Financial District

| December 1, 2010

A Bipartisan Bluprint?

A Virginia think tank report may shape our next SAFETEA-LU.

By John Latta

I f there is to be a new surface transportation bill sometime in 2011, or even if it comes months, or years, later, it is probable that a new report entitled Well Within Reach, America’s New Transportation Agenda may provide its blueprint

The Miller Center of Public Affairs at the University of Virginia hosted a policy conference to encourage discussions and formulate a comprehensive set of proposals for the reauthorization of America’s transportation programs. It was co-chaired by Norman Mineta and Samuel Skinner, both former secretaries of transportation.

The conference drew upon the collective experiences of more than 80 transportation experts, as well as previous studies of the issue undertaken by the Brookings Institution, the Bipartisan Policy Center, and two national commissions established under SAFETEA-LU. The conference’s intent was to build upon existing scholarship and canvas the various opinions to identify the best and most practical solutions to be incorporated in SAFETEA-LU legislation.

The director of the Miller Center, former Virginia Governor Gerald L. Baliles, who came up with the idea for the conference, said of its recommendations that, “They were formulated with the guiding principle that they can be adopted without a complete overhaul of the traditional structure of the legislation in mind. They are predicated on the conviction that, unless federal transportation law and policy address the country’s current needs in a more relevant, more effective, and sustainable way, deficiencies in our transportation system will seriously compromise both the near-term prospects for economic recovery and our long-term economic productivity.”

The report notes that the emphasis throughout the conference was on long-term, sustainable changes instead of short-term “stop-gap” measures. Participants wanted to avoid the fragmentation that so often exacerbates our transportation challenges — thus, their recommendations extend across different transportation modes and issues.

The report’s recommendations will not surprise many people, they are well-thumbed ideas. But they are presented broadly, from a largely apolitical, bipartisan expert pool without being vague, and pragmatic without being overly specific. There is room for interpretation and compromise, and they can be done. There is a clear need for a blueprint for bipartisanship in developing, and passing, a new transportation bill and the care with which these recommendations have been crafted and delivered, and the neutral gravitas of the men and women who did the work, suggest it may fill the need.v

The recommendations (using the report’s own titles) are:

1) Stop the Bleeding

Congress, says the report, must address the immediate crisis in transportation funding. This comes dangerously close to stating the obvious.

All parties concede that without a higher gas tax, there will simply not be enough money in any version of the HTF to expand, repair, rebuild and maintain a bold new highway system. There may be enough money to choose one of those options (except expansion). Which perhaps is what led the Miller reporters to make this significant observation: “The suggestion that there be a moratorium on new transportation construction in favor of first maintaining our existing infrastructure can no longer be dismissed. The logic is simple: if available resources are inadequate to maintain the systems we’ve already built, then we certainly should not be developing more systems that we cannot sustain. In other words, our national dollars should be directed first to protecting and maintaining past investments.”

2) Beyond the Gas Tax

The report backs the idea that users should pay for the transportation system, a principle enshrined in the HTF when it was set up and backed by virtually all stakeholders pushing for a new surface transportation bill. Conceding that a gas tax hike alone would be inadequate in the long term, the report calls on Congress to “adopt legislation laying out a clear plan for transitioning, over the next decade, from the per-gallon fuel tax to a highway-use fee based on vehicle-miles traveled (VMT) … A fee of just one penny per mile would equal the revenue currently collected by the fuel tax; a fee of two cents per mile would generate the revenue necessary to support an appropriate level of investment over the long term.”

The Miller plan also addresses the need to balance privacy issues with another necessity — the need to know a lot about where a vehicle goes, and when, so that it pays more in rush hours on busy thoroughfares than it does on Sunday morning out in empty country.

3) Jobs for the Future, Not Just Today

Here the Miller report quietly suggests some fundamental change to the old way of funding transportation infrastructure. “Future Stimulus spending should be directed to those transportation projects that will deliver the greatest returns in terms of future U.S. competitiveness, economic growth and jobs. Building a foundation for sustained prosperity and long-term job creation is more important than boosting short-term employment in road construction.”

It is possible to read into this that any long term bill should have the goal of investing primarily in projects that can deliver broad, long terms advantages. No more ARRA, they seem to be saying.

“Investments in transportation must be approached as investments in the nation’s long-term economic health, not primarily as short-term fixes for unemployment or other problems… Congress should show leadership in directing any remaining or additional Stimulus funds to those investments that do most to strengthen the foundation for long term economic growth.”

4) Pass the Power, Please

The report calls for Congress to “clarify decision-making power and enhance the effectiveness of states, localities and metropolitan planning organizations.” This is something both the incoming and outgoing chairmen of the Houses Transportation and Infrastructure Committee (John Mica [R-Fla.] and Jim Oberstar [D-Minn.] respectively) and a number of bureaucratic reports have supported. The fault, says the Miller report (and a number of other stakeholders), is that the current process is muddy, unwieldy, poorly defined, policed and operated, and basically a very confusing conglomeration of money- and opportunity-wasting machinery.

5) Adopt a Capital Budget

The federal government should adopt accounting methods that (a) recognize expenditures on transportation infrastructure as investments (rather than consumption) and (b) take into account future returns on those investments, says the report.

“Specifically, the Office of Management and Budget (OMB) should score the anticipated return on investment when it evaluates transportation spending proposals. This is an incremental step, but it would allow the government to begin evaluating projects based on their long-term benefits and to prioritize those projects that deliver the largest future returns.”

The report is by no means alone here. The idea that our highways are investments we put funds into and manage and monitor to bring us long-term returns is a popular one. It is an attitude adjustment that would not only change accountants’ bookkeeping methods but the way we perceive our highways and bridges, and what we expect of them, especially in elected bodies.

6) Connect the Dots

Adopt an integrated approach to transportation planning that includes freight and goods movement and stresses intermodal connectivity, says the report.

Better freight-transportation facilities and better intermodal connectivity between them and our roads and airports would result in a more efficient supply chain and reduce business costs, and there would be environmental and congestion pluses as well. In this point the commission is echoing ideas that have come from the White House and both houses of Congress, and it seems inevitable a new surface transportation bill will address this need.

7) Getting Americans Home in Time for Dinner

The Miller call for finding more effective ways of reducing urban congestion is another certain focus for the next long-term iteration of SAFETEA-LU. The costs of congestion are well known. They are staggering for business and individuals alike and steadily getting worse.

Says the report: “Congress should set aside funds to support programs specifically targeted to reducing urban congestion. This would include research to develop and implement better traffic management practices as well as other policies — such as zoning practices — that would reduce congestion and promote more efficient use of existing transportation systems. It is worth noting that such incentives could be coordinated with performance measures, such as the performance measures required to be implemented by MPOs larger than one million people under the Oberstar bill.”

One way or another, performance measurement will be in any new bill. How it will be defined is unclear.

8) It’s All About Leverage

The Miller report here must be music to John Mica’s ears. It calls for Washington, and in effect state capitals, to encourage public-private partnerships and other forms of private investment in highways and bridges, while at the same time improving oversight of such joint ventures to protect the public. But, the report goes on, “In this context, it is important to recognize that private investment in transportation infrastructure will not replace the need for public investment and that efforts to expand the private-sector role should not distract from efforts to grapple with immediate funding gaps while developing new public funding mechanisms.”

It is inevitable that more private money will flow into infrastructure and a new bill will invite it, but both sides will treat it so carefully that it will take some time.

9) Deliver Transportation Investments on Time

Reform project planning, review and permitting processes to speed actual implementation, says the report. “Private-sector builders and contractors in the transportation sector often view deficiencies in these agencies and processes as the biggest obstacle to meeting infrastructure needs.” Once again John Mica will be turning cartwheels. He has loudly pushed his “437-day” agenda, a reference to the fact that the fallen I-35W bridge in Minneapolis was replaced (a monster undertaking) in 437 days, “proving,” he says what can be done when red tape is overcome. Mica will go after this one, big time.

10) Build a Foundation for Informed Policy

The report says that, “Better and more timely data are essential to measure progress toward defined goals and objectives, and to improve the performance of the nation’s transportation systems.” We know from recent reports and surveys that the American public is woefully informed on the status of our infrastructure, its needs and problems, and what is needed to fix them.

The Miller report argues basically that if governments effectively inform and educate the public about what is going on, they will be better able to present and find support for the necessary moves to keep our future infrastructure up to date. A number of major projects across the country that have gone out of their way to keep the public in the loop with transparent, easily accessible, daily reporting, are testimony to the effectiveness of this.

Editor’s Note: Find the entire Miller report at http://www.millercenter.org/policy/transportation

 

The Stimulus Runs Dry

No more ARRA funds for new projects (but payouts still going).

It’s over.

All of the $27 billion in Stimulus dollars destined for highways has been obligated. But billions still have to find their way to contractors.

The Stimulus legislation, the American Recovery and Reinvestment Act (ARRA), required that all highway improvement funds be obligated by September 30 this year. According to Federal Highway Administration (FHWA) data, nearly every state met that requirement. And only one state – California – gave back Stimulus money, with $1.67 million of it redistributed to Arizona, Michigan, New York and South Carolina according to the American Road and Transportation Builders Association (ARTBA) analysis of that data.

Only one tenth of a billion remained unobligated at the end of September.

With the deadline passed, states can’t obligate ARRA funds for new projects or transfer funds among projects. Any funds not obligated must now be returned to FHWA. If a Stimulus project runs over its budget, the state can ask FHWA for more ARRA funds. But if approved, those funds have to come from another in-state project, which of course has to have its funds cut to provide the transfer. But as ARTBA points out the over-budgeted existing project must experience “a legitimate cost increase not related to a disputed contract claim or an increase under an escalation clause.”

Because September is the peak of the highway construction season, FHWA outlayed a monthly record of $1.49 billion of ARRA highway funds during the month, bringing total outlays to $13.99 billion for construction work performed, according to ARTBA.

With all ARRA highway investment funds now obligated, ARTBA’s analysis shows state and local government recipients have obligated just under $26.4 billion for 12,932 projects, including 5,322 that have been completed and 6,229 that are under construction. When projects on federal lands and TIGER 1 projects are included, the grand total comes to $27.0 billion obligated for 13,351 projects, says the analysis. At the September deadline, state and local governments in Texas continue to lead in outlays, at $945.2 million, with California second at $847.4 million and Illinois third at $676.1 million. Twenty other states, up from 18 at the end of August, have paid out more than $250 million.

Breaking down the $13.994 billion of ARRA funds by year, ARTBA says $5.612 billion was outlayed during calendar 2009 and $8.382 billion so far during calendar 2010. ARTBA estimates that if outlays during the final three months of 2010 equal the same months of 2009, then total Stimulus fund outlays this calendar year should be about $11.5 billion, which is slightly higher than expected according to data from the Congressional Budget Office. v

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