House Republicans are wasting no time asserting their new majority on transportation programs. Even before they got down to the business of lawmaking, they passed a new set of rules that are sending shock waves through the transportation community.
The House effectively opened the lockbox protecting the Highway Trust Fund by requiring that spending of revenue collected from motor fuel taxes will have to be allowed in separate actions each year by the House Appropriations Committee. Those funds have been allocated by guidance established in a long-term highway bill.
Protests from the industry were nearly instantaneous: Without a guaranteed stream of trust fund revenue that was established by the last two multiyear bills, state highway authorities and the contractors they hire will not be able to plan long-term projects.
Side Bar: House Chairman Targets Highway Traffic.
In effect, the groups calling for greater attention to transportation infrastructure over the last two years got that attention immediately from House Republicans, but with a potentially troubling result.
In a rapid and unexpected move on Jan. 4, the new GOP majority acted to change a structure that had been in place for 12 years for decisions on transportation spending.
A new surface transportation reauthorization plan, as the highway bill is more formally called, remains a goal even for the budget-conscious Republicans. But along with the U.S. Department of Transportation’s TIGER program that breaks spending decisions away from traditional modal guidelines, the change in rules is part of an overhaul that’s taken place in seemingly entrenched transportation programs.
Those programs and the umbrella Highway Trust Fund that feeds them have been under stress even as voices across the political spectrum calling for increased infrastructure investment have grown louder. And the outcry over earmarks in the last highway bill passed more than five years ago has made politicians wary of revenue-boosting ideas even as they’ve argued for programs that would spur jobs.
Now, the new House rules give extraordinary power to House Budget Committee Chairman Paul Ryan, R-Wis., to set binding budget targets. Ryan recently said he expects to have new data from the Congressional Budget Office, and will have a new budget resolution by April.
House Republicans could find themselves painted into a corner. They campaigned on a platform of jobs, economic growth and tax cuts, but achieving it all may be a contradiction. Members pledged no new taxes, even though an increase has been widely supported by two presidential commissions of the Bush administration, and industry groups such the U.S. Chamber of Commerce and the American Trucking Associations.
House Majority Leader John Boehner, R-Ohio, pledged to cut $100 billion from the current budget and to roll back spending to 2008 levels, but Republicans also recognize that investing in transportation infrastructure is good for jobs, good for the economy and makes the country more competitive in the global marketplace. Something will have to give.
Rep. John Mica, R-Fla., the new chairman of the House Transportation and Infrastructure Committee, said he had assurance from House leadership that there would be no drastic changes in highway spending. Others aren’t so sure.
“The vote by itself didn’t do anything, it just opened the door to do something,” said Jack Basso, director of program finance and management for the American Association of State Highway and Transit Officials. “I can’t imagine that they went to all that trouble to struggle over the rule for no particular reason.”
Mortimer Downey, senior advisor, Parsons Brinckerhoff and deputy transportation secretary in the Clinton administration., said cutting $100 billion shows Republicans are delivering what they promised, but it’s a relatively small amount of a nearly $4 trillion budget. “We’re still waiting to see what the ground rules will be, but for me, the real concern is that this is not going to be a thoughtful process,” Downey said. “It’s going to be a slash-and-burn, get-it-done-quickly activity. There could be some serious unintended consequences.”
The new House rules supersede provisions written in two succeeding multiyear transportation bills — the TEA-21, Transportation Equity Act for the 21st Century, passed in 1998; and SAFETEA-LU, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users of 2005. SAFETEA-LU expired on Sept. 30, 2010, and Congress has yet to pass a successor.
In 2009, House Transportation and Infrastructure Committee Chairman James Oberstar, D-Minn., proposed a sweeping bill for transportation infrastructure and Department of Transportation reform, but it foundered when lawmakers could find no revenue source to pay the $450 billion price tag.
The three Senate committees responsible for portions of transportation legislation have not produced a bill, but Sen. Barbara Boxer, D-Calif., chairman of the Environment and Public Works Committee, responsible for highway infrastructure, said recently she would “fight to the end to prevent any efforts by the House to use this rules change to reduce much-needed job-creating investments in our highways, bridges and transit systems.” She gave no indication when the committee would introduce a transportation bill.
The Senate bill may be out of the gate before a House version. Committee leaders in both parties indicated they were making progress before the end of the 111th Congress.
In the past, Mica has said he wants a new surface transportation bill in the first half of 2011. Any later, and legislation will be swept up into 2012 election politics. However, he wants to hold town hall-style “listening sessions” around the country before the committee starts drafting a bill. These hearings could start on or about for Feb. 18.
Mica said a bill reauthorizing the Federal Aviation Administration was first on his order of business. The current FAA law has been extended 17 times. He appears to be walking a fine line. He said Rep. David Dreier, R-Calif., in a discussion on the House floor, gave “a pretty good clarification that funds would still be handled within the trust fund in the same manner, and would only be used for highway purposes.
“I’ve assured leadership that we would work with them, that we would stay within the trust fund, but also that funds from the trust fund wouldn’t either be diverted or used to offset other spending,” Mica told The Journal of Commerce.
Before the 1998 rule, the Highway Trust Fund concealed the depth of the federal deficit. Reduce spending, and revenue goes up, offsetting expenditures somewhere else in the budget.
“The Highway Trust Fund and its guaranteed spending provisions are unique. I don’t know of any other discretionary spending in the budget mechanism that had the kind of isolation and protection that trust fund spending has,” Basso said.
If Congress rolls spending back to 2008, Basso said transportation spending would revert to $35 billion a year, compared with the current $43 billion.
“Unless you find more revenue, you’ll have to reduce the program significantly,” Basso said. “It seems to me that on the Republican side, and it may be bipartisan, there seems to be no stomach for raising the gas tax regardless of what these projections show. I don’t know where we’re going from here.”
Downey said Congress could have taken steps to brighten the financial picture. When Democrats passed the 2008 budget, they decided to spend down anticipated Highway Trust Fund revenue, plus the balances on hand.
“At best, they set out on a course that would have brought the trust fund balance to zero at the time when SAFETEA-LU was going to be reauthorized,” Downey said. “The feeling was ‘we’ll deal with it then.’ They didn’t know that would come back to bite them.” Because of a variety of factors, the trust fund went into the red. Congress had to transfer money from general revenue in 2008 and 2009 to shore up the trust fund.
SAFETEA-LU also had a “safety valve” provision to adjust trust fund spending to remain in line with revenue, but Downey said Congress didn’t use it. In 2009, Congress rescinded more than $7 billion in unobligated highway funds, which gave the fund some relief, but restored them in the Hiring Incentives to Restore Employment Act in March 2010.
The longer it takes to draft a multiyear transportation bill, the worse it’s going to get, Downey said. “This issue has been building up for a long time, and really has to be dealt with in a reauthorization bill, but what are the prospects for getting such a bill?
“The only way you can save money and generate outlay savings from a program is to not start any new commitments. If they have to find savings on the discretionary outlays, they could be in a position of having to take a $10 cut for every dollar they have to fund,” Downey said.
He said so much infrastructure needs attention that it’s hard to say any spending is unnecessary or wasteful. “We are in a real pickle nationally. We’re at the tipping point where if we don’t get revenues up or expenses down, there’s no future.
“Until Mr. Ryan issues the overall marching orders and allocations, I don’t think anybody knows exactly what the game will be,” Downey said. Until then, “I’m sort of riding the streets and saying ‘the British are coming,’ and we better be ready for a fight.”
Contact R.G. Edmonson at email@example.com.