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InTransition Magazine : Transportation Planning, Practice & Progress

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Stalled in Traffic

Experts Say MAP-21 Defers Hard Funding Decisions Amid Growing Transportation Needs

By Mark Solof

A broken Congress may be the new norm. The last time Congress approved a budget and completed the required appropriations bills before the close of the federal fiscal year was at least 15 years ago in 1997. “Now the standard is, we get to the end of the fiscal year at the federal level, we threaten government shutdown, we come up with some compromise and we move on,” said National Association of Regional Councils (NARC) Executive Director Fred Abousleman.

traffic and road work

A recent study by the nonpartisan National Surface

Transportation Policy and Revenue Study Commission

concluded that the U.S. is only spending about 40 percent

of what it needs to in order to properly maintain and improve

its transportation infrastructure.

Surely there have been titanic budget battles in decades past, but at least leading up to those battles, Congress often managed to approve many of the 13 appropriations bills needed to fund government agencies and pro-grams. Recent budget battles have seen agreement reached on only Defense and Homeland Security-related appropriations  bills. Across the political spectrum, the process is increasingly seen as heading to a new low.

The dysfunction was visited upon the transportation sector this summer when funding for transportation projects and programs came up against a July 1 funding cutoff. Congress managed to avert the loss of funding by passing a reauthorization of the nation’s transportation law, MAP-21 (Moving Ahead for Progress in the 21st Century). But the legislation was of the Frankenstein variety—with parts hastily sewn together from provisions in House and Senate bills and other proposals floating around Capitol Hill.

It’s alive—but not for long. In contrast to the six-year length of past reauthorizations, which are intended to provide long-term frameworks for yearly appropriations, MAP-21 expires in just two years. It was passed after nine short-term extensions of the previous reauthorization law (called SAFETEA-LU) which was enacted in 2005 and expired in 2009.

National experts on transportation policy, including Abousleman, gathered to explore MAP-21’s shortcomings—and a few potentially positive elements—at an Aug. 22 forum sponsored by the North Jersey Transportation Planning Authority (NJTPA) in Newark. This article draws upon their assessments.

Funding Shortages

The shortcoming most deeply troubling to the experts is the lack of funding. MAP-21 provides $105 bil-
lion to support transportation investments, operations and research over two years, holding overall funding at previous levels with just some adjustment for inflation.

After enduring three years of short-term extensions, NJTPA Chairman Matthew Holt told the gathering, “We’ve essentially ended up with a two-year bill that has no funding increase to show for it whatsoever.…If you do the math, by the time MAP-21 expires, we will have spanned a period of 10 years—a decade—without a real conversation on where transportation funding needs to be.”

During those years, public, private and nonprofit groups produced studies documenting the gap in funding needed to support the nation’s infrastructure and the economic importance of making up the gap. Among them:

• In 2008, the bipartisan National Surface Transportation Policy and Revenue Study Commission identified the need to invest at least $225 billion annually from all sources to upgrade our existing system to a state of good repair and sustain economic growth. The U.S., it found, is spending less than 40 percent of this amount today.

•  In 2009, the American Society of Civil Engineers (ASCE) found that more than a quarter of the nation’s bridges are either structurally deficient or functionally obsolete. Funding must increase by 60 percent from the $10.5 billion annually now spent to $17 billion to address these needs.

•  In 2011, another ASCE study estimated that if not adequately addressed, the nation’s deteriorating surface transportation infrastructure could cost the American economy more than 876,000 jobs, and suppress the growth of the country’s Gross Domestic Product by $897 billion by 2020.

Despite this and other accumulating evidence that the nation is facing a deepening transportation crisis, Congress failed to move beyond the funding status quo in crafting MAP-21. “It was a horrible process,” according to Abousleman, one in which Congress “really didn’t think or talk about what we wanted.”

Fuel Tax Unstable

The source of transportation funding for the nation, the Highway Trust Fund (and its Mass Transit Account), remains very much on the ropes. Back in the 1990s, robust gas tax receipts prompted Congress to maintain “unexpended balances” in the fund as a way to the offset the deficit in the general revenue side of the budget.

highway construction

The fuel tax’s ability to fund federal transportation

projects has diminished due to inflation, a drop in

driving nationally, vehicles’ greater fuel efficiency,

and hybrids and electric vehicles that require less

or no gasoline.

Now, the tables have turned. Congress was only able to achieve stable funding under MAP-21 by supplementing the Trust Fund with $18.8 billion from general revenues. This follows $34.5 billion in previous transfers from general revenues since 2008.

The problem is that the federal 18.4 cents per gallon gas tax, which hasn’t been raised since 1993 and is the source of 89 percent of revenues going into the fund, no longer yields enough to cover transportation outlays. The economic downturn has meant a drop in the miles of vehicle travel—and consequently fewer trips to the gas pump by drivers—since the 2007 peak.

An economic rebound may not solve the problem as the trend toward more fuel-efficient vehicles will allow drivers to fill up less while driving more. New standards requiring automakers to double the fuel efficiency of their vehicles by 2025 are projected to reduce Highway Trust Fund revenues by as much as $57 billion over 11 years, according to the Congressional Budget Office.

Even the increasing use of mass transit use has taken a toll on gas tax revenues. Asking for a show of hands from those who took the train to the forum, Abousleman chided them to stop it. “You guys are messing things up.…If you are going to take the train, fill up your SUV in the morning and just leave it running in your parking spot. …We need you to use gasoline, lots and lots of gasoline.”

Compounding the problem of falling gas tax revenues, inflation has steadily eroded the spending power of each dollar taken in by the Trust Fund. By 2022, trust fund dollars will be worth 52 percent less than they were in 1993. Meanwhile, the demands for investments to meet the needs of a growing population and to address aging and outmoded infrastructure in many areas continue to accumulate.

Pressure for Alternative Revenue Sources

Resorting to general revenues to supplement the Trust Fund may soon no longer be a viable option. To keep funding stable in MAP-21, Congress had to scour the budget to find offsetting funding. The largest source was $9.4 billion from tax changes involving private pension contributions which have no connection to transportation.

“We’ve become more creative on what transfers deserve to be put into the Highway Trust Fund, but we cannot rely on that going forward,” said Joung Lee, deputy director of the American Association of State Highway and Transportation Officials (AASHTO) Center for Excellence in Project Finance.

MAP-21 forum panelists

An expert panel gave its analysis of MAP-21 at a forum hosted by the

North Jersey Transportation Planning Authority (NJTPA) in August.

From l-r: Fred Abousleman, National Association of Regional Councils;

Joung Lee, American Association of State Highway and Transportation

Officials; Jaime Rall, National Conference of State Legislatures;

Jack Lettiere, former New Jersey Department of Transportation

Commissioner; and NJTPA Chairman Matthew Holt.

One reason is that pressures to reduce the overall federal deficit will increase no matter which party carries the November election. That will leave fewer and fewer offsets in domestic spending to tap. Indeed, the nation faces a drastic 10-12 percent across-the-board cut in all domestic programs if the so-called “fiscal cliff” is not addressed by Congress in January. This “sequestration” could even claw back some or all of the general revenues put aside by Congress to support MAP-21.

So in two years when MAP-21 expires, if Congress does not find new revenues “we’ll have to suffer serious cuts in the program funding levels for both highways and transit.” said Lee of AASHTO. He called it “an absolutely terrible picture for everyone involved.” He added “Fortunately, from a technical perspective, there are no shortage of funding options…if the political will can be found.”

AASHTO has compiled a long list of options. An increase of 10 cents on the gasoline and diesel tax would bring in $18 billion per year —“a small rate adjustment with a very large yield,” Lee said. Among the other options are various vehicle miles traveled (VMT) fees which have been the subject of 18 pilot tests around the nation. Despite garnering wide interest and support in the transportation community as the logical successor to the gas tax —particularly as a way to continue pay-for-use principles regardless of vehicle fuel efficiency—provisions for additional VMT pilot tests were stripped out of MAP-21 at the last minute, no doubt over fears about the specter of “big brother” watching where, how much and when we drive.

Notable Reforms

Other long-discussed policy ideas made it into the law and have been seen by some as the saving grace of the legislation. Among the provisions, the law:

sidewalk repairs

One controversial MAP-21 reform was the elimination

of set asides for bicycle and pedestrian projects.

They’ll now be included as part of a wider

Transportation Alternatives program.

•  Consolidates hundreds of categorical programs into six core program areas.

•  Eliminates all Congressional earmarks in favor of formula allocations.

•  Requires performance measures to guide planning and investments.

•  Streamlines project delivery by providing exemptions from environmental reviews for smaller projects and some upgrades to existing facilities.

•  Substantially increases funding for the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit program to help states finance large-scale projects.

Some groups are less than enthusiastic about the provisions. Notably, environmental groups have taken issue with the streamlining as bypassing public input on important projects and undermining environmental safeguards. They also decry the elimination of set asides for bike and pedestrian investments and their consignment to secondary status as part of catch-all Transportation Alternatives program.

Yet even the policy “successes” in MAP-21 come with a caveat: they could be subject to wholesale revision when a successor law takes shape in two years. Even so, federal agencies are directed by MAP-21 to move forward now with months-long rulemaking to implement many of the law’s provisions.

A Shift to States?

As the expiration of MAP-21 approaches in two years, renewed debate can be expected about addressing the transportation crisis at the national level by kicking transportation funding and policy responsibilities down to the states. The obvious objection is that this undermines the long-standing leadership role of the federal government in transportation dating back to the construction of the interstate system. Then, Abousleman said, “we don’t have a national transportation system. We have a system of independent regions funding their own things.”

But, in any case, states may simply not be in any position to take on added responsibilities without substantial funding given their own fiscal crises. As at the federal level, most states have not raised their gas taxes in years—for 14 states, it has been 20 years or more, according to Jaime Rall, senior policy specialist with the National Conference of State Legislatures’ Transportation Program.

At least in theory, states have advantages in weathering the recession, being less dependent on the inflation-vulnerable gas tax than the federal government and being able to draw upon fees, tolls, sales taxes and other measures. Many cities also pursue local sales taxes and other sources on their own, particularly to support transit (though gaining voter approval can be difficult, as recently seen in Atlanta).

But in practice, the recession has battered transportation-related tax collections by state and local governments across the nation. The collections remain well below pre-recession levels. And what has been collected has become less secure.

“The competing demands for already overstretched state dollars has led in cases to diversions of dedicated transportation revenues to plug other holes in state budgets,” said Rall. A silver lining to the fiscal crisis, Rall said, is that it has led to “a renewed focus and commitment to making the most of the infrastructure that states already have in cost-effective and creative ways.”

That focus may be the way out of the transportation crisis, not only for the states, but the nation as a whole, according to Jack Lettiere, a transportation consultant who is a former commissioner of the New Jersey Department of Transportation. He said there has been little groundswell of public support for improved transportation because many travelers believe transportation projects “cost too much, take too long” and are too disruptive. 

He called for greater attention to customer needs and innovation. The transportation sector can “bend the cost curve” to get more done with less through the application of new technologies, fixing corridors rather than single facilities and coordinating transit equipment purchases among transit agencies, among other strategies, he said.
Lettiere’s call for “reform before revenue” is a startling proposition for many transportation professionals who face immediate cuts in staff and projects. But there is little doubt, as Lettiere suggested, that the past decades of strong federal funding has bred complacency in some quarters about making every investment dollar count for the traveling public.

Yet those decades also demonstrated the value of the partnership between the federal government and state and local governments to build and maintain the nation’s transportation system to high standards while advancing multimodalism, environmental protection and other shared national goals. Motivating Congress over the next two years to preserve that partnership is emerging as an urgent priority for those concerned with the future of ransportation and its support for the national economy.

Mark Solof is the director of public affairs and communications at the NJTPA.

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