WASHINGTON–Memo from Washington to state transportation chiefs: Be careful what you wish for.
Transportation officials in Connecticut and other states have long lamented Congress’s inability to pass a new, long-term transportation plan that details federal spending levels and outlines national priorities. Critics say the lack of such a roadmap hampers state planning and creates uncertainty about resources.
House Republicans have now unveiled just such a proposal–a six-year transportation measure that GOP leaders say would give states much-needed predictability. But it would come at a steep cost–a nearly 34 percent cut in federal funding from current transportation spending levels.
In Connecticut, the House GOP bill would translate into a loss of more than $246 million in federal highway and transit funds in 2012, the first year the proposal would take effect if passed. That’s enough to turn proponents of a six-year plan into champions of legislative gridlock.
“Right now for Connecticut, the best thing that could happen would be for the House and Senate not to be able to agree on a bill this year,” said Donald Shubert, a spokesman for Keep CT Moving, a transportation advocacy coalition composed of labor and business groups.
Top Republicans on the House Transportation and Infrastructure Committee released their proposal earlier this month. The six-year bill would authorize $230 billion over the next six years for highways, bridges, transit and other transportation projects. The last six-year measure, enacted in 2005, was $56.4 billion more generous, with a price tag of $286.4 billion.
Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee, said the GOP plan is the only realistic way forward given the current budget constraints. He signaled that he would have liked to put more money in the bill, but was hampered by the lack of resources.
“This long-term plan is the only fiscally responsible proposal and will ensure the continued solvency of the Highway Trust Fund,” Mica said in a July 7th statement when he and others outlined the proposal.
Rep. Richard Hanna, a New York Republican and another member of the transportation committee, said at a recent news conference that passing the six-year bill would provide states with a steady stream of funding that would encourage them to take on major, long-term projects.
“Given this predictability, states will be more comfortable taking on bridge replacement, highway interchange improvements, etc.,” Hanna said. “These are projects that provide jobs for two or three years, not two or three months.”
Without a long-term bill, Hanna said, “states will continue to put off major construction projects.”
Connecticut transportation officials and advocates have certainly been deeply frustrated in recent years as Congress has repeatedly punted on reauthorizing the six-year transportation law that expired in 2005. Lawmakers have instead passed one short-term extension after another, keeping federal funding essentially flat at 2009 levels. The current stop-gap extension expires at the end of September.
President Barack Obama, in his 2012 budget request, outlined a six-year, $556 billion transportation package, including a proposal to devote more than $50 billion to high-speed rail projects and a $30 billion infrastructure bank. But that ambitious plan has little chance of passage, in part because White House officials haven’t said how they would pay for it.
The Obama Administration has ruled out one potential revenue stream–an increase in the gas tax–as have many lawmakers in Congress. But the years-long stalemate over a long-term bill stems from the fact that there’s not enough revenue currently flowing into the federal Highway Trust Fund to pay for the transportation priorities that lawmakers in both parties want to fund.
Congress has borrowed from general revenues just to cover the flat spending levels. In 2010, for example, $35 billion in revenues flowed into the trust fund, but Congress authorized $50 billion in spending. Over the last three years, Congress has taken $35 billion from general revenues to keep the trust fund solvent, House Republicans note in their blueprint.
“More short-term extensions or a two-year bill are recipes for bankrupting the Highway Trust Fund,” Mica said. “These options will cut the legs from under our states and hamper their ability to move forward with many needed, large-scale projects.”
But the GOP measure has set off alarm bells around Washington. The U.S. Chamber of Commerce and the AFL-CIO– political opponents on most issues–both blasted the GOP outline as too anemic. Connecticut lawmakers don’t like it either.
“I don’t know anybody who would say that it’s a good trade off to have six years of predictability for a plan that would cut off God knows what–whether it’s the Q-bridge, I-95 widening, Route 11, the list goes on and on,” said Rep. Joe Courtney, D-2nd District.
The bill would “be a real double whammy in terms of jobs lost directly in the construction trades,” Courtney said, pointing to Democratic calculations that the highway funding cuts alone would cost Connecticut nearly 6,000 jobs in 2012. “But I think the real killer is just the long-term effect in terms of retarding Connecticut’s ability to upgrade its transportation system, which is directly linked to pro-growth planning in the state.”
It certainly does not come at an ideal time for the state. The collapse of a state employees’ concessions deal has translated into the loss of an anticipated $78 million infusion for the Special Transportation Fund, leaving Connecticut’s transportation to-do list dramatically underfunded. Any pull-back from Washington would only serve to increase the $926.4 million chasm between the funds needed and the funds available for planned transportation projects in the state.
House Republicans haven’t put their plan into formal legislation yet, and their outline does not provide specific funding levels for each federal transportation program, whether highway investments or transit initiatives. So it’s hard to discern what the impact would be on Connecticut priorities, such as high-speed rail.
But it does increase funding for small-scale infrastructure banks, entities that can use federal dollars to attract private investment for high-priority projects. This is a long-time goal of Rep. Rosa DeLauro, D-3rd District, who has called for setting up a so-called “I-bank” that would fund a gamut of infrastructure projects, from water and energy to transportation and telecommunications. The White House has backed a smaller version of that, a $30 billion bank focused only on transportation initiatives.
Mica’s plan does neither. But it would dramatically bolster funding for the Transportation Infrastructure Finance and Innovation Act (TIFIA), an existing federal bank that provides loans for projects of “regional and national significance.” It’s now funded at about $122 million a year; the Mica proposal would authorize $1 billion a year for TIFIA. The measure would also provide states with funding to set up their own local infrastructure banks, which would similarly use federal funds to leverage private investment.
The GOP proposal would increase, from 10 percent to 15 percent, the amount of federal highway funds that a state could channel into a state infrastructure bank. States would also get a set amount of money that could only be used for an infrastructure bank, although the outline doesn’t say how much.
“This keeps the federal financing bureaucracy at a minimum and maximizes states’ financial capabilities,” the GOP blueprint states.
DeLauro isn’t impressed. “I applaud states that have set up infrastructure banks for their forward-thinking action,” she said. “But just giving states money for their banks to help fund local transportation projects is an entirely different concept then establishing a self-sustaining national infrastructure bank, which would go out onto the capital markets and leverage private dollars to objectively fund a wide range of infrastructure projects of national and regional significance critical to job creation and our nation’s overall economic growth.”
Courtney and others say a still-emerging Senate plan will offer a better alternative on almost every count. Sen. Barbara Boxer, D-Calif., chair of the Senate’s Environmental and Public Works Committee, has said she will draft a two-year, $109 billion transportation bill. That would give states a small inflationary bump up from current funding levels, but it would also delay questions about long-term financing for the nation’s transportation needs.
Boxer hasn’t fully detailed her proposal yet. But at a recent press conference, she blasted the GOP plan as a job killer and said she was working with Senate Republicans to craft a “very streamlined” two-year bill.
She said she and other senators were looking at a variety of options for funding that measure. “There are lots of ideas out there,” she said.
Her favorite: redirecting funds from the wars in Iraq and Afghanistan, as the U.S. winds down its military presence in those two countries. She noted that those two conflicts are costing the U.S. a combined $12 billion a month.
As for an infrastructure bank, Boxer has expressed skepticism in the past that a wide-ranging proposal, like the one outlined by DeLauro, could not pass the Senate. At her news conference, she said her two-year bill would increase funding for TIFIA, but she didn’t provide any details.
Judd Everhart, a spokesman for Connecticut’s Department of Transportation, declined to comment on the details of the pending proposals in Congress, noting that such outlines can change dramatically from introduction to passage.
“Having said that, our general position is that a longer-term funding plan–six years as opposed to two–is better for the states because it gives greater stability and certainty, and allows for more comprehensive planning,” Everhart said.
Courtney has a different perspective.
“What I’m hearing from folks in Connecticut is they would rather have a fighting chance to revisit this in two years, rather than just surrender to this shrunken policy,” Courtney said. He argued that it doesn’t make sense to write a six-year bill now, during such a restricted budget climate, because it will soon be out of step as the economy rebounds.
“If you pass a six-year plan by surrendering to the immediate economic conditions, you’re really squandering a historic opportunity to step up to what the country needs,” he said.
Shubert said he, too, would prefer to see Boxer’s two-year bill go through. But if her two-year proposal that can’t pass, he said, another short-term flat funded extension this year would be better than the House plan.
The best option, Shubert said, is for Congress to take up a long-term bill next year, at the height of election season when lawmakers are looking for positive campaign messages.
“They’re going to have to campaign with high unemployment and [tell voters] what they’re going to do to turn the economy around,” he said. A generously-funded, six-year transportation plan would be the perfect platform.