The lean times for transportation infrastructure spending are likely to get even leaner.
The more fiscally conservative House Republicans are signaling they won’t prop up the Highway Trust Fund, the main driver of federal highway spending, when it runs out next year. That could put a crimp in Congress’s broader push to maintain highway spending through a new surface transportation bill, which looks increasingly unlikely to be passed this year.
Raising the federal fuel tax would come too late to boost HTF coffers and is politically dead anyway, and gaining another revenue stream by taxing drivers for miles they travel is still years from adoption.
To paraphrase the dreaded recession jargon, local, state and federal agencies will have to build more with less. The increasing pressure to cut out efficiencies and ensure spending has the maximum economic impact can be seen in the Senate’s two-year, $109 billion bill and the House’s five-year, $260 billion proposal. The problem is the belt-tightening on the national, state and local levels still won’t likely be enough to offset federal belt-tightening.
The Senate and House plans want to reduce the number of transportation programs to speed up the transfer of highway dollars to local and state agencies. They also call for performance targets and resulting reports aimed at improving the economic impact of infrastructure projects, although some transportation advocates say there still won’t be enough oversight.
Each plan also would give states more flexibility in how they spend federal dollars, with the hope that those closest to the projects know how to spend the money the best.
Lastly, increasing the annual funding of the Transportation Infrastructure Financing and Innovation Act by $120 million to $1 billion could leverage more private infrastructure projects. TIFIA projects tend of have strong economic impact because “you get double the impact of analysis” from the Department of Transportation, the lender and the borrower, which can be private or public, said Mortimer Downey, a former DOT deputy secretary.
That’s where agreement over cost-cutting ends. The House Republican proposal to speed up and cut costs of highway projects by streamlining environmental reviews is a major stumbling block on the path to striking an accord between House and Senate plans. Congress’s hopes of passing a transportation bill by the end of the year are fading, as the end-of-the-month extension of highway funding nears and talk of a six-month extension intensifies.
Business groups, including the U.S. Chamber of Commerce, back the push to allow project design to parallel environmental reviews so highway projects can be completed under the average timespan of 13 years. Such efforts would “lessen the opportunity for unnecessary re-evaluation of alternatives and second-guessing of decisions made earlier in the environmental review process,” wrote Bruce Josten, the chamber’s executive vice president of government affairs.
Streamlining critics point out supporters of the provision, including House Transportation and Infrastructure Committee Chairman John Mica, R-Fla., have failed to show just how much money and time can be saved through such “red tape” cutting. Opponents also decry the streamlining measure as a way to sidestep environmental law, and as a scapegoat intended to distract attention from dwindling infrastructure investment.
Congress at least is focusing on getting more economic impact from highway dollars spent. The same can’t be said for most states. Only 11 states said they use economic analysis in terms of deciding what highway projects benefit, and more than 80 percent of the funding they receive from the federal government comes with little oversight, according to a 2010 Government Accountability Office report.
Creating more standards isn’t the answer either, Susan Binder, a senior associate at Cambridge Associates, told a transportation panel in Washington on June 8. “One of the gems of this country is its multifaceted approach. Standardization could have a chilling effect on innovation,” she said.
Panel participants called for the Department of Transportation to give more guidance to state counterparts, particularly in terms of piecing projects into a national freight transportation plan. Getting increased help from Uncle Sam in picking worthwhile freight projects doesn’t look promising, considering House conferees don’t appear fond of Senate language that would create the framework of a U.S. freight transportation plan. “We need a national plan with goals so (the federal government) doesn’t become an automatic teller machine,” Downey said.
Those withdrawals will become even more precious as the account balance of the HTF nears zero and shippers get hit with the overdraft charge of an ever more dilapidated infrastructure.