Back to business for now

The so-called “jobs bill” may disguise some reauthorization dilemmas

By John Latta

It was almost audible.

The sigh of relief that followed the passage of the so-called “jobs bill”, actually the Hiring Incentives to Restore Employment (HIRE) Act, was a release of months of pent-up tension. Prior to HIRE the venerable SAFETEA-LU had stumbled through four short extensions and both contractors and government agencies were holding their breath worrying that replacement six-year surface transportation funding legislation would never arrive.

HIRE basically gave us SAFETEA-LU TWO, an extension through the end of the year, essentially keeping the old act’s machinery, and money, in place. The construction season was saved. And so we exhaled.

But does HIRE’S nine-month extension provide an automatic and well-oiled segue into a recognizable highway bill?

A common reaction to HIRE’s passing was that transportation funding was on solid ground until the end of the year and states could begin the construction season by creating jobs and doing much needed highway and bridge work because the Highway Trust Fund had enough money, guaranteed, through the end of the year. An allied reaction was that this created a period of relative calm after the tumultuous fights for the four extensions, a period that would allow Congress to finally come together on a multi-year highway and transit reauthorization bill, a new SAFETEA-LU.

But if Congress could not do it before – after all when you pass a six-year bill you know when it will expire – what changes in nine months might make members able to do it this time?

With the air coming out of the balloon with the passage of HIRE, the urgency that has pushed action ever since SAFETEA-LU expired last fall has all but disappeared. Without it there is the possibility that not enough will be done in the time at hand. What’s more, some of the terms of HIRE, in relation to highway funding, run through into the first quarter of 2001, muddying the renewal process just enough to worry those still demanding decisive action.

One thing that will not change is the inability of the current fuel tax to provide adequate funding to the Highway Trust Fund (HTF). That won’t change by Christmas, so the question of where the money to make up the difference between fuel tax intake and the needed funding numbers will come from will be very much like it is today. The President has said no fuel tax increase, pre-election Congress members don’t want to touch it and it’s hard to see that tax-averse situation changing after the November mid-term elections.

The extent to with the elections will change things is guesswork, but veteran industry analyst Ken Orski says in his latest newsletter that the once remote possibility of a Republican takeover of one or even both Houses of Congress now appears a distinct possibility among serious political observers. “Would a Republican Congress make major reforms in the current transportation program more or less likely? Will the 111Th Congress be less or more tax averse?” asks Orski. And, he asks, “What would be the impact of a possible change in the leadership of the House Transportation and Infrastructure Committee?”

Many industry stakeholders pushing for SAFETEA-LU’S renewal last fall did not see the health care bill looming and did not predict that it would take center stage, in fact take almost all of the stage. After November, what other issues may force their way into line ahead of reauthorization?

During the short term SAFETEA-LU extensions, and again in HIRE, money from the General Fund has bailed out the HTF. With no increase in the fuel tax being considered, is this duality entrenched enough to become standard in future? Could a future six-year bill accept that the HTF has limits, define where its funds are to be spent and rely on the General Fund for other transport and construction programs once paid for by the HTF? According to Orski, as much as 25 percent of the HTF revenue is spent on non-highway programs such as walkways, trails and bike paths. One way to partially restore solvency to the HTF, he points out, would be to limit its use to highway expenditure and transfer all of its non-highway obligation to the General Fund. Here an Infrastructure Bank, something the President has supported, could assist the General Fund

Orski also raises the elephant-in-the-room question: “How important will deficit reduction figure in future budgetary cycles?”

In a New York Times piece David E. Sanger notes that the projected deficit for the coming year is nearly 11 percent of the country’s economic output. We’ve run huge deficits before, for example during WWI and WWII, and they have risen with the expectation that they would fall back into line once peace was declared. But, says Sanger, what is scary is that “by President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next ten years.” In fact, he writes, in 2019 and 2020 deficits start rising again to more than five percent of the GDP.