Congress DOT Finance

The Senate’s Transportation Program

(I) The Accomplishment

The U.S. Senate’s passage of a transportation reauthorization bill Wednesday was big news, if only because it has now been 898 days since the last transportation bill officially expired. Three years of debates in both houses of the Congress have brought us one proposal after another, but only one piece of legislation has actually made it out the doors of one of the chambers. That is a serious accomplishment for Barbara Boxer’s leadership in the Senate Environment and Public Works Committee.

Senate Bill 1813, also known as MAP-21 (“Moving Ahead for Progress in the 21st Century“), is a $109 billion law that will remain in effect for 18 months if it is passed by the House. It reorganizes several national transportation programs and includes a number of interesting features, some of which I describe later in this piece.

Of course, the specific policy measures of MAP-21 may be meaningless despite the bill’s 74-22 passage margin, which included about half of the GOP contingent in the Senate; House Republicans have suggested that they have little interest in moving forward with this bipartisan legislation. Current funding for transportation runs out on March 31st; at that point, if nothing happens at the Capitol, collection of fuel taxes and distribution of transportation funding from Washington to the states will cease. What seems most likely is yet another extension of the existing transportation bill, originally passed in 2005 but now woefully out-of-date and underfunded.

Some have noted that MAP-21, for all the acclaim it has received (at this point, any bill to get through would likely be lauded…), is ultimately little more than another extension of the existing law. But, as Lisa Schweiter has written, it does nothing to resolve the financing difficulties that plague America’s transportation funding situation. The bill will require a significant infusion of money ($12 billion) from sources other than the Highway Trust Fund. In other words, it will not be fully funded through the fuel tax user fee, which many would like to see increased to cut down on automobile-produced externalities and force a link between spending on transportation infrastructure and revenues derived from transportation. It is unclear how the next bill, facing even fewer revenues from the Trust Fund, would be funded.

Yet the political conditions in which MAP-21 did pass are indicative of the bill’s importance. We are, after all, in a tightly contested election year in which Republicans have set their sights on the White House and Senate as Democrats eye the House. The bipartisan passage of the legislation — though not as close to unanimity as many previous transportation bills — suggests that there continues to be relative consensus among both parties that there is a rationale for federal investment in transportation infrastructure. Republicans in the Senate could have easily deflected the bill’s passage, forcing yet another extension — but they chose to cooperate and produce a less-than-ideal bill that will nonetheless keep people employed and America’s infrastructure in reasonable condition.

It is true that the Highway Trust Fund’s diminishing pot of funds — caused by the coinciding effects of an overall decrease in driving, better fuel efficiency, and the lack of any inflation adjustments on the levy since 1993  — imperils the future of U.S. transportation funding, whether or not MAP-21 makes it to President Obama’s desk. But Congress is not run by economists. It is run by politicians who, for better or worse, must respond to the demands of their constituencies.

What is unquestionable is that the level of support for a national increase in the fuel tax is minimal. Republicans are hammering the Administration for presiding over a significant increase in fuel costs since 2009, despite no increase in the tax. Meanwhile, Democrats are legitimately worried about increasing the burden of transportation costs on the nation’s lower- and middle-income households. In discussing how to pay for transportation, we cannot forget the fact that a majority of the nation’s poor now live in suburbia — most of them far away from the nation’s underdeveloped public transportation system. Increasing the gas price will do significant damage to the purchasing power of tens of millions of Americans in the short and medium term. There’s a reason that doing so has little political momentum.

Transportation experts may not like the sound of it, but funding for national infrastructure is not — and likely will not be — fully user funded (it wasn’t even when the Highway Trust Fund was on more solid fiscal ground). In fact, its role is as somewhat of a redistributive tool, encouraging mobility by subsidizing cheaper travel both through cheap roads and, in the cities, transit. Helping people to get around is a bipartisan policy goal. This leaves MAP-21 in the uncomfortable position of relying on outlays from federal funding sources other than the gas tax. In this day and age, that comes in the form of debt.

(II) The Policy

Despite the limited nature of the MAP-21 legislation, there were nonetheless some significant changes to federal transportation law contained within. Most intriguingly, the bill puts into question the future of private sector involvement in the transportation field.

What MAP-21 does not do is either cut funding for sustainable transportation dramatically (as would have the still-born House Republican proposal, H.R. 7) or devolve transportation funding and decision-making entirely to the states, a revision whose primary consequence would be putting more highway-crazed State Departments of Transportation in charge. It was, in other words, not a good policy. Thankfully, two amendments to MAP-21 that would have done so failed by huge margins in the Senate (Senator Jim DeMint (R-SC)’s by 30 to 67; Senator Rob Portmans (R-OH)’s by 30 to 68), suggesting that there is little support on either side of the aisle for moving all transportation policy to the states.

MAP-21 is designed to provide a framework for a significant reworking of the nation’s transportation policy structure. It does so first by establishing a set of national goals for the mobility system — to improve the freight network, to ensure a state of good repair for existing infrastructure, and to reduce congestion, for instance. These largely symbolic efforts may come to play a larger role if MAP-21 enters into the law and is eventually expanded by future legislation.

More importantly, this bill consolidates duplicative programs in the Department of Transportation and at least in theory streamlines project delivery processes to ensure faster construction timelines and cheaper costs. Whether these changes will actually improve the construction and operation of transportation in the U.S. remains to be seen.

Though MAP-21’s investment strategy is generally designed to continue existing levels of federal transportation investment (at an inflation-adjusted pace) including the now-standard 20% of funds for transit, it includes several measures that are beneficial to sustainable transportation options. For one, the TIFIA program, which offers federal loan support and can back significant private investment in new infrastructure, would be expanded from $122 million a year to $1 billion a year. For cities like Los Angeles, which wants to expand its transit network at a breakneck speed, this could be a huge boost, as it allows cities to take out more loans at lower, federally backed rates.

The bill permanently equalizes commuter tax benefits for transit commuters with those received by people who park, a long sought-after rule. It also allows transit agencies to use federal funds to pay for operations costs in certain situations. This is currently not to be covered using money from Washington (because transit funding is currently reserved for capital expenses). This is a huge advance that could provide downtrodden metropolitan areas the ability to maintain services on their bus and rail lines even when they face declines in revenues from other sources, which has happened in most U.S. cities since the beginning of the economic crisis.

Despite the inclusion of more money for TIFIA, the bill’s stance on private involvement in transportation is mildly contradictory. The House bill H.R. 7 would have given transit agencies a monetary incentive for contracting out their services to private operators. This was, to be frank, a giveaway to the private transportation industry. MAP-21 has no such provisions.

On the other hand, MAP-21 includes an amendment proposed by Senator Jeff Bingaman (D-NM) that passed 50-47 that excludes private highways from the calculation of a state’s guaranteed transportation funding through standard federal formulas. Currently, states are provided highway funds in part based on their mileage of federal highways; the Senator’s amendment simply says that roads that used to be public and were transferred to a private entity should not be counted in that calculation. Bingaman argued that “drivers across the nation shouldn’t be subsidizing any state that has chosen essentially to “sell off” an existing highway to the highest bidder.” He has a point, and his amendment seems likely to dissuade states from continuing down this particular path, but it does seem to be somewhat of a contradictory move on the part of the Senate: Does it want private investment through programs like TIFIA, or not?

Altogether, the Senate’s proposal is a significant advance over the existing law. If it were passed by the House, American cities would benefit.

Nevertheless, MAP-21’s ultimate failure remains the fact that it fails to provide for a significant expansion in funding for sustainable infrastructure projects. President Obama, whose administration continues to officially promote the passage of a bill that would double national transportation spending and devote a far higher percentage of it to transit, livable communities, and high-speed rail, has been shunned to the sidelines in the Senate’s debate. And the nation’s mobility systems will suffer as a result.

What, then, can we make of the future of the nation’s transportation network? What is inevitable is that MAP-21’s success or failure in the House of Representatives will do nothing to resolve the legislative confusion between the oft-repeated claim that transportation should be paid for through user fees and the embarrassing fact that there aren’t enough user fees being collected to pay for the things we want.

Image above: The subway connecting the U.S. Senate office buildings and the national capitol building, from Flickr user goldberg (cc)

29 replies on “The Senate’s Transportation Program”

I don’t understand why most, if not all, of the state DOTs are “highway crazed”. Aren’t state governments elected by and accountable to their citizens too, just like the feds? It’s really weird to me that the state DOTs are so stuck in the 50s.

Maybe I’m spoiled by Mass DOT. I think they’d do an awful lot of good in Massachusetts if they had a big pile of no-strings federal funds.

1. Highways are more lucrative in terms of federal funding available.

2. All the states with big urban populations have a bicameral legislature, so less populous areas get disproportionate representation; rural communities don’t need rail or bus rapid transit, but they do need roads (and politicians to gold-plate them).

Out of curiosity, what good has MassDOT done? If MassDOT was given no-strings funds, they’d use them in a no-strings way according to their institutional preferences, which are (from what I’ve seen) roadway expansion plus the odd park-and-ride, not good urban transit (for instance, the Red-Blue Connection and North-South Rail Link cost estimates went up by three thanks to “contingencies”—i. e. the studies were rigged to kill the projects).

One error which needs correction (and I was corrected on this a while back), but the rural/small state bias that is present in the US Senate generally does not occur in the states–the SCOTUS, in Reynods v. Sims, ruled that state legislative districts were required to represent areas of roughly equal population.

Of course, many states have a larger rural population than urban, and many of these have gerrymandered their legislatures to dilute urban voting power (i.e Georgia). Others, such as New York, have the situation virtually the rest of the state frequently unites against the dominant city.

Two other things: Roads are useful for moving freight whereas rapid transit systems are not; thus industry has a vested interest in promoting road development to reduce their costs. (Why they then permit these vital freight corridors to become clogged with automobile traffic is another matter). Also, many state DOTs are depoliticized, and often run with boards staffed with various captains of industry–who exhibit the pro-freight and pro-road bias.

In New York, there’s a precise guideline for how much the state legislative district populations can vary from the statewide mean (4%), and generally Upstate districts are as small as possible and Downstate districts as large as possible subject to the guideline.

And every single left-wing area upstate is cracked into pieces, unless it’s too large (Albany) in which case it’s packed. Extreme gerrymandering.

The State Senate Republicans can barely retain control even with the extreme gerrymandering, because of the population trends and the recent “repatriation” of prisoners — and this time round they’re trying a state constitutional violation, adding an extra seat to the State Senate, in order to maintain their control — so this problem may end eventually. But Andrew Cuomo signed the evil gerrymander, which means we’re not going to fix this problem for another couple of years.

“highway-crazed” is a bit strong – I would have said “highway-orientated”.

The problem is that in most states, transit and active transportation is done at a county or municipal level. Transport planning at the state level is all roads – so there is no knowledge or expertise about how to balance different transport modes.

One solution woudl be for the state to pass the fund further down the chain . Alternatively, states should have state-wide *multi-modal* transportation policies, and use the funds accordingly.

Many states also have a much more severe unbalance of power – giving rural areas more political heft on state-level issues than urban and metropolitan ones, despite the fact that the metro areas are usually where all the tax base and the vast majority of the people are.

It’s not like states are some idealized political geography. They’re not national (where a nation’s borders at least coincide with other major differences in sovereignty, monetary policy, language, etc), they’re not the best economic geographies (for cities, that would likely be Metro areas – since most cities no longer annex new territory as they grow); instead they are anachronistic political entities. It’s fundamentally a mismatch of governance, and there’s nothing inherent to the states that makes them a good choice.

New York has been gerrymandering the State Senate in order to keep Republicans in power for the last 40 years.

It’s practically impossible now; they already lost power once, and their rural powerbase shrank during the last census. They are currently attempting to violate the state Constitution by increasing the size of the State Senate in order to allow themselves another gerrymander; I’m not even sure that will work given population trends.

Unfortunately sellout Andrew Cuomo signed off on their plan.

What if we just let the federal gas tax expire?

States could raise their own gas taxes and vehicle registration fees for highway maintenance. Cities could raise their own sales taxes for transit maintenance.

USDOT should only oversee a national infrastructure bank for major captial projects, such as major river crossings and transit New Starts. Funding for the national pool could come from the savings of ending two wars.

I love this idea. Stop collecting the taxes, and stop disbursing the revenue. Let the states figure out how to sustain the unsustainable subsidies. If Ohio wants to continue with $3.00/gallon gas, by all means let them. At least then, we know it is coming out of the state general budget and not being paid for with inflation or debt…or taxes from states that are more responsible.

Except that states don’t know how to do anything except build more highways. At least with the federal government levying the gas tax, you know that some of those funds will make their way targeted grants for public transit projects like TIGER, Small Starts, New Starts, etc.

This is nothing more than paranoia. States and localities DO spend money on transit. The proportions aren’t even that far off when you consider urban vs rural population. So many people here act like states don’t spend a cent, but it is pure availability bias. Just because states don’t have high visibility programs that provide for “newsworthy” ribbon cutting ceremonies doesn’t mean that they don’t spend money on transit.

Furthermore, part of the reason why states spend so much money on roads is that the Federal government has already made that decision for them. They either spend the money or they lose it (their matching subsidies). Roads funding is one area of government where states have little to no autonomy for how money is spent. If they actually had to pay to support 100% of their highway expenditures, you can bet your ass that they would favor the far less costly urban transit than building and maintaining urban highways.

We love highways in our state your going to pull our stearing wheel from our cold hard dead hands before that happens.

Our state loves road money pits such as the Coalfields Expressway such as we have already spilled $500 million into this beast while the Norfolk drowns under over loaded 1950’s expressways that really need to be widened into eight and ten line wide highways. And don’t get me talking about the money chow hound Interstate 95 in Vriginia in it’s many failed road widening projects.

Once again, these projects are funded mostly from the Federal government. Do you know how your state would act if it were acting without the intervention/money of the feds?

Its not like states have a choice here. If they get $40bn in transportation money from the federal government, they can’t just arbitrarily divide it up and budget it out…it comes pre-budgeted, pre-allocated, and with plenty of strings attached.

The proportions you’re thinking about assume that everything in the transit bucket is actually transit. This isn’t really true. One third of the MBTA’s debt, the interest of which is equal to two thirds its current budget gap, comes from the construction of Big Dig mitigations.

Alon, I’ve read your post and I agree with it, but I don’t think the problem there is state legislatures and their budgets. The problem there is that the transit agencies themselves are complicit. It might be an incentive issue…do the Metra directors aspire to some day be the DOT Commissioners?

You know, I never thought about it this way. There’s little I refuse to believe about the MBTA. That said, some of the big bombshells, for example the overestimated costs of the North-South Rail Link and the Red-Blue Line connection, seem to come from political opposition, e.g. from the mayor.

It might be a difficult battle in the short run to break state DOTs of their highway bias, but in the long run urban transit would be much better off with transportation policy and funding set by the population-proportionate state legislatures than by the inherently rural-dominated US Senate.

How confident can we be in that assessment? The rural-dominated U.S. Senate is also the body that actually managed to pass a bill. And the bill it passed enhances the status of transit in the national transportation program. Meanwhile, even the most urban states — from Massachusetts to New York — continue to have significant difficulties maintaining appropriate levels of service on their transit systems due to a lack of adequate state support.

…due to a lack of adequate state support.

There are far more causes than a lack of state support. You should know this, but your bias towards centralized government doesn’t let you think outside of that box.

As someone who would willingly support raising my own taxes by a few thousand dollars per year in exchange for better transit service, you would be hard pressed to get me to vote for a tax increase in cities like New York, Chicago, Boston, or San Francisco. “Increased funding” and “increased service” are not interchangeable phrases in those cities.

Find a city where transit is done right (or even mostly right), and you will find broad electorate support for funding, without the funding volatility that comes from the huge opinion swings on the national level. Surprisingly, even in this political climate, such cities do exist (I personally have voted for transit expansion in one of them).

In Chicago increased funding actually does seem to translate directly to improved service. (Not “increased service” — it usually means rotting stations are fixed.)

In Boston we haven’t seen increased funding to the MBTA in something like four decades, and the Republicans deliberately saddled the MBTA with extra debt just for the hell of it (you can look the history up), so any claim about what would happen to increased funding is a hypothetical. What the MBTA needs is for the state to remove its debt and turn it into state debt; most of it was state debt originally ANYWAY.

I know what you mean about NYC and SF, which have *actual* project execution problems.

I really wouldn’t care now anymore if we get rid of the federal highway program that way we can let the interstae highways fall apart and become remantants of the bygone age of when there was a great empire that built great projects. Also get ride of federal transporation systems and funding can finally help us get to where we really want and that is for everyone to take care of everything themselves.

Maybe in 500 years the Surfs will take their foot carts on the former overgrown four lane and eight line wide highway beds though the giant man made pases basted though the mountains ages ago by the long dead race of people known road builders and no one will remember why they died out.

You could argue that the lack of inaction is already causing a fundamental shift with the interstate system. More and more the only lane miles that are being added are the ones that can be tolled as well as ever increasing use of variable tolling on those roads depending on the time of day. This works in urban corridors where their is traffic/demand to support it. In the same token, rural low density states are seeing their miles of interstates and four lane highways crumble without a clue what to do. A good example at the moment is Missouri and I-70 where the DOT is arguing for tolling and the state representatives worry about the latest social agenda item, voter fraud by the bogey man or whatever.

Devolving the issue to the individual states will, if anything, result in a more highway-oriented policy. Buying off State-level politicians with a well-placed campaign contribution is a lot easier than buying Federal-level politicians. The industries that rely on shipping love highways because they use them to move freight (and thus support freight rail as well) but see public transit as a waste because it doesn’t direct boost their bottom line.

And it’s a lot easier for voters to kill the necessary tax levies to support “highway-oriented” policies at the state level.

States leaning urban have the votes to keep their tax base where the jobs are. States leaning rural lack the tax base to waste where the people aren’t.

Thanks to market urbanism and the value-capture of density, cities are more resilient. If and when we transition to a more localized political economy, investment decisions will be made by those who have a more direct stake in, plus can capture the value of, the resulting return.

House passes both Ryan’s budget and the 90-day extension of SAFETEA-LU. In other words, this House is not going to pass a reauthorization tied to conventional funding sources or lacking spending cuts.

Without any real threat to let the gas tax expire, voters will continue to ignore the importance of a new transportation bill. And without any limit to extensions, this House will continue to ignore even the most bipartisan of Senate bills until they can work with a different Senate.

Sure, the Senate could have looked like obstructionists, if they allowed expiration. But it would still be better to do that now, when the election is more than 90 days away and gas prices are going up. That window of opportunity has now been given to the House, as the public’s attention can turn to the budget and an election.

The only foot in the door left for the Senate is to tackle big-oil subsidies. But the framing of transportation will then shift from sustaining the fragile recovery and building a more resilient economy to yet another budgetary and deficit-focused exercise, on top of the energy de-regulation framing the House had already achieved.

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