7 Things To Know About Federal Transportation Funding

Developing and maintaining an effective transportation system is one of the major challenges that the United States will face in the coming years. A recent article from Innobriefs.com gave an overview of  the situation:

1) The HIRE Act Bought Lawmakers Some Time
The HIRE Act (Hiring Incentives to Restore Employment Act, H.R. 2847, P.L 111-147), signed by the President on March 18, has placed the federal surface transportation program on a firm footing and taken the pressure off the lawmakers and the White House to come up with a more permanent solution — at least for a while.

2) Additional Legislation Won’t Be Coming For Awhile
While efforts to develop a long-term transportation strategy are expected to continue for the remainder of this year, Congress and the White House are likely to take their time enacting a multi-year legislation. This is the near-unanimous judgment of informed congressional observers and Washington insiders whom Innobriefs.com consulted over the last several days.

3) The Highway Trust Fund Will Remain Solvent For Several Years
Innobrief’s interpretation of the Congressional Budget Office’s latest projections suggests that both the Highway Account and the Transit Account of the Highway Trust Fund could remain solvent as long as mid-2013. This is thanks in part to a transfer of $19.5 billion from the General Fund into the Highway Trust Fund.

4) Long-Term Funding Is Still An Unsolved Problem
The main obstacle standing in the way of enacting a multi-year bill continues to be the inability to come up with adequate funding. To close the gap between the projected revenue into the Highway Trust Fund (estimated to be $234 billion from 2010 through 2015 ) and the program needs as estimated by Chairman James Oberstar (D-MN) ($450 billion for highways and transit) would require an extra $216 billion over the life of the next authorization (or $145 billion if only to cover outlays, according to the estimates of  House Transportation and Infrastructure Committee staff .) Adding a proposed $50 billion for the high-speed rail program would raise the total unfunded six-year shortfall to over $200 billion.  Where is this money to come from? No one has yet found an answer.

5) Raising The Gas Tax Is Not Being Considered As A Solution
The most obvious option — to increase the gas tax— has been taken off the table for the immediate future. The Administration’s unwillingness to consider this option was forcefully reaffirmed by Transportation Secretary LaHood (pictured above) at the recent AASHTO Briefing. “It’s easy for people who are not elected to talk about raising the gas tax,” the Secretary observed. “They don’t have to face the voters.”

6) Taking Money From The General Fund May Not Be A Long-Term Solution
This option has been pursued de facto as a way of keeping the Highway Trust Fund solvent during the past year and it will be used again to extend the program through December 31 and beyond. However, there are some serious objections to expanding the use of General Funds to support the surface transportation program over the long term. The objections are threefold: their use (1) undermines the user-pays principle; (2) threatens a potential loss of contract authority, i.e. the ability to enter into multi-year funding commitments for large capital projects in advance of appropriations; and (3) opens the surface transportation program to competition for funds from other government programs. In addition, one could expect Congressional opposition to using General Funds to pay for a multi-year transportation bill.

7) Decisions On Future Transportation Funding Will Be Delayed
With no concrete ideas of where to find the extra money, with fewer than 100 legislative days left before congressional adjournment and, most importantly, with adequate funding projected as long as mid-2013, most Washington insiders believe there is little likelihood of enacting a long-term transportation bill during this session of Congress. What is more likely to happen during the rest of this year, according to our sources, is a low-intensity effort to lay a foundation for future legislation.

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