Among state transportation officials, it’s an inside joke. The absence of a federal highway program is taking states back to the Stone Age — a century ago when a paved roadway outside city limits was a novelty.
Congress hasn’t produced a new spending plan for the nation’s surface transportation system since the last one, itself derided as inadequate for little more than bare maintenance, expired in 2009. States since then have had to take funding in three- or six-month dribbles, making no one happy. With the limited resources they’re getting, transportation officials essentially are performing triage, and that means letting paved surface deteriorate to gravel on the least-traveled routes.
“The biggest thing for us: We need resolution. It has been dragging on too long, and it’s the uncertainty that’s killing us,” said Kirk T. Steudle, director of the Michigan Department of Transportation.
With highway bills now on the table in the House and Senate, the question is whether House Republicans and Senate Democrats can find a way past huge differences in ideology to find common ground. Congress has shown it can compromise on transportation, recently passing a bill that keeps the Federal Aviation Administration in business for another four years.
It took just five years and 17 extensions of the old FAA law before Congress passed that replacement. The compromise was laden with presidential election-year politics: passing the measure helps drain away President Obama’s ability to run against Republican intransigence or a “do-nothing Congress” if Congress is passing bills, after all.
No one is willing to wager on the prospects for a surface transportation measure, even when it’s being promoted as a jobs bill in an election year when employment is the make-or-break issue.
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But voters aren’t making the connection, said Rep. Albio Sires, D-N.J., whose district includes portions of the Port of New York-New Jersey. “You ask the cab driver, right now all he cares about is creating jobs. I think the people who want the transportation bill done are the people who have a stake in transportation, the people who know how important it is.”
When Mica’s bill was before the transportation committee, Sires offered an amendment to provide local governments grants to develop freight transportation — the port authority needed the money to reduce truck congestion and move more cargo onto the rails. The proposal was rejected.
“Neither side wants to be blamed if the highway bill is not authorized and all of a sudden construction workers find themselves out of a job,” said Joshua Schank, president of the Eno Transportation Foundation. “The game is (to) put yourself in the position so the other side can be blamed. To do that, you have to do something that gets your bill passed in your respective house.”
Sen. Barbara Boxer, D-Calif., chair of the Environment and Public Works Committee, has the support of Sen. James Inhofe, R-Okla., in producing a two-year, $109 billion bill. They said bipartisanship is one of its key selling points.
Bipartisan isn’t an adjective anyone will apply to a five-year, $260 billion measure sponsored by Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee. Mica’s bill has poison pills aplenty that Democrats will not swallow, starting with revenue from new oil and gas leases, including drilling in the Arctic National Wildlife Refuge, a fortress of the environmental movement.
Mica pares down the number of DOT programs, and would give states more latitude in the way they spend their share of federal tax dollars. States would no longer be required to spend money on programs decreed by Washington, such as on safe routes to schools or scenic byways. Disbursement would be strictly by formula — no discretionary spending for the federal government — and it all would come out of the Highway Trust Fund.
That’s a sharp turn away from the current landscape and, critics say, from any sort of coordinated, national effort on transportation. A broad argument over governing philosophy, however, is buried under practical and sobering financial numbers.
The Congressional Budget Office estimates the Highway Trust Fund balance will turn negative in fiscal 2013, which starts this Oct. 1. The Senate bill spends more than what’s in the fund over the two years, which is why it was so essential Finance Committee Chairman Max Baucus, D-Mont., find other revenue sources.
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Baucus’s efforts were cut short last week after the senior Republican on the committee, Utah’s Orrin Hatch, tried to strip the proposals and replace them with the energy language from the House bill. Baucus prevailed, but the committee approved sources that would yield only $9.6 billion.
The House bill sticks with what the trust fund can pay, estimating annual expenditures of approximately $40 billion. But the price for extending trust fund revenue over the next four fiscal years is funding for transit programs — not good news for an urban lawmaker. Transit money was a discrete account within the Highway Trust Fund. Mica’s plan would put transit and other transportation programs into an “alternative” transportation fund to be appropriated from general revenue.
“Having the transit funding in question is a concern for us. We need to have some stable transit funding source, however that’s identified,” Steudle said. Michigan’s congressional delegation includes Republican Dave Camp, chairman of the House Ways and Means Committee. Steudle said Camp assured him there would be funding for transit.
The House bill includes no freight strategy, corridors of national significance or other provision aimed at improving the movement of goods, giving freight advocates little to cheer about. The DOT is tasked with drafting a freight transportation plan, and states are obligated to design their own freight plans.
Although it looks like a recipe for a mash-up of transportation policy, Steudle said it’s not as bad as it appears. “We have a number of coalitions among Midwest states where we’re working on freight movement.” Goods that cross the Canadian border into Michigan may be bound for 26 other states or Mexico. The Michigan DOT isn’t going to ignore Interstate 69 because it’s Indiana’s trade corridor.
“From a freight standpoint, there’s much more of a need for us to look across state lines,” Steudle said. “I think states can do that, but we need the federal government in that conversation as well.
“When Mica encourages the federal government to put together a freight plan, he means that the states are going to have to be involved, as opposed to somebody who sits in Washington and says here’s how it’s going to go,” Steudle said. “When you weigh all the things together, we have to say we’re taking the side that says we need to get this done.”
There are problems in each bill, but Steudle said nothing is insurmountable. Having a bill that extends over years is paramount, however.
“The continuing resolutions and the extensions are very hard on us,” Steudle said. When the federal government is only providing a state with a portion of the federal funds it’s due, construction gets thrown off schedule, and it only costs the taxpayers more money.
“By March of every year, we like to have 80 to 90 percent of our projects out for bid or under contract. We’re not able to do that,” he said. In northern states, delaying a contract letting from spring to summer means projects finish in the face of winter weather.
“Come October-December, there’s bad weather setting in, and you’re finishing projects in less-than-ideal conditions,” Steudle said. Contractors will factor the cost into their bids. “A week in June or July is worth two or three weeks in November. We’re going to get the projects done, but on June 21, the longest day of the year, we want to see every crew working across the entire state all day.”
“Not only is a state hesitant to start a project, the contractors are hesitant to invest their own money unless they’re reasonably certain there’s going to be funding for it,” said Pete Rahn, senior vice president for the HTNB engineering firm and a former director of the Missouri Department of Transportation.
“The rule of thumb is for an engineering contracting team to spend about 1 percent of the cost of the project competing for it,” Rahn said. A $100 million project isn’t uncommon, so a bidder is putting $1 million on the line. “I am very confident I am going to win if I’m going to spend a million dollars without any income. The real question, is someone going to spend $1 million to compete for a project if they’re not sure the DOT is going to have the money?”
Rahn said uncertainty creates inefficiency and, ultimately, uncertainty costs the taxpayers. Even at a time when contractors are hungry and bidding low for business to recover from the recession, they will still raise their bids to cover potential losses.
“The picture going forward for federal highway and transit funding is not a pretty picture,” Rahn said. “It appears to me we’re not going have a program in the foreseeable future that’s going to come anywhere near adequately paying for what needs to be done to our transportation system.”