The long search for a multi-year highway-transit bill has moved closer to the goal with the House’s passage of a six-year, $335-billion-plus proposal. Negotiations will begin soon with the Senate, which in July cleared a $350-billion measure, also spanning six years.
Construction and state officials have struggled for many months with unpredictable funding from a string of short authorizations. They welcomed the House’s 363-64 vote on Nov. 5 for its Surface Transportation Reauthorization and Reform Act (STRR), not least for the bill’s six-year length.
But infrastructure advocates also know the House and Senate bills’ authorizations are only slightly above current levels, far short of the robust sums they had hoped for.
What’s more, the Senate proposal, the Developing a Reliable and Innovative Vision for the Economy Act (DRIVE), has enough real funding to cover only three years of authorizations. The House bill had the same shortfall until just before final passage, when lawmakers there laid a wild card on the table: They approved an amendment that would add $40 billion. But the provision may not be iron-clad.
All eyes will be on the conference committee that will seek to work out a compromise between STRR and DRIVE. Heading the House team will be Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) and the panel’s ranking Democrat, Peter DeFazio (Ore.).
Senate conferees will be led by the Environment and Public Works Committee’s chairman, James Inhofe (R-Okla.), and its ranking Democrat, Barbara Boxer (Calif.). They hope to agree on a final bill by Nov. 20, when the current extension expires.
That stopgap is the latest of four temporary measures over 14 months. They followed 10 other extensions between Sept. 30, 2010, when the five-year SAFETEA-LU measure lapsed, and July 6, 2012, when the 27-month MAP-21 was signed into law.
Brian Pallasch, American Society of Civil Engineers managing director for government relations and infrastructure initiatives, says, “To help states plan for the future, we really need to stop this roller coaster of short-term extensions.”
Funding on the installment plan has had an impact. “We’ve seen the bid lettings get rather thin,” says Jay Hansen, National Asphalt Pavement Association executive vice president. “The states are reacting to the short-term extensions by not putting out as much work as they would normally.”
Stephen Sandherr, the Associated General Contractors of America’s CEO, says construction firms have been unable to plan due to “not knowing whether there’s going to be a letting next month, not knowing where the projects are going to be, not being able to make decisions on purchasing new equipment or expanding their workforce.”
Jim Tymon, the American Association of State Highway and Transportation Officials’ chief operating officer, sums up, “The sooner we can get a long-term transportation bill done, the better for the entire transportation community.”
The bills do increase funding, but modestly. The House’s STRR bill would raise the highway obligation ceiling by an average of only 1.9% a year; the Senate’s DRIVE bill has a 3% annual average hike. For transit, the House bill’s increase averages just under 2% a year; the Senate’s boost is about 3.8% per year.
AASHTO’s Tymon says, “While we would love more money and a longer bill, the fact that we’re on the verge of getting at least some level of predictability over the next three or six years is something that we’re very much looking forward to.”
But the House amendment, from Rep. Randy Neugebauer (R-Texas), has industry buzzing—one source says it could be “a game changer.” It would delete a Senate provision to raise $19 billion for transportation by reducing dividends that the Federal Reserve pays to banks. Instead, the plan would direct the Fed to liquidate its capital surplus account, which would raise an estimated $59 billion, leaving a net funding gain of $40 billion.
Sandherr says, “Finding $40 billion under the sofa cushions, going into conference, will provide [negotiators] with the opportunity, perhaps, to make this a five-year bill that’s funded, rather than a six-year bill that’s funded for three years.”
Will the provision be in the final version? “I’d like to think so,” says Steve Hall, American Council of Engineering Companies vice president for government affairs. “I think, so far, the [Senate] reaction has been encouraging and supportive,” Hall says. But he adds, “It’s almost too good to be true, so we’re waiting for the other shoe to drop.”
There’s no guarantee the $40 billion would go for highways and transit. David Bauer, American Road & Transportation Builders Association senior vice president for government relations, notes that the amendment directs the $59 billion to be deposited into the general Treasury, not the Highway Trust Fund.
Moreover, revenue-raising “pay-fors,” such as Neugebauer’s idea, are coveted on Capitol Hill, where tight budgets are a reality. To offset the costs of other spending programs or desired tax breaks, some lawmakers may seek to grab some or all of the Fed’s surplus money for other bills.
Even if the infusion stays in the transportation bill and is earmarked strictly for highways and transit, the higher total still would barely narrow the huge gap between highway and transit spending and the estimated needs.
“Let’s not kid ourselves,” Bauer says. “Neither of these bills is about doing what the nation’s transportation network requires. They’re about doing the best they can in the environment that we find ourselves in.”
Some continue to campaign for more dollars. American Public Transportation Association CEO Michael Melaniphy said his group will seek more funding to meet transit infrastructure’s $86-billion “state of good repair” needs and also for current and future capital plans.
U.S. Transportation Secretary Anthony Foxx, who has pushed the Obama administration’s $478-billion, six-year transportation bill, said he’s urging Congress “to do more than minimum funding.”
The Dept. of Transportation has estimated it would take an additional $23.5 billion to $45.7 billion per year in federal and non-federal spending to maintain and improve U.S. roads and bridges. DOT also said improving transit’s infrastructure would require an additional $8.2 billion per year.
Lobbyists see few big differences between the House and Senate bills and say a quick conference deal is possible. “I don’t see any poison pills,” says NAPA’s Hansen. Business groups were glad to see both bills include a provision to reauthorize the U.S. Export-Import Bank, which has been unable to approve new loans since June 30.
Inhofe and Boxer are aiming to get a final bill to the White House by Thanksgiving. Some observers say that target is optimistic but still expect a deal in place in December.
As the negotiations draw near, industry officials are disappointed that Congress didn’t pursue a sustained, long-range revenue source, such as a federal motor-fuels tax hike or receipts from taxing U.S. companies’ overseas income.
Sandherr says, “Here was an opportunity to have a serious discussion about finding real revenues and not doing general-fund transfers, and that decision has been punted yet again.”