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.