As outlines of new House and Senate transportation bills come into sharper focus, it is clear the construction industry will be hard-pressed to get even a small federal funding boost above current levels for highways and transit.
That outcome would be another blow to construction firms bracing for the end of the federal stimulus program and enduring spending cuts by state and local transportation agencies.
Two plans are on the table. House Transportation and Infrastructure Committee Chairman John Mica (R-Fla.) on July 7 formally unveiled a $230-billion, six-year transportation framework. In the Senate, Environment and Public Works Committee Chairman Barbara Boxer (D-Calif.) said on July 6 she is drafting a $109-billion, two-year proposal.
Construction officials prefer Boxer's $54.5-billion-a-year plan to Mica's $35-billion 2012 figure, which is a 32% cut from enacted 2011 funding. Further, Mica's total is down about 20% from 2005's Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which authorized $286 billion over six years.
Jay Hansen, National Asphalt Pavement Association vice president for legislative and regulatory affairs, says, “We will not support those [House] numbers.” He says asphalt-pavement tons are down about 35% since 2007. With the stimulus waning, state and local budgets squeezed and commercial construction yet to rebound, he adds, “To have this [House proposal] now overlaid on everything else, it's almost too much to bear.”
Even Boxer's modest hike isn't assured. She says her plan would need a $12-billion infusion to the Highway Trust Fund from a source to be identified. The Congressional Budget Office estimates the trust fund's highway account will be in the red around fall 2012, when fiscal 2013—the second year of Boxer's plan—begins. Mica says the two-year proposal is “a recipe for bankruptcy of the trust fund and would close down long-term projects across the country.”
Mica says he would love to have proposed a bigger bill but notes that “we have to deal with the cards that are dealt.” He says new House GOP rules limited him to projected trust-fund receipts. A gas-tax hike would produce more trust-fund spending, but lawmakers in both parties have ruled out that option.
Mica said his panel would “look for every way possible to maximize those dollars.” One dollar-stretcher would be increasing the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which provides federal loans and loan guarantees for major projects. Mica wants to boost direct TIFIA funding to $1 billion a year from $122 million now. TIFIA's allure to budget-conscious lawmakers is its leverage: Each direct federal TIFIA dollar produces $10 in loans.
Mica also suggests steps to complete projects faster, such as shortening the environmental review process. Those ideas, which have strong industry support, could cut planning and construction to less than eight years from up to 15 now, he says.
Some had hoped Mica's proposal for tolling would go further than it does. The plan would allow states to put tolls on interstate expansions, such as new lanes, but not on currently toll-free interstate highways. Mica's bill does not include a federal infrastructure bank, which is something President Obama backs. Instead, Mica wants to boost state infrastructure banks, letting states use 15%, up from 10%, of their federal highway aid for such banks.