From Ken Orski.
---------- Forwarded message ----------
From: Ken Orski <korski(a)verizon.net>
Date: Mon, Aug 13, 2012 at 7:11 AM
Subject: After the Dust Has Settled...Some Reflections on the New
Transportation Law (MAP-21)
To: Our Readers <korski(a)verizon.net>
[image: Innovation Briefs] <http://www.innobriefs.com/> Vol. 23, No.
21 (Rev) www.innobriefs.com
August 13, 2012 (update)
*After the Dust Has Settled... Some Reflections on the New Transportation
Law (MAP-21) *
By a vote of 373-52 in the House and a vote of 74-19 in the Senate, the
lawmakers approved a two year reauthorization (October 1, 2012 through
September 30, 2014) of the federal surface transportation program, just one
day before the program was set to expire on June 30. In so doing,
Congress passed the first multi-year reauthorization in almost seven years
and put an end to a three-year long series of nine short-term extensions
that kept the transportation community in a state of perpetual uncertainty.
The bill, which also extended the existing authorization through the end of
the current Fiscal Year (September 30) was signed into law at a subdued
White House ceremony on Friday, July 6.
Stakeholders and the construction industry applauded the bill as one "that
will bring us 27 months of much needed funding certainty and program
stability" in the words of Kirk Steudle, AASHTO’s president. Political
observers praised the compromise bill as a commendable example of bicameral
give-and-take. Even many think tank conservatives privately admitted that
the bill was far better than they had reason to expect.
About the only sour note was sounded by environmentalists and advocates of
so-called "active transportation" (i.e. the bike/ped lobby). They felt
cheated by what they considered too many concessions made by Senate
negotiators eager to pass a bill at any price."A substantial capitulation,"
and "a major step backward," was how the disappointed Transportation for
America (T4America) advocacy group characterized the conference bill in its
press release. "Bad News for America," headlined the Rails-to-Trails
Conservancy. Smart Growth America thought the bill "fails to provide the
kind of visionary...transportation reform America deserves." Nature
Conservancy deemed it "a sad event in the history of American
conservation." And an anti-automobile civil liberties activist called the
bill ‘The most hyperpartisan and least productive that I’ve seen in
decades." Collectively, the green advocacy groups gave vent to their
frustration that Congress did not embrace enough of their agenda. They
found themselves isolated, unable to influence the outcome and,
ironically, opposed to a bill that was unanimously supported by
all congressional Democrats.
As with any negotiated compromise, neither Senate Democrats nor House
Republicans felt completely satisfied. But in the end, fear of being
accused of killing a"jobs bill" five months before a critical election,
plus a genuine desire to put an end to three-years of uncertainty, tipped
the scales in favor of a compromise. The prospect of a 27 month respite
from having to revisit the transportation authorization also weighed in
favor of approving the measure, despite reservations on both sides.
Lingering Fiscal Concerns
Although the bill was welcomed, its failure to address the problem of
long-term solvency of the Highway Trust Fund did not escape notice. "A good
step forward," said former Governor Rendell, co-chairman of the Building
America’s Future coalition, but the bill lacks a "long-term sustainable and
significant funding source." Echoed ARTBA’s President Pete Ruane, "The
tough job of coming to grips with how to fund the nation’s investment in
transportation over the longer term remains." So did Sen. Orrin Hatch
(R-UT), ranking member of the Senate Finance Committee, who observed
that "The revenue title kicks the can down the road, failing to put the
Highway Trust Fund on a sustainable path forward."
Fiscal conservatives complained about the questionable way the $118 billion
bill ($105.2 billion bill in obligation authority for FY 2013-14) is to be
paid for. To fully fund it, the bill supplements the Highway Trust Fund
(HTF) with an $18.8B transfer from the general fund and an additional $2.4B
transfer from the LUST (Leaking Underground Storage Tank) Trust Fund.
To pay for these transfers, the bill uses "a remarkable array of budget
gimmicks voters aren’t supposed to notice," in the words of the Wall
Street Journal. The main source of offsets is the projected revenue from
the so-called Pension Funding Stabilization reform which will allow
employers to lower their contributions to defined benefit pension plans.
Since pension contributions are tax deductible, reducing them will increase
employers’ taxable income and hence allow the government to collect more
taxes. Also used for offsets will be projected increases in premiums paid
to the Pension Benefit Guaranty Corporation. FY2012-2014 offsets will only
amount to $8.077B. To fully pay for the 27 months of funding, ten years
worth of offsets will be required. "It is simply nonsensical to pay for
this measure for at least eight years after it expires," observed Sen.
While pension funding stabilization has been called "phantom savings" by
the Wall Street Journal, and criticized as problematic by conservative
groups such as the American Enterprise Institute and the Competitive
Enterprise Institute, it is not without supporters. They
include, primarily, corporate employers who feel that current regulations
require them to set aside more funds than is necessary.
*End of Long-term Reauthorizations?*
With a road user (mileage) fee garnering little support in Congress
(indeed, the House has approved an amendment to the FY 2013 appropriations
bill that would block the exploration of a Vehicle Miles Traveled (VMT)
fee), and with no other money-raising mechanism anywhere in sight, there
is a growing sense among seasoned observers that the days of
long-term transportation authorizations may be over. The prevailing fiscal
and political climate will make it difficult if not downright impossible to
raise hundreds of billions of dollars in a single legislative package.
For example, at FY 2013-14 (MAP-21) levels of expenditure, a six-year
surface transportation authorization would require approximately $300
billion in funding. Highway Trust Fund revenue and interest over the same
time frame is expected to generate only $210 billion, leaving an unfunded
shortfall of $90 billion.
Faced with this dilemma, Congress is likely to embrace short-term bills as
the only practical solution. Short-term authorizations, such as MAP-21,
will only require relatively modest injections of general funds and, if
recent experience is any guide, Congress will always find ways to offset
modest revenue transfers with "creative" accounting gimmicks.
To be sure, the transportation community will contend that longer-term
(i.e. five- or-six-year) authorizations are necessary to allow for an
orderly planning and implementation of major capital investments. But to
the extent that large highway capital projects still figure on State DOTs
agendas, tolling, private capital and credit instruments such as TIFIA, can
probably provide an adequate substitute for the funding stability offered
by long-term federal authorizations.
Major credit for passing the bill goes to *Sen. Barbara Boxer
(D-CA)*chairman of the Senate Environment and Public Works Committee
formed a bipartisan alliance with the Committee’s Ranking Member James
Inhofe (R-OK), never wavered in her determination to get a bill passed
during the current session of Congress, and was willing to meet John Mica
halfway in order to gain the House Republicans’ support. Sharing in the
credit is *Rep. John Mica (R-FL)*, Chairman of the House Transportation and
Infrastructure Committee who had to contend with and persuade a diverse and
independent-minded group of conferees of his own party to accept some
unpopular Senate provisions. Major credit also goes to *Speaker John
Boehner (R-OH))* who put his prestige on the line and skillfully traded his
major trump card, the Keystone XL pipeline, at a crucial point in the
negotiations with *Senate Majority Harry Reid (D-NV)* for important Senate
concessions. Just how extensive and significant those concessions have
been, will become apparent from the summary below.
Two Substantive House Victories
The House can point to two substantive victories:
It prevailed upon the Senate to agree to stronger reforms to the project
delivery process, including an expanded use of the "categorical exclusion"
process. The conference bill provides for setting a 4-year deadline for
project approval and for exempting more categories of projects from
environmental assessments (EIS). The exemptions now include repair of
existing highways and bridges, reconstruction of projects damaged in
natural disasters; projects within an existing ROW; and projects receiving
minimal Federal assistance ($5M or less).
The House was also successful in reining in the Senate’s "Transportation
Enhancement" program, a favorite of the bike/ped advocates. The conference
bill renamed the program as the "Transportation Alternatives" (TA) program.
(Sec. 1122). It eliminated funding eligibility of certain "Enhancement"
projects (such as transportation museums, public art). And it folded the
"Recreational Trails," and "Safe-Routes-to-School" programs into the
overall Transportation Alternatives program, thus depriving them of
their own dedicated funding.
The new TA program is funded with a set-aside amounting to 2 percent of
total federal highway funding. Fifty percent of the set-aside is allocated
to local agencies and the other 50 percent to the states. However, states
can transfer their allocation to other uses if they get a backlog of 150
percent of an annual set-aside. Effectively, the Enhancement (TA) program
will be reduced from 1.2B in FY 2011 to $808/820 million/year in FY
2013/2014, a reduction of approximately 30 percent.
The conference bill also allowes expanded authority to toll new Interstates
and added lanes on existing Interstates so long as the current toll-free
lane capacity is not diminished (Sec. 1512). It allows conversion of HOV
lanes to High Occupancy Toll (HOT) lanes; and it requires US DOT to compile
"best practices" for working with the private sector and to develop
guidance for P3 in public transit.(Sec. 1534). Provisions favoring tolling
and public-private partnerships had been missing from the Senate bill.
Left on the Cutting Room Floor...
In return for dropping the Keystone XL Pipeline amendment and the proposal
to curb EPA coal ash regulation, and in return for abandoning Congressman’
Mica’s earlier goal of a six-year bill (H.R. 7), the House was able to win
significant concessions from the Senate. Left on the cutting room floor
+ The Senate bill’s "Bingaman amendments." The amendments would have
penalized states for entering into public-private (P3) toll concessions by
withholding formula funding for privatized interstate toll roads and
eliminating accelerated depreciation and use of Private Activity Bonds for
P3 transactions. Defeating the amendments was a major goal of the financial
+ The Senate bill’s Title III, *Surface Transportation and Freight Policy
Act of 2012. *However, the bill keeps modified Senate provisions
establishing a national freight policy, designating a primary freight
network of 30,000 miles and requiring the development of a national freight
+ The Senate bill’s Title V, *National Rail System Preservation, Expansion
and Development Act of 2012*." House conferees opposed this measure because
it would increase funding for Amtrak and high-speed rail, and add
provisions that "stifle private sector competition in passenger and
commuter rail service and lay the groundwork for re-regulation of the rail
industry." Striking out Title V was another nail in the coffin for the
Administration’s high-speed rail program, the funding for which Congress
has now denied three years in a row.
+ The Senate bill’s seven-year $1.4 billion proposed reauthorization of the
*Land and Water Conservation Fund,* a National Park Service program within
the U.S. Department of the Interior. The measure was opposed by the House
conferees as too costly and totally unrelated to the purpose of the bill.
+ The Senate bill’s proposal to create a new *National Endowment for the
Oceans, Coasts and Great Lakes*, to be housed in the Department of
Commerce, another measure totally outside the scope of the transportation
+ The Senate bill’s provision to continue the TIGER grant program, a
favorite of the Democrats but opposed by the Republicans as
"executive earmarks" that are lacking transparency and are used to
promote only the Administration's own priorities. In its place, the
conference bill created a new program of Projects of Regional and National
Significance ($500M in FY 2013) intended to fund competitive grants for
large highway and transit projects. Unlike TIGER, which was open to local
governments and metro areas, only states and transit agencies can apply.
The Senate bill’s provision authorizing the issuance of TRIP Bonds.
+ The Senate bill’s provision for a National Infrastructure Bank, a White
House priority but opposed by House Republicans as creating a redundant
financial bureaucracy. Instead, the bill retained a bipartisan provision to
boost TIFIA program funding from $122 million/year to $750 million in FY
2013 and $1 billion for FY 2014; and to increase the maximum project cost
share from 33% to 49%. The conference bill eliminated most of the selection
criteria such as "sustainability" and "livability." An increase in
funding had been strongly promoted by the financial community.
+ The Senate bill’s set-aside for the "Job Access and Reverse Commute"
program (JARC). The program was moved to Section 5307 Urbanized Area
Formula Capital Grants.
+ The Senate bill’s provision that would allow transit agencies to use a
limited portion of their Sec. 5307 formula funds for operating assistance
during periods of high unemployment for up to two years, a measure
championed by transit advocates.
+ The Senate bill’s restoration of an expanded tax benefit for transit
commuters. (It goes back to $125/month for transit but remains at
$240/month for parking); another measure supported by transit advocates.
+ The Senate bill’s provision that would require automakers to equip cars
with "Event Data Recorders" that record and store the vehicle’s operation
immediately before and after an accident. House conferees expressed concern
that this provision would constitute an invasion of motorists’ privacy.
+ The Senate bill’s "Complete Streets" provision. This provision would
have established standards for the "safe and adequate accommodation ...of
all transportation network users, including motorized and non-motorized
users," but was seen by the critics as another way of advancing the green
advocates' bike/ped agenda.
+ The Senate bill’s controversial offset giving the IRS the power to lift
the passports of American citizens who owe more tha $50,000 in back taxes.
The Senate Finance Committee had estimated the passport provision could
have brought in more than $500 million in collected back taxes in its first
five years of operation, but House conferees opposed it as being of
*By yielding so much ground, the Senate conferees showed a genuine
willingness to meet the House halfway. This they did without sacrificing
the Senate bill's fundamental objectives of maintaining current funding
levels and bringing funding certainty and stability to the transportation
program. The House, in turn, won major concessions on two issues important
to the Republicans---environmental streamlining and reining in
transportation enhancements. It also got rid of the most questionable and
objectionable provisions of the Senate bill in a quid pro quo for giving up
the Keystone XL pipeline. Both parties can truly claim to have achieved
their main goals. And, importantly, Congress has demonstrated that it can
still get things done --- even in the highly partisan and supposedly
gridlocked pre-election season. *
Kenneth Orski, Editor/Publisher
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National Journal Transportation Experts Blog (
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