Hopes dim for a highway bill this year

A few people in Congress have made polite gestures towards bringing a House transportation bill to the floor before the end of the month, but transportation analyst and author of the Innovations Newsbriefs news letter Ken Orseki thinks any such legislation is bound to die on the vine this year. The chief problem is that with just three weeks before the current highway bill “SAFETEA-LU” expires, the House Ways and Means committee doesn’t have any notion of where the funds might come from for a new multi-year transportation bill. Most of the members of that committee and Transportation Committee Chairman Oberstar say they do not want to raise the gas tax in the middle of the recession. And Oberstar has been adamant in arguing for a $500-billion bill, almost double the level of funding from SAFETEA-LU.

The good news is that it’s almost certain that a continuing resolution will be passed to keep funds flowing. Possibly as early as next week senators Inhofe and Boxer will bring to the floor of the Senate a bill providing for an 18 month extension of the current program and repealing an  $8.7 billion rescission of the federal highway program which otherwise would have taken effect at the end of the month.

Speaking of the likely 18 month extension of the current program/postponement of a new bill, Senator Kit Bond of Missouri said:

“Postponing the enactment of a multiyear authorization would also offer the Senate and the Administration a chance to participate more fully in the overhaul of the nation’s transportation policy. This argument, we suspect, while seldom expressed openly, is probably in the back of the minds of many Senators and senior Administration officials.”

The Obama administration has indicated it favors an extension and Orseki thinks a shorter extension, say 8 to 12 months may be in the cards.  And he believes as we do, that any extension could present the transportation construction industry a golden opportunity to get it right this time.

The political climate for anything right now in Washington D.C. is pure poison. The health care bill will likely be torn to shreads as will the energy/climate bill and probably anything else the Obama administration proposes. There was a time in the late 1990s where gridlock in Washington could be seen as a good thing. That was before terrorists stuck and we launched two wars, bridges started falling into rivers and the economy spiraled into a bottomless pit. Gridlock is not a good strategy when faced with such enormous problems.

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So wouldn’t it be a great thing if the transportation industry could show the rest of the country how to get good legislation written and passed in a bi-partisan way to the betterment of all the citizens of our republic. A $500 billlion transportation bill wouldn’t cost any more than adding a dime or so to the federal fuels tax, and the benefits in reducing congestion and lifting the construction industry would be immediate and long lasting.  Plus raising the fuel tax is the least expensive way to promote conservation and encourage the development of alternative fuels and transportation modes.

Again for emphasis: this is a once in a lifetime opportunity. Blow this chance and we might as well call into questions the need for a federal government. If we can’t pave our roads we’re really no better than a bananna republic. And if the government could show us that they could at the least pave our roads without devolving into a fractious, demagogic catfight, maybe more people would come to trust them with bigger goals like energy and health care.

If you’re into the details, the full text of Orseki’s latest newsletter is included below the More line.

Congress Will Likely Extend the Existing Transportation Authorization

Among the pressing legislative priorities facing Congress this autumn– besides the attention-grabbing health care and climate change bills–is an extension of the federal surface transportation program. The program authority expires on September 30 and its renewal is essential to keep the federal transportation money flowing. As we reported in our NewsBrief of August 8 on the eve of the congressional adjournment, the House and the Senate have been on divergent paths in their approach toward renewing the program. The House Transportation and Infrastructure Committee, under the leadership of Chairman James Oberstar (D-MN), has been intent on passing a six-year $500 billion surface transportation measure ($450 billion for highways and transit, $50 billion for high-speed rail) during this session of Congress. In late July, a bill to this effect was reported out by the House Highways and Transit subcommittee. Chairman Oberstar announced at the time that he would hold a full committee mark-up soon after the House returns from its summer recess.

The Senate, on the other hand, has been working toward an 18-month extension of the existing surface transportation program. Its rationale for doing so was succinctly stated by Sen. Barbara Boxer (D-CA), chairman of the Environment and Public Works Committee and Sen. James Inhofe (R-OK) ranking minority member. There simply is no way, the two senate transportation leaders concluded, that Congress could pass a multi-year authorization of the surface transportation program before the program’s expiration at the end of September. “There are just too many big questions left unanswered, not the least of which is a lack of a consensus on how to pay for it,” Boxer and Inhofe stated. A better approach, they said, would be to pass an 18-month extension as recommended by the Obama Administration. Left unsaid were probably two other motives for wanting to postpone enactment of a long-term legislation: (A) an 18-month extension would allow the Senate to take a more active role in shaping the legislation and influence the nation’s future transportation policy; and (B) by early 2011, a more favorable economic climate might allow a significant boost in federal fuel taxes– a boost that both the Senate and the House leaders have ruled out during the current economic recession.

Three Senate committees having jurisdiction over the surface transportation program (the Environment and Public Works (EPW) Committee; the Commerce, Science and Transportation Committee; and the Banking, Housing and Urban Affairs Committee) completed action on their bills to extend the existing program before the recess. Also approved was a measure that would effectively ensure adequate funding for the 18-month extension. The bill in question (S. 1474), sponsored by Finance Committee Chairman Max Baucus (D-MT), would replenish the Highway Trust Fund through a transfer of $26.8 billion from the General Fund. The funds were said to represent reimbursements for lost interest payments owed to the Fund since 1998 and for past disaster emergency expenditures.

This briefly summarizes the situation as it appeared when Congress adjourned for the summer recess. What follows is an attempt to assess the likely course of events in the days ahead. Our analysis is based on conversations with sources on Capitol Hill and members of the Washington transportation community. The report presents a snapshot view of the situation as we see it at the time of publication. Nothing can be asserted with certainty, however, until the Senate and House leaders have sat down and hammered out a negotiated compromise sometime during the month of  September.

Where the Matter Stands in the House

Chairman Oberstar says he has a commitment from the House leadership to bring the bill to the House floor by the third week of September if the Ways and Means Committee can come up with the revenue title to the bill. That’s a big “if”. So far, the W&M Committee has given no indication where the money might come from. According to press reports, a majority of the members of that committee are opposed to any tax increases as a means of funding the proposed $500 billion bill. Significantly, only 15 of the 41 committee members went on record in a July letter to committee Chairman Charles Rangel (D-NY) supporting “prompt action” (i.e. in September) on a revenue package for the bill.

In the opinion of many observers, hope for the enactment of a long term transportation bill this year all but vanished when Rep. Oberstar himself acknowledged that he does not favor raising the fuel tax at this time to pay for the $500 billion transportation program. He made this admission in testimony before a hearing of a House Ways and Means Subcommittee on July 23. “Although increasing and indexing the gasoline and diesel user fee is a viable financing mechanism,…I do not believe that the user fee should be increased during the current recession,” Oberstar stated in his opening statement, echoing the posture previously taken by the White House and Transportation Secretary Ray LaHood. Although he suggested other potential sources of supplementary funding, Oberstar deferred to the Ways and Means Committee. “The Committee on Ways and Means,” he said in concluding his testimony, “must undertake the difficult task of identifying the revenue to finance this bill…We’ll take any dollar you can scare up for us for the trust fund.”

By taking the gas tax increase off the table, Rep. Oberstar acknowledged a political reality but also removed from consideration the most logical source of additional revenue. Other funding options appear limited. One solution could be to use general tax revenue to fund a transportation-focused “Stimulus II” bill . Such a measure might conceivably be rationalized as helping to bring down the level of unemployment— should high joblessness persist. A second option could take the form of a major bond issue to be financed by additional revenue generated from indexing the gas tax at some future date. Both options have been hinted at by Rep. Oberstar and Rep. DeFazio (D-OR) in past interviews. But political analysts do not consider either option as plausible, since both lack congressional and Administration support: neither Congress nor the White House are eager to add to the already sky-high budget deficit. Several other funding options suggested by the T&I Committee leaders—such as imposing a fee on imported and domestic crude oil; taxing crude oil futures transactions (the subject of a DeFazio-sponsored bill, HR3379); and a flat sales tax on the purchase of gasoline—stand even less chance of congressional approval.

The Senate is Poised to Take Action

According to Sen. Inhofe, he and Sen. Boxer have obtained a commitment from Senate Majority leader Harry Reid (D-NV) to schedule the 18-month extension bill for early floor action, possibly as early as the week of September 7. The bill also will serve as a vehicle for repealing the $8.7 billion rescission of federal highway program contract authority required to take effect on September 30. Prompt action on the extension bill is necessary, say Senate sources, before states take irreversible steps to cancel existing contractual commitments to comply with the spending cutback. Pressure to repeal the scheduled rescission has been intense. In late July, AASHTO sent a letter to members of Congress noting that failure to promptly repeal the provision would lead to “devastating consequences” for the states. Sen. Kit Bond (R-MO), author of an amendment to repeal the scheduled rescission, has been equally emphatic: All 50 states will face “drastic cuts” to their highway programs, he said, if the highway rescission is not promptly repealed. The cuts could lead to 250,000 jobs lost in the construction industry, Bond noted.

Given an almost certain approval of the extension/rescission measure by the full Senate, the transportation community is rife with speculation as to the ultimate resolution of the Senate-House impasse. Undoubtedly, an 18-month extension would provide more time to develop a broad-based consensus among the stakeholders on the needed program reforms. Such a consensus hardly exists today as our survey of transportation stakeholders has shown (see, NewsBrief, July 11.) Postponing the enactment of a multiyear authorization would also offer the Senate and the Administration a chance to participate more fully in the overhaul of the nation’s transportation policy. This argument, we suspect, while seldom expressed openly, is probably in the back of the minds of many Senators and senior Administration officials.

Whether a full 18-month extension is needed or appropriate is a matter of judgment. It may be argued that a postponement until the spring of 2011 makes sense because passage of a gas tax increase will be politically more feasible in a post-recession economy. But others argue that getting a gas tax increase enacted in the spring or summer of 2011 is not going to be politically any easier. An 18-month extension would expire a mere three months after the start of a new Congress. With new faces in Congress and a possible political realignment,  the extension could easily morph into a two-year or longer delay. This point of view is emphasized by Rep. Oberstar. “An 18-month extension will just take us into the next presidential election cycle,” he observed, “so it [the extension] will turn into four years.”

Since both houses and both political parties are anxious to keep the transportation money flowing, the current impasse will end up in a compromise. The House will likely drop its insistence on passing a multi-year transportation bill during this session of Congress; in return, the Senate will probably consent to a shorter extension of say, 8 or 12 months— especially as there already is some sentiment for a shorter extension on the part of certain senators. A resolution of the impasse will come before the end of September when the current transportation program authority expires.

Searching for a Consensus on a New Reform Agenda

Postponing the enactment of a long term transportation authorization does not have to mean a pause in searching for a broad consensus on a new vision for transportation policies and programs. Indeed, a National Transportation Policy Conference, to be held September 9-11 at the University of Virginia’s Miller Center of Public Affairs in Charlottesville, may mark the beginning of such a search. Co-chaired by two former Secretaries of Transportation – Norman Mineta and Samuel Skinner, and directed by former Undersecretary of Transportation Jeff Shane, the Conference will aim to develop “an informed, forward-looking, credible agenda to guide the legislative process.”  Panelists and invited participants include some of the best known and most highly regarded members of the transportation community.

The Conference will begin by reviewing the current state of thinking about transportation policy reform by examining the recommendations of the two congressionally-chartered transportation commissions, and the reports of the Brookings Institution and the National Bipartisan Policy Center. It will then focus on four problem areas: funding, urban congestion, freight movement and multi-modalism. The Conference will conclude with a roundtable in which participants will develop a set of “clear, credible and achievable legislative and policy recommendations for a new transportation authorization.” The Conference findings and recommendations will be presented to leaders in Congress and the Administration and to the editorial boards of major newspapers.

We think the conference will mark an auspicious beginning to a dialogue that will  reach across ideological and partisan lines and develop a true consensus on a vision for a “transformative” national transportation policy.


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