Financial District: Hurry up and wait
Reauthorization Could Slide into 2011
By Audrey Dutton, Washington Bureau, The Bond Buyer newspaper
For cash-strapped state and local governments that have critical transportation infrastructure needs, but no money to pay for them, the coming year will be bittersweet.
Federal aid from the American Recovery and Reinvestment Act and possibly another job-creation bill will provide some transportation funding relief to municipal bond issuers, and some high-profile grants are expected to be announced this winter. But it probably will be another year before Congress takes up new multi-year authorization bills for the sector, sources said in recent interviews.
Governments and other muni bond issuers earlier this year began chasing ARRA funds after the new law was enacted in February, flooding the U.S. Department of Transportation and its various sub-agencies with applications for surface transportation and high-speed rail projects. The application pool was so large that states and cities face miniscule odds and are competing with their neighbors.
But market and industry participants are now speculating that the ARRA initiatives may be models for, or springboards into, longer-term programs.
Meanwhile, surface and air transportation groups have pushed for Congress to dedicate a large portion of funding in any new job-creation bill to transportation infrastructure.
But more permanent programs and revenue overhauls that would be instituted by much anticipated multi-year transportation bills have been hampered by a prolonged congressional battle over health care and climate-change legislation, the coming midterm elections, and reluctance by some lawmakers and the White House to broach the subject of user fees while unemployment remains high.
After the Senate returns from its winter recess this month, it is expected to take up a new job-creation bill.
The bill had not been proposed in the Senate as of late December, but the House-approved Jobs for Main Street Act of 2010 would provide federal transportation grants and attempt to solve some cash-flow problems that have plagued the highway trust fund.
The House bill would provide $27.5 billion for highways, $8.4 billion for transit, and $500 million for airports.
Rumblings in the Senate have suggested lawmakers there might support transportation funding in the area of $23 billion to $30 billion split between highways and transit,an industry source said late last month. The House bill also would lift a ban on the trust fund’s ability to earn interest on its cash balances — providing it with $500 million to $1 billion more per year, according to House estimates — and would restore $19.5 billion of foregone interest payments.
The jobs bill also could prolong the wait for a new multi-year transportation law. The bill passed by the House, for example, would extend the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users SAFETEA-LU) through the end of the fiscal year on Sept. 30, 2010, or one year after the law expired. The programs under SAFETEA-LU were extended through the end of February by a military appropriations bill to give Congress time to approve the longer extension.
In the meantime, new programs created by ARRA may be laying groundwork for lengthier federal investments in state-administered transportation projects. State transportation officials want the Build America Bonds program created by ARRA to be extended beyond its current expiration date of Dec. 31, said Joung Lee, senior analyst for finance and business development at the American Association of State Highway and Transportation Officials. Sen. Ron Wyden, D-Ore., who introduced BAB legislation in February 2005 and is considered a key supporter of the bonds, plans to work toward an extension.
“I think that we have seen that Build America Bonds have been an incredible success, providing prompt infrastructure investment in an efficient way. For that reason, I want to continue working to extend the program before it expires at the end of next year,” he said. “But I also think that Congress needs to refine the program, so that there isn’t just one type of Build America Bond that can be used for any type of project.
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