Congress Finance

The Federal Role in Surface Transportation Funding

» Contesting Washington’s involvement in transport funding could be deeply problematic.

The issue of how or even whether Washington should be involved in the funding of American transportation programs has been of concern for decades. When most travel undertaken is of a local nature — people getting to and from home, work, and leisure — why should the federal government be involved with the financing of new or maintained roads and transit systems?

Like with most expenditures, one clear argument for federal involvement is that using funds derived from nationally produced revenues allows for a more progressive apportionment of overall spending power, since revenues can be redistributed among the population as a whole. This, after all, is how our national social programs work, in health and education, for example. The benefit is obvious: A more equal society in which people all over the country are blessed with the nation’s wealth. The U.S. provides similar benefits to people in Mississippi and Connecticut even though, of course, incomes in the former state are far lower than those in the latter.

I have argued that transportation, like other issues more commonly referred to as matters of public concern, is an essential matter of overall social welfare. We need a robust national mobility system to guarantee that all of our country’s residents have adequate access to jobs, goods, and people. For this reason, I have repeatedly endorsed the idea of using national income tax receipts to pay for transportation expenditures, moving away from the gas-tax model that is currently used. Using income tax receipts allows the creation of a more progressive model for funding, and, perhaps more importantly, disconnects how revenues for the transportation system are collected from how they are distributed. This latter insight is controversial, however, since most transportation economists can’t help but endorse the idea of a “user pays” model, since it aligns with their sense that supply should equal demand.

For the most part,* the federal government has endorsed this “user pays” approach, using a federal gas tax since 1956 to pay for the construction of the Interstate Highway System, and, in more recent years, its maintenance, as well as the construction and maintenance of many of the nation’s transit systems. The problem is that this approach is not progressive. In fact, states generally receive back from the federal government almost exactly what drivers have paid in taxes at gas stations in those states. As a result, the system does not move funding from the states with the most funding to the states that need funding most.

Indeed, rather than there being some sort of national plan that determines how federal transportation funding is spent, the money is generally passed back out by formula, with a few regulations but not much else attached. Because of differences in Congress about what policies the government should be encouraging, there are no prohibitions on new highways and few preferences for pedestrian or bike infrastructure, as there probably should be. It’s much like the revenue sharing policies that have been in place for the Department of Housing and Urban Development since the Nixon Administration.

Rohit Aggarwala wrote yesterday that the lack of consensus about the rationale for a federal transportation policy, combined with the inability of Congress to raise the gas tax to fund the system, suggests that there is an argument for simply eliminating the federal gas tax and allowing states to determine how to fund their transportation networks alone. This reasoning is appealing in that it would devolve revenue-production and funding decisions to a lower level, which ought to be good for small-d democracy. Aggarwala suggests that a devolution of transportation policies would force low-tax states (which often happen to be high-driving states) to make a clear decision about how many roads they should be building. I would agree that the idea of spending federal gas tax revenues on new highways around Sun Belt cities, which we do a bit too much currently, is anathema to the nation’s transportation needs.

Moreover, seeing as how the federal transportation funding system is not particularly progressive, as outlined above, keeping decision making in Washington no longer seems so reasonable. So let states decide for themselves, not only in terms of how much they want to raise, but also in terms of how much they want to build. In fact, states already raise the majority of their own transportation revenues.

The problem with this whole line of discussion is that it would likely be devastating for transit systems in major cities, particularly in conservative states with no history of state support for public transportation. One major advantage of the current federal finance system is that it devotes a fifth of all transportation funding to transit. The consequence is that cities are awarded funds for maintaining their bus and rail systems by formula at about $8 billion a year (and that’s not even including the $2 billion annually devoted to new transit construction). That funding plays an essential part in ensuring cities can keep their systems up to date.

Were the federal funding system devolved, some progressive states such as New York and California could increase the share of funding aimed towards transit. Yet the evidence suggests that when most states are given the option by the federal government to determine how funding is spent, they direct the large majority of financing to roads. States that have established state infrastructure banks have similarly shown themselves clearly oriented towards highway construction. This is a serious problem if we are to believe that leaving all transportation funding in state hands is a good idea.

There is some argument to be made that cities that want to invest in public transportation should simply pay for it themselves, yet that approach has a number of serious flaws. First, it would be a serious impediment for poorer cities to continue the funding of their transit systems, since they lack adequate local funds; there is a very strong correlation between metropolitan-area income and the amount of money cities spend on transit operations, producing highly inequitable results. Second, cities in low-tax states may find their ability to actually raise taxes locally stymied by state legislatures that believe that any tax increase should be prevented. Finally, there is little evidence that locally funded transit projects are “better” or “more efficient” than federally funded ones, since most projects already require a significant local contribution.

This discussion does not answer the question of whether or not the federal government should be directly involved in the funding of the nation’s transportation systems. But we certainly should raise the question of whether simply diverting all power and decision-making authority to the states would really be of much benefit to the nation’s cities.

* Over the past ten years, Congress has had to shore up its transportation funding repeatedly with infusions from the general fund (income tax- or debt-derived) to supplement the declining revenues from the gas tax.

Congress Finance President

Bridging the Fiscal Cliff

Buffalo Light Rail

» Declining federal expenditures will hit transportation spending hard. How should states and cities keep up their investments?

The Democratic Party’s big wins in last month’s national elections effectively maintained the national status quo, keeping Barack Obama in the White House, Democrats in charge of the U.S. Senate, and Republicans at the helm of the U.S. House. The Democrats have the cities to thank for their success; urban voters not only turned out to vote at high levels, but they made clear their overwhelming preference for the Democratic Party’s government investment program. In matters of transportation, Democrats in power represent a base of voters that benefits uniquely from new spending on transit, pedestrian, and biking infrastructure.

As part of his proposal to respond to the nation’s “fiscal cliff” — a government austerity mechanism imposed by the Congress a year ago — President Obama suggests investing $50 billion immediately in new infrastructure spending in order to provide additional stimulus for the still-weak economy. The Secretary of Transportation, Ray LaHood, has also noted that the President plans to include significant funding for high-speed rail in next year’s proposed budget.

But Republicans have made clear that they are singularly opposed to any such additional spending, and according to Slate’s Dave Weigel, are actively plotting ways to further marginalize urban voters, rather than, you know, develop policies that attempt to respond to their needs. Thus the chances that the House GOP will approve any additional federal spending on transportation over and beyond what was already approved in the MAP-21 two-year transportation reauthorization bill are minimal. Nor are we likely to see new federal transportation revenue generators such as a gas tax increase or the implementation of a vehicle miles travelled fee.

At the same time, for the most part states have not taken up the slack. Few have taken the initiative to increase their funding for transportation projects and those that have have frequently oriented those investments towards new roads rather than sustainable alternative infrastructure.

What does this mean for cities? Are we likely to see another two years of federal inaction when it comes to improving our transportation system, thereby decreasing the level of maintenance of many of the nation’s transit systems and making expansions downright difficult? Or could we see a breakthrough? Please use the comments section as an open thread to add your thoughts on this and any other relevant transportation issues.

My apologies for the lack of writing as of late; my non-web work has taken hold of my time. I hope to be writing more soon, but in the meantime will post shorter entries such as this to allow for commenters to chip in and keep up the discussion.

Image above: Buffalo Light Rail, from Flickr user Jenn Durfey (CC)

Congress Elections Infrastructure President

The Vote 2012

» A change in power in Washington will affect federal commitment to sustainable transportation, but so will local ballot measures.

The first two years of the Obama Administration, accompanied by Democratic Party control of the U.S. House and Senate, produced significant new investments in transportation projects nationwide. Over $10 billion was distributed to intercity rail projects across the country, new funds were devoted to streetcar and bus rapid transit lines, and the government began an unprecedented period of cooperation between the Department of Transportation and the Department of Housing and Urban Development.

Since early 2011, however, much of this progress has been stalled thanks to a stingy U.S. House newly controlled by the Republican Party. Their leadership, both in the Transportation and Infrastructure Committee and the Budget Committee, has promoted a significant decrease in funding for alternative transportation. A House committee voted in favor of legislation that would eliminate the guaranteed distribution of gas tax revenues for transit; the full body repeatedly voted against high-speed rail investment; and previous requirements for states and localities to invest in pedestrian-oriented projects have been scoffed at.

Mitt Romney’s decision to select Paul Ryan, head of the House Budget Committee, suggests that, if he were elected, he would pursue a similar significant reduction in spending on transportation. Barack Obama has campaigned, on the other hand, in favor of transferring funds currently being spent on the war in Afghanistan on “nation building at home,” or improved infrastructure in the U.S.

But President Obama’s advocacy of a large transportation bill in 2011 and 2012 was ignored by Congress. Only in the summer of 2012 were Democrats and Republicans in the House and Senate able to compromise on a two-year transportation bill that maintained previous levels of investment, largely on the back of deficit spending. There is little evidence that there is any source of new funding for transportation projects that will acquire bipartisan support.

Polls indicate that President Obama is likely to win reelection, Democrats will keep the Senate, and Republicans will keep the House. These conditions will probably prevent the federal government from increasing investment in alternative transportation over the next two years. We’ll likely be at a stalemate.

Fortunately, measures also on the ballot in many cities will play a big role in determining the future of America’s transportation investments. Below is a summary of the major measures up for vote. It is not an exhaustive list, only including transit spending in major metropolitan areas; it does not include proposals to expand investment in highway infrastructure, such as Arkansas’ Issue 1, which would distribute about $1.3 billion to new four-lane roadways across the state. For a full list, see the Center for Transportation Excellence.

Follow me @ttpolitic for live coverage. On another topic, you may also be interested in the op-ed on the home mortgage deduction I co-authored with Professor Lawrence Vale in last Wednesday’s New York Times.

Round-up of local ballot measures (and one mayoral election) that will affect transit projects nationwide. Updated with results 9 AM Wednesday

1. Alameda County (California) Measure B1 : Failed with 65.5% voting in favor (needs 2/3)

This county, across the Bay from San Francisco and incorporating the cities of Oakland and Berkeley, among others, is proposing a 30-year extension of its existing transportation sales tax. The $7.7 billion expected to be collected over the period will be distributed to transportation improvement projects, with about half going to public transportation and 39% to roads. 24% of overall funding will be distributed to transit operations and maintenance and a significant amount diverted to transit capital projects, such as the long-sought-after Dumbarton Rail project, BRT corridors, and infill stations along BART.

About $400 million in tax revenues will be distributed to the BART to Livermore expansion project, which is likely to increase sprawl in the eastern sections of the Bay Area as it improves transit access to the Livermore Lab, for better or worse.

2. Arlington County (Virginia) Bond : Passed

This (increasingly urban) suburb of Washington, D.C. is asking voters to approve a $32 million bond to be spent on transit, roads, bike, and pedestrian projects. About half will be spent on fleet and capital improvements for the region’s Metrorail network. Over the past five decades, the County has been a very responsible custodian of its transportation network and invested in projects that have encouraged transportation alternatives.

3. Clark County (Washington) Sales Tax : Failed

Vancouver, Washington is just adjacent to Portland, Oregon and is expected to welcome an expansion of the latter city’s light rail network in the next few decades thanks to a new crossing over the Columbia River. A 0.1% increase in the existing sales tax will provide funding for light rail and bus rapid transit operations in the Fourth Plain Corridor, which extends from Vancouver’s downtown.

4. Honolulu (Hawaii) Mayor’s Race : Caldwell (pro-rail) Wins

More than any other city in the country, Honolulu’s transit future depends on this mayoral election. The city has a more than $5 billion elevated metro rail line under construction that is expected to carry more than 100,000 riders a day thanks to a corridor that serves most of the city’s major destinations. The project has been under development for a decade, has assurances of federal funding, and has the support of locals thanks to previous approvals of a dedicated tax to pay for the line. Candidate Kirk Caldwell, who has previously served as acting mayor, is supporting the project.

But opponent Ben Cayetano argues the rail line is a waste of money and that funds could be better spent on bus rapid transit corridors that would be less visually intrusive than the rail line. He claims (without much evidence) that the city could reorient federal funding into such a project and serve as many people. He has promised to shut down the line’s construction if he is elected.

5. Houston (Texas) Sales Tax Diversion : Passed (Diversion continues)

Since 2003, a quarter of Houston’s 1% transit sales tax is redistributed to local communities under the General Mobility Program. This effectively allows cities to build roads ith  money that was originally supposed to be directed to bus operations and light rail expansion. The diversion of funds was initially supposed to end in 2014, but voters are being asked whether they want to extend the diversion until 2025.

While transit advocates argue the policy is depriving the city’s public transportation network of desperately needed funds, local mayors argue they need the money to continue their normal operations.

6. Kansas City (Missouri) Streetcar

Kansas City is planning a $100 million streetcar line that will connect destinations downtown. Unlike many other cities, locals here are planning to pay for the project mostly out of local funds. Specifically, about 700 downtown residents are being asked whether they are willing to pay special assessments and a 1¢ sales tax for the privilege of funding the streetcar.

The mail-in ballot is not due back until December 11, so we’ll have to wait a bit longer to hear back about these results.

7. Los Angeles (California) Streetcar

Like Kansas City, L.A. also expects local residents to consider paying a dedicated tax to construct a streetcar line. The mail-in ballot will fund a project that connects with the region’s subway and light rail networks and serves the biggest destinations in downtown L.A. There is some question as to whether the project is duplicative of existing services.

Citing Portland’s experience, many proponents of investments in streetcar lines argue that the systems can play an important role in encouraging economic development and improving property values. The local taxes proposed in L.A. and Kansas City are a test of whether property owners in those cities are willing to bet on that concept.

8. Los Angeles (California) Measure J : Failed with 64.7% voting in favor (needs 2/3)

Fresh off the passage of Measure R in 2008, L.A.’s Mayor Antonio Villaraigosa is proposing extending that half-cent sales tax from 2039 (when it was supposed to expire) to 2069. This extension will allow L.A. County to use projected revenues far into the future to pay for transit and highway investment projects today. If passed, the measure will make it possible to complete many of the region’s major mass transit projects, including a subway to UCLA, an airport link, and a downtown connector, far more quickly than originally planned.

9. Memphis (Tennessee) Gas Tax : Failed

This city’s leadership is promoting a unique approach to improving funding for the area’s public transportation system, MATA. By implementing a local tax on gasoline equivalent to 1¢ per gallon sold, the city will be able to raise between $3 to $6 million for transit. Specifically, funds will go to expanding service on 8 bus routes and the downtown trolley.

10. Orange County (North Carolina) Sales Tax : Passed

Last year, voters of Durham County, Orange County’s neighbor to the east, approved a half-cent sales tax, dedicated to funding transit. The two counties, part of the broader Research Triangle region, plan to significantly improve bus services and construct new light and commuter rail lines. If Orange County’s residents approve the tax, about $661 million will be collected over the next thirty years, about $418 million of which will be devoted to a light rail line connecting the University of North Carolina Hospital in Chapel Hill and downtown Durham.

11. Richland County (South Carolina) Sales Tax

This county, whose seat is Columbia, the state’s capital, is asking its voters to consider the imposition of a one-cent sales tax that will fund roads, greenways, and bike lanes. The tax is expected to raise about $1.1 billion over 22 years, of which $301 million, or about one quarter, will be spent on improving bus service on the region’s Central Midlands Regional Transit Authority. About $656 million will be spent on local roads.

12. Virginia Beach (Virginia) Light Rail Advisory Vote : Passed

Fresh off the success of the new light rail line in neighboring Norfolk, Virginia Beach is considering whether to extend that line into the city and perhaps all the way to the waterfront. Citizens are being asked whether they approve of the idea or not, but the city council, advised by this citizen input, will make the final decision on whether to pursue the project or not.

Image at top: Rendering of proposed Kansas City Streetcar, from KC Smart Moves

Congress Finance

Congress Passes Major Transportation Bill, Preserving the Status Quo

» MAP-21 will provide federal funding for highways and transit over the next 27 months. Passing the bill was an accomplishment for a do-little Congress, but serious issues about how to pay for transportation in the future have yet to be resolved. Nonetheless, there are some interesting features in the bill for new transit capital projects.

On Friday, the U.S. House and Senate passed MAP-21*, the federal government’s latest ground transportation authorization bill, modeled closely on the bill that passed the Senate in March. The $105-billion piece of legislation will provide funding for essential highway and public transportation programs, most of which are in the form of formula-based allocations that direct money automatically to states and metropolitan areas. The bill will be in effect for 27 months, expiring in September 2014.

MAP-21 replaces SAFETEA-LU, the last long-term federal transportation bill, which expired in 2009; in the meantime, we have seen extension after extension of that law and a seemingly never-ending set of grueling disagreements about the future of mobility policy in the U.S. that revealed stark partisan differences about the role of the federal government in directing the construction and maintenance of the nation’s road and transit systems.

There have been points in this debate when the chances of a bill passing — any bill other than an extension — seemed close to nil. Democrats have demonstrated a sincere interest in expanding the amount spent on new transportation capital, especially in high-speed rail and transit, as illustrated by President Obama’s proposal in early 2011 for a $556 billion, six-year bill. Republicans, meanwhile, have argued for constraining the amount spent on highways to revenues collected from fuel taxes — and abandoning efforts to expand funding for sustainable mobility. But ultimately the two sides have similar goals: To maintain existing transportation funding without increasing taxes to pay for them; in other words, to preserve the status quo.

Indeed, that is the first point to make clear about this transportation bill: It is neither transformational nor a long-term problem-solver. It does not “fail America,” as some have suggested, by failing to make the major reforms that have been suggested by proponents for four years. It does reduce the complication of moving a major project through the federal grant process and it reduces the overall confusion of programs in the U.S. Department of Transportation, two important changes.

It is, however, a disappointment that the bill does not do more to equalize decision making between modes, of course: Why do there continue to be separate budgets for highways and for transit? Why can’t rail (which goes unfunded in this legislation) be compared to highway expansion when the latter is being considered? Meanwhile, why do transit expansion projects continue to be subjected to rigorous competitions for funding, while highways do not?

The bill continues the decades-long trend of declining investment in transportation at the national level. As the following chart shows, as a share of the federal budget, transportation spending has declined from about 3% in the 1960s to about 2.5% in the 1970s to about 1.5% today. At the national level (including local and state funding), transportation spending has declined from about 2% of U.S. GDP to less than 1.5% (though there was a stimulus-related jump in 2009). There has been a general decline in the perception of the importance of spending public dollars on transportation. That trend will continue under MAP-21, which provides about $50 billion per year in funding, equivalent to spending today adjusted for inflation.

It is worth questioning whether we need to significantly increase spending on transportation. The massive federal investments in new highways from 1956 to the mid-1980s encouraged the decentralization of our cities and a decline in our transit systems. Now that our cities are growing again, some might argue that they should simply find the tax revenues to pay for improvements themselves — but that suggestion has its real weak points, specifically because it diminishes the redistributive potential of the federal system. Moreover, as long as national funding continues to pump tens of billions into highways every year, I question how cities will be able to keep up.

U.S. ground transportation spending has declined as a percentage of GDP or federal government budget. Dotted line shows projections based on MAP-21 funding. Data from the Congressional Budget Office and the Office of Management and Budget.

Preserving the status quo doesn’t mean keeping spending in line with revenues from the fuel tax. Because neither party has demonstrated an interest in working for an increase in the gas tax or establishing a viable alternative, maintaining current spending levels means that funds must be identified from elsewhere.

As such, the law creates a number of new financing methods to pay for expenditures not covered by the Highway Trust Fund, into which fuel taxes flow. The biggest change involves altering the way pension interest rates are calculated. But most of the shortfall will be covered by the government transferring in $18.8 billion in general funds from income tax collections, $6.2 billion in FY 2013 and $12.6 billion in 2014. Because the U.S. operates with a deficit, that money is effectively debt-based. Got a problem with that? The vast majority of legislators from both sides of the aisle do not seem to be particularly concerned.

As far as I know this is the first time in a federal transportation authorization bill that federal spending on ground transportation will be funded from a source outside of user fees. The conclusion: Federal transportation funding is no longer really dependent on the collection of user fees, and that’s not necessarily a bad thing at all.

MAP-21 will expire in 2014, but as indicated by the transfers from the general fund that will be necessary to fund programs, it will carry on the legacy of a bankrupt Highway Trust Fund. The Congressional Budget Office estimates that — assuming a flat level of spending only adjusted to inflation — by FY 2015 there will be a $9 billion shortfall in the Fund; by FY 2022, it will have increased to $95 billion. That’s money that will have to be redirected from the general fund again beginning in 2014, when the bill’s replacement is being devised, unless by then a new user fee funding device has become sufficiently popular to members of the next Congress.

MAP-21, of course, is more than just a spending bill. Like its predecessor, the large majority of funding in the bill is dedicated to highway spending. As can be seen in the chart below, transit and rail have established a share of about a quarter of federal ground transportation spending, a ratio that is similar to that of spending by state and local governments. That split has been in place since the mid 1980s and is way down from the large percentage of federal ground transportation funds dedicated to transit and rail in the 1970s and early 1980s. MAP-21 maintains that politically motivated balance. (The bill does decrease funding for bicycling and pedestrian programs, obviously not good news, but I’ll leave that discussion to others.)

Transit funding has stabilized at about 25% of all ground transportation spending. But, in terms of federal spending, this is way down from the late 1970s and early 1980s. Data from the Congressional Budget Office.

In terms of funding for mass transit, the bill offers $8.478 billion in FY 2013, rising to $8.595 billion in FY 2014, both on par with existing funding levels, adjusted for inflation. Programs designed to distribute funds by formula remain the largest percentage of the bill and grow similarly, accounting for about $6.5 billion in spending in both years, mostly to pay for the purchase of new buses and the reconstruction of facilities (such as through State of Good Repair grants). The capital investment program, however, has been cut by about $50 million and is stuck at $1.91 billion in both years. This funding provides for the Small Start and New Start programs, which provide the grant funding for new rail and bus corridors.

Despite the lack of increase in funding for those capital expansion programs, a close examination of the bill shows that it offers a number of interesting changes in the way this money is to be allocated to transit agencies:

  • The New Starts program, in the past reserved to new rail or bus lines operating in dedicated rights-of-way in new corridors, will be expanded to include “Core Capacity Improvement Projects” that significantly improving existing infrastructure while increasing capacity on the existing line by 10% or more.
  • Bus rapid transit projects will be classified and funded in the following two ways:
    • Corridor-Based BRT will lack a separate right of way. As the bill describes, however, these BRT programs will involve “a substantial investment in a defined corridor as demonstrated by features that emulate the services provided by rail… including defined stations; traffic signal priority for public transportation vehicles; short headway bidirectional services for a substantial part of weekdays and weekend days.”
    • Fixed Guideway BRT, on the other hand, means a bus-based project that includes all of the features of the Corridor-Based BRT, plus “the majority of the project operates in a separated right-of-way dedicated for public transportation use during peak periods.” The law includes the provision that the federal government will provide 80% funding for up to three such projects each fiscal year. This is an excellent opportunity for cities that want to invest in a big and serious BRT program to set their ideas into action, with limited local support needed. I hope they’re paying attention.
  • The federal government will provide expedited review for fixed guideway projects under two circumstances: New Start projects whose budget is less than $100 million in total; and projects designed by transit agencies that have recently completed similar projects that have achieved or surpassed expected budget, cost, and ridership measures.
  • The Secretary of Transportation will be able to increase the federal share for a capital expansion project if “the net capital project cost… is not more than 10 percent higher” and ridership estimates are “not less than 90 percent” of the estimates at the time the project was approved into the engineering phase of the review process.

The bill expands the TIFIA reduced cost loan program to $1 billion a year (from just over $100 million) and increases the maximum federal share from 33% to 49%, both important advances for cities that promise to dedicate future tax or toll revenues to pay for transportation improvement programs. Essentially, the federal government is increasing the ability of local governments to take advantage of lower federal borrowing costs. In Los Angeles, which has promoted the program heavily under the name “America Fast Forward,” TIFIA loans will allow for the completion of such projects as L.A.’s Westside Subway.

MAP-21 does allow small transit agencies — those with 100 buses used in the peak — to receive operating assistance (currently only capital expenditures are covered by federal transit funding). Though this provision isn’t the kind of large increase in operations support that might be beneficial to cash-starved agencies that are expanding their systems while firing bus drivers, it raises the question of whether large transit agencies could split themselves into smaller operating entities to receive federal operating support via a loophole in the law.

The bill does have one really unacceptable feature: It reestablishes the inequitable relationship between the tax benefits provided for people using transit and people who park. Before the passage of the stimulus in early 2009, people taking transit were able to deduct up to $120 a month from their taxes for doing so, whereas people who parked were allowed to deduct $230; with the stimulus, those figures were temporarily equalized at $230. Now, MAP-21 pulls transit users back down, to $125 in deductions a month, compared to $240 a month for parkers. That’s a disappointment.

Moving Ahead for Progress in the 21st Century. The bill text. It still needs President Obama’s signature to become a law, though this is expected in the coming days.

Congress Finance

In Which the Rhetoric of Fiscal Conservatism Ceases to Convince

» Left with a chance to set in stone the rule that transportation funding should remain based on user fees alone, the House punts.

On Friday, members of the U.S. House took one of the most significant votes on transportation in years. A non-binding motion brought forward by Representative Paul Broun (R-GA) to limit federal transportation expenditures to receipts from the fuel tax assembled in the Highway Trust Fund was defeated, massively defeated, by a 82 to 323 vote. Translation: A large majority of the lower chamber endorsed the idea that the government should be using funds sourced outside of user fees — generally that means deficit-increasing debt — to pay for transportation investments.

Listening to the rhetoric of many political leaders in Washington, the outcome may come as a surprise. After all, isn’t this supposed to be a new age of fiscal discipline? Doesn’t everyone care about keeping expenditures in line with revenues to limit the deficit?

Apparently not when it comes to transportation. If last week’s vote proves anything, it is that support for the idea that spending on transportation should be limited to user revenues is confined to a right-wing minority so far on the sidelines that it does not even account for half of House Republicans. Faced with the choice between drastically reduced spending on infrastructure — a reduction of 30% or more if spending on transportation were to match revenues, according to some estimates (because of the fall-off in collections from the federal fuel taxes, which have historically paid for national spending on roads and transit) — or keep spending in line with demand, rather than the money available, the majority of elected officials across the political spectrum continue to select the latter.

The House’s vote comes almost 1,000 days since the transportation authorization legislation officially expired and it indicates that members of the Democratic and Republican Parties may not be as far apart in ideological terms as we might have thought. While the House GOP’s legislation announced earlier this year — H.R. 7, which would have significantly damaged transit funding — was certainly far from bipartisan, its Senate counterpart MAP-21 has just the right elements of moderation that can please politicians on both sides of the aisle, and indeed it made it through that chamber with a large majority of votes.

For a month now, House and Senate leaders have been working on a compromise between hard-core right-wing views about spending on transportation and the Senate’s moderation, and little has come of the negotiations. In fact, last week House Speaker John Boehner (R-OH) suggested that transportation spending be extended another six months, until the end of December, to avoid making any sort of hard decisions now about a long-term piece of legislation. (The current extension, which basically keeps federal spending at 2009 levels, will expire at the end of this month.) But now that it is obvious that members of both political parties really do want to keep spending going on infrastructure, perhaps compromise is in the offing.

Of course, in today’s Washington, in the middle of election season, you can’t count on anything of the sort.

Nonetheless, what choice do leaders on either side of the aisle have other than to compromise? Without a new law, spending on transportation won’t go up or down, but it will certainly remain above the levels provided for by the Highway Trust Fund. If that’s the case, why not at least make provisions for reforms of the transportation grant system, which everyone claims is too complicated already? That’s pretty much what MAP-21 does.

Republicans have demonstrated that they are unwilling to make the cuts to the federal budget for transportation that would be necessary if they wanted to honor their pledge to reduce the budget deficit; the vote last week proved that they care more about ensuring adequate investment in infrastructure (as they should!) than they do about taking out more federal debt in a period of record-low interest rates. Democrats in Washington, meanwhile, have shown no real interest in actually fighting for revenue increases through an increase in the fuel tax, major installation of tolling facilities, or the creation of a vehicle-miles traveled fee, all of which could restore the fiscal health of the Highway Trust Fund but which are considered too politically explosive to fight.

Thus here we are. Members of Congress seem to agree: The politically obvious choice is maintaining transportation spending and in the process doing nothing to increase taxes to pay for the program. Is that a big problem? Not really. But it certainly won’t do anything to reduce the deficit.

What does this suggest about the future of federal transportation spending? What seems clear is that it would be delusional to think that there will be any sort of quick return to a system in which expenditures are defined based on revenues. The grave for the user fee based model for transportation funding has just been dug a bit deeper.