September could be a tough time for transportation spending, and that could affect transportation planning for far longer. Several fast-approaching deadlines may find lawmakers too disorganized and too contentious to avoid disrupting some of the main federal programs still providing an economic stimulus.
September will see a renewed fight over reauthorizing the Federal Aviation Administration, efforts to meld sharply different surface transportation bills to shape the much larger Highway Trust Fund and a presidential push for a new federal account to help finance infrastructure projects.
After the hard-won August deal to cut projected federal spending without raising new revenue — the price to increase the government’s borrowing limit — transportation programs face potentially tough battles in a Congress where investment in infrastructure hardly looks like a top priority.
Before lawmakers left town for their August recess, President Obama tossed them a list of high-priority measures to spur jobs when they return after Labor Day.
These include three pending bilateral free trade agreements, extensions to a payroll tax cut that expires at year along with unemployment insurance benefits, and his request for a transportation infrastructure bank.
But looming over all will be the Sept. 30 deadline to extend expiring federal programs paid for out of the highway fund, and one to extend authority to keep collecting gasoline, diesel and tire taxes that pay for those projects.
Lawmakers will have about three weeks to act; industry officials fear the worst. Another “crisis” could erupt by month’s end over resistance by some hard-right members of Congress to extending the fuel tax. The extension has always been all but seamless, but some Republicans have signaled the program that supports the Highway Trust Fund may be next on the list of political targets.
That could leave another government shutdown looming next month, and states could find their shares of trust fund project allotments throttled until it all sorts out.
“Right now, you’ve got very problematic prospects for a transportation agreement, on anything from the structure of a bill or even the very basics,” said Peter J. Gatti, executive vice president of the National Industrial Transportation League.
“It seems today like ‘everything is on the table,’ but to view the fuel tax extension as a tax issue is a short-sighted perspective,” said Mortimer Downey, senior advisor to construction engineering firm Parsons Brinckerhoff. “The proper question is how we pay for necessary investment. With flat rates and rapidly improving fuel economy standards, the current tax is a diminishing resource but one that is critically needed.”
“Everyone is looking at the dollar signs, and the third rail, as the Republicans have made clear, is the ability to raise revenue or create new revenue streams. Right now, everyone is talking about earmarks and what’s known as pork and what business needs to focus on is turning this into a debate over investment in the country’s future. That’s a challenging case for industry to make,” Gatti said.
One reason Washington policy observers fear a tough time on transportation is the example of what was expected to be a simple FAA program extension.
It was to be another in a long series of short-term measures, as the Senate and House grapple with disputes that prevent them from agreeing on a final long-term bill. One of those is a House effort to rein in the National Mediation Board, where a recent rule change would make it easier for unions to organize airline workers.
Unable to force that issue, the House passed a short-term extension bill in July that stripped out a subsidy for small airports that happened to be in the home states of key Democratic senators. The Senate refused to accept the legislation, FAA funding lapsed, and 4,000 non-critical workers were furloughed. Obama chided Congress to settle what he called “another Washington-inflicted wound on America.”
Transportation Secretary Ray LaHood bristled that members of Congress should not fly home without funding the FAA. They did just that, and the effects quickly spread. The FAA halted more than 200 aviation projects it oversees worth billions of dollars, suspending jobs for their 70,000 workers, and stopped collecting federal air ticket taxes.
Finally, in an only-in-Washington solution, the Senate in a pro forma session and nearly empty chamber approved the House measure. It still contained the offending language, but LaHood planned to issue waivers that would keep the small airport ticket subsidies flowing.
The costs were high. More than $300 million in ticket taxes could not be collected, and projects were delayed at the height of construction season. And that patch only lasts through Sept. 16, after which a new FAA measure will be needed.
Obama again talked up the infrastructure bank idea to help create more jobs. That I-Bank, which would use federal seed money for loans for infrastructure projects, was not in the major House-Senate surface transportation bills, though it could be attached in the Senate.
But no one has explained how to fund it, or cover projected shortfalls in a Senate committee’s transportation bill, or cover trust fund gaps that will come as new Obama administration regulations mean heavy trucks and cars alike will burn less fuel and pay less in fuel taxes.
And a backfire is already building against traditional highway programs. Several conservative senators proposed allowing states to drop out of the federal trust fund and directly spend their own fuel tax receipts.
Transportation policy faces a rough road next month.