banksters for the rest of your life no matter what.

Not really on-topic, but grad school in the US is free, and pays stipends. That’s why I, and many other people not from the US, chose to go to the US for my studies. Otherwise I’d have gone to Denmark or some other English-speaking place where school is free.

They speak Danish, but people from Denmark I went to grad school with tell me the grad math classes are in English, since everyone speaks it anyway and a lot of the math notation simply doesn’t exist in Danish.

They don’t have siderodromophobia they have agoraphobia. They can’t imagine anyone wanting to leave home. Big cities are especially scary places filled with people that are different in many ways, some of them obscure.

We need to fight for a better bill. This country deserves better. How do we compete with other countries if they are spending way more on modern infrastructure? Think long term, the next 100 years. If a bill like this passes, we are screwed.

If you go over to Skycraper City you will find it shocking how China is building themselves a new Interstate system and a new high speed rail system and some freight and building up Africia’s run down rail and highways to world class stardards and respect too at the same time.

Ocean Railroader, one note of caution with the China building spree. In 50 years they may find themselves where we are today. All that shiny new infrastructure is expensive to maintain. They just finished building the worlds longest ocean bridge. How much will that cost to maintain every year? Imagine the quantity of paint!

A lot of these new Motorways and Highways and Bridges have their own tolls that people have to pay before they can cross them in that is how they would be able to have thing built in the first place.

I’ve known people from China and also with Skycraper City a lot of the comments are that we are starting from rock bottom and have nothnig to go but up. While we in the US are sitting at the top and are watching every year as things are getting worse and worse. We have a lot more to lose then they do in that they are used to having nothing but we are used to having a lot.

Even tools and fares have serious issues in an authoritarian country. Raising prices leads to angry residents, and that can chip away at power. Theres a reason gas costs something like 10 cents a gallon in Venezuela.

That’s not a facter in China in that China’s goverment has a two trillion suplus so they got pently of resources for goverment funding for these projects. Also the cars and toll roads are coming into being at the same time with one another so it isn’t coming on to the people in China like a hard shock.

China, unfortunately, isn’t well known for maintenance, building or other, so they’ll just rebuild it all, assuming they can swing it, financially.

I think they are going to have a crash once they start depending on their own market, as in their internal consumer market and start switching to higher value products are wages go up and fewer people are willing to work in factories. And if they depeg their currency, etc. The infrastructure investment in Africa could be good for Africans long term – I hope…

Thank you for using “siderodromophobic” to describe Republican electeds. It’s accurate, unfortunately.

Regarding Mica’s proposal for tolling “newly built” Interstate highways: there will be no new Interstate highways — we already have more than we need or want — so it’s sort of an empty proposal, isn’t it?

The need for new Interstate is there. It depends on the are and purpose. Maybe consolidated metropolitan areas like Washington, New York or Los Angeles don’t need new major freeways. However, US is a vast country, and many areas that are growing (despite the crisis) need better connections. In terms of rural transportation in the open space, freeways really speed up traffic and radically lower accident rates than 2-lane roads.

First, if freeways reduce accident rates, then why did the ten years following the beginning of the Interstate program have stagnant per-VMT accident rates, breaking a 100-year trend for a 3.3% annual decline?

Second, no area of the US needs new highway capacity. (New connections are another matter, but nobody’s discussing anything like a Long Island-Westchester bridge.) Compare the freeway network of Houston and Atlanta with that of similarly sized metro areas outside the US, especially those in Britain and Australia, which have surprisingly few motorways for their population. Here is the arterial road network of Sydney; motorways are in green. This is a fast-growing city of 4.5 million with about the same transit mode share as Greater New York.

Most of the new Interstates that are actually worthwhile would be major highways upgraded to interstate standards. Most of these highways are already 4 lane divided highways, so bringing the highway up to interstate standards would involve building grade separations and bypasses if the highway goes through a town. US 290 between Austin and Houston or TX 6 between Houston and Waco would be good examples of this.

Texas specifically has found that new roads — particularly grade-separated roads — not only don’t pay for themselves, but are spectacularly expensive for the results.

The occasional bottleneck removal, new bridge, bypass may be valuable, but that’s tiny stuff. Not tollable stuff.

Things sure changed once Mica no longer had Jim Oberstar educating him, but rather Eric Cantor bullying him.

I hold the Obama Administration significantly responsible for nitpicking over the gas tax and bonding and conspicuously failing to propose an alternative. Had Obama put a transportation bill up right at the start of his administration things could have turned out very differently and we’d have had a better looking stimulus too.

One thought on VMT. There’s a lot of hostility to the notion itself. This brings up the same hackneyed arguments about the excesses of the federal government, the erosion of privacy, and the like. However as anyone who has leased a car can tell you, there are plenty of people who willfully enter into arrangements whereby they pay for a fixed quota of road usage with penalties when this is breached.

Perhaps a more reasonable proposal:

when registering your car with the state, you would select a fixed quota of road usage (miles/year). 10000/yr, 20000/yr, 5000/yr.
if you do not use all of your quota, you get a rebate that can be applied to your tax bill.
if you use more than your quota, you need to pay an additional amount at the end of the year
auto manufacturers who lease their cars to customers would peg lease rates to these quotas (discounting for volume)

Thinking of different ways to align incentives towards a solution.

How does this improve on making people pay a VMT tax, without a quota? The government would still need to know how much you’ve driven, and the tax rate would still scale linearly with VMT. (And if it doesn’t, it beats the whole purpose of pay-as-you-go.)

If people are already willing to subject themselves to a VMT-like measure when leasing a car, perhaps they wouldn’t find the concept so alien. You bundle it together the same way that you express a floating point mortgage as an improvement on fed funds or libor.

“Second, no area of the US needs new highway capacity”

Untrue. Washington, D.C. for instance had much of its system ‘de-mapped’ (leaving an imcomplete inner hub and no northern radials between the BW and GW Parkways) on specious ‘reasoning’ that the world was going to run out of petro before 2000, that we lacked the imagination to conceive of autos powered by anything other then petro, and that the system cir 1974 was essentially the same as the 1959 system (wrong!).

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