Transportation

Transportation Bill Finally Moving

Congressional conferees reached agreement on a 5-year, $305 billion transportation bill that will hike funding for public transportation.

Congressional conferees reached agreement on a 5-year, $305 billion transportation bill that will hike funding for public transportation.

House and Senate conferees have agreed on a transportation bill that funnels more money to local government, boosts funding to improve highway freight corridors, increases spending on buses and enhances safety for crude oil rail shipping.

The 1,300-page, five-year, $305 billion transportation authorization compromise is expected to land on President Obama's desk as early as Friday, the day the current authorization bill expires. If the process slows in the House or Senate, another short-term extension may be likely and will push the bill signing to next week.

In addition to transportation provisions, the so-called FAST Act revives the Export-Import Bank, which was effectively mothballed Oct. 1, and removes a restriction on financing large water projects.

While observers are still looking at the fine print, here are several highlights in the conference agreement: 

•  More money in the Surface Transportation Program is allocated for local government. The allocation will grow from 50 percent to 55 percent, which could mean an average increase of $300 million annually for local transportation projects.

•  Funding also increased for the Transportation Alternative Program. States and local government use this money for economic development, trail and other access projects.

•  Bus funding increases by 89 percent over the life of the bill. This provides both stable formula funding and a competitive grant program to address bus and bus facility needs.

•  A brand new National Highway Freight Program will focus on funding critical urban and rural freight corridors across the country. The new program is funded at $1.15 billion in 2016 and rises to $1.5 billion in 2020.  

•  The Nationally Significant Freight and Highway Projects, a new competitive grant program, will start at $800 million in FY16. After that, it increases by $50 million each year for a total of $1 billion. The program will reduce the impact of congestion, generating national and regional economic benefits and facilitating the efficient movement of freight.

•  Crude oil shipments will be required to move in railcars with a thermal blanket and other safety features. Local governments have demanded these additional measures along rail routes.

•  Conferees jump started the Water Infrastructure Finance & Innovation Act  (WIFIA) program. They made this possible by removing the restriction that disallows use of municipal bonds as the local match. The EPA designed the program to reduce the financing costs of large scale water projects. It's estimated that the WIFIA program could save an estimated 20 percent on the cost of construction.

Boehner Bombshell Shifts Capitol Landscape

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's surprise announcement to retire at the end of October has shifted the landscape on Capitol Hill and may presage an even more dramatic shift later this year.

No longer beholden to the "Freedom Caucus"  – the far right flank of the GOP, Boehner has the flexibility to push more moderate legislation through the House over the next 32 days. The question is, how much can he really get done and what are the short- and long-term implications for the next House Speaker?

In the short-term, the retirement announcement has provided breathing room for the Speaker. The chances of an October 1 government shutdown have nearly evaporated, bipartisan passage of a drama-free debt ceiling bill is more likely and there is hope for a compromise on a transportation/tax reform package. Without the constant threat of a motion to "vacate the Speaker," other bills could hitch a ride on a fast track, including reauthorization of the Export-Import Bank.

Don't get too optimistic. It's also clear the next Speaker will have to deal with the consequences of an unhinged Boehner. Next in line to the Speakership is Boehner friend and ally, Majority Leader Kevin McCarthy from California. The more bipartisan legislation that moves in October, the higher the level of conservative frustration later in the GOP caucus. To be elected Speaker, McCarthy can only lose 29 votes from the GOP ranks – 24 of whom already voted against Boehner in January. Thus, McCarthy can only lose five more Republicans to avoid an all-out scramble for the Speaker's position. 

If McCarthy is tied to the Speaker's actions over the next month, his ascension to Speaker could be put in jeopardy. So Boehner is still going to have to balance the risks and rewards of moving legislation in his final days. Bipartisan action would continue to stoke tensions within the Republican Party and could bring the confrontation past the boiling point to a full revolt. Boehner is a master politician though, so he may manage to clear the decks of some of the most contentious issues and leave the institution he loves on a high note.

Here is some quick analysis on how key provisions could be impacted by the Speaker's departure:

September 30 Budget Showdown/Shutdown – Boehner is no longer beholden to the far right and word from GOP leadership is the Speaker will offer up a clean Continuing Resolution (CR) to keep the government funded through December 11. The CR will not contain the controversial repeal of funding for Planned Parenthood. Without the Planned Parenthood funding repeal, the GOP will lose 30-50 votes for the CR and Republicans will need to rely on Democrats to pass the bill. The measure will likely pass by Wednesday evening, just in time for the September 30 end of fiscal year deadline.

Debt Limit Increase – Another casualty of Boehner's departure could be a showdown over the debt limit. With an historic debt of $19 trillion, the country needs to increase its credit limit once again before it defaults. Unfortunately, the debt limit increase is becoming an annual affair. 

The timeline for default is not exact, but will likely happen in November. It's expected Boehner will try to act before he leaves office to clear the decks for the next Speaker. Typically, the Freedom Caucus has been steadfast in its opposition to raising the debt limit without a dollar-for-dollar cut in spending. The Obama Administration meanwhile has said the debt limit is not a tool for negotiation, even though in 2011, that's how we got the Super Committee and Sequestration. 

Transportation and Tax Reform– The fate of the transportation bill also could benefit. Word out of leadership and the House T&I Committee is that Chairman Bill Shuster and Ways and Means Chairman Paul Ryan have a six-year package that is ready to be unveiled. With the blessing of the Speaker, a transportation/tax reform package could receive an expedited path to the floor of the House. Many Freedom Caucus members have opposed additional federal spending on transportation. October could be the perfect time to get a popular bipartisan bill through the House.

Sequestration Cap – Without another 2013 Murray/Ryan type of agreement, the two-year sequestration relief bill will expire October 1. Both Republicans and Democrats want to lift the cap, but for different reasons. Republicans generally want more defense spending, while Democrats want more non-defense spending. It is hard to be optimistic that the Speaker can reach a deal to lift the spending caps before he leaves. However, there will certainly be pressure on him to expedite negotiations and resolve the issue.

December 11 – The likelihood of a government shutdown on December 11 has gone up significantly. An emboldened Freedom Caucus, a lame duck President Obama and presidential politics are could conspire to make this a tumultuous December. It will take  fancy footwork from both sides to come together on the FY16 spending package.

The Growing Price of Congestion

Many commuters have had to double the amount of time they allot to get to work. 

Many commuters have had to double the amount of time they allot to get to work. 

A rebounding economy has led to more sluggish traffic commutes, highlighting the need for increased investments in roadways and public transit, according to the latest Urban Mobility Scorecard. The 20th iteration of the scorecard comes just before Congress returns to take up stalled federal transportation legislation.

Some of the data in the scorecard, which relies on traffic speed data to calculate delays, is staggering. The annual delay per commuter is 42 hours and is expected to grow to 47 hours by 2020. Total delay nationwide will grow from 6.9 billion hours to 8.3 billion hours in the same period. The cost of congestion, which is borne by motorists and businesses that depend on moving goods on highways, will jump from $160 billion to $192 billion.

Commuting delays subsided during the Great Recession, but a stronger economy has returned mind-numbing delays. The U.S. Department of Transportation cites data indicating Americans drove more than 3 trillion miles in the last 12 months.

Slowing traffic hasn't gone unnoticed by increasingly exasperated motorists. According to the scorecard's authors, many commuters have been forced to double the amount of time they allot to get to work. Others have worked out arrangements with employers to adjust when they arrive or leave from work, or to skip commuting altogether and tele-commute.

“Our growing traffic problem is too massive for any one entity to handle – state and local agencies can’t do it alone,” says Tim Lomax, a report co-author and Regents Fellow at the Texas A&M Transportation Institute. “Businesses can give their employees more flexibility in where, when and how they work, individual workers can adjust their commuting patterns, and we can have better thinking when it comes to long-term land-use planning. This problem calls for a classic ‘all-hands-on-deck’ approach.”

The all-hands-on-deck approach includes substantial road and transit improvements. Scorecard authors say it is smart economics to make those investments. Drivers stuck in traffic waste 3 billion gallons of fuel and 7 billion hours of non-productive time, which adds up to $960 per commuter annually.

Portland isn't among the worst congested cities in America, but the cost of congestion is still notable, even though vehicle miles travelled has decreased from what it was in 2011. In 2014, the average congestion cost for a peak-time auto commuter was $1,273, which includes the price of 29 gallons of wasted gasoline. 

The average cost of congestion for a peak-hour commuter in Seattle, who wastes 63 hours each year in a highway parking lot, is $1,491.

The scorecard observes that traffic congestion is no longer just a big-city problem. Smaller urban areas face mounting congestion. For example, delays in Salem in 2014 cost $175 million, which worked out at $876 per peak hour commuter.

DRIVE Act Enters Passing Lane

This is a follow up from our initial post, DRIVE Act: The Little Engine That Might 

Congressional action on transportation funding remains fluid as the Senate gears up to act in the shadow of a looming deadline July 31.

Congressional action on transportation funding remains fluid as the Senate gears up to act in the shadow of a looming deadline July 31.

The Senate last night secured enough votes to advance the 6-year transportation bill. The procedural vote, which passed 62-36, allows the Senate to debate the bill and consider amendments.
 
While funding for the overall STP program was increased and the allocation to local governments was increased to 55 percent from 50 percent, the bill includes a little sleight-of-hand feature that actually reduces STP funds to municipal governments. The bill requires that 15 percent of the STP suballocation for local governments go toward non-system bridges. In MAP-21, this 15 percent bridge funding came from the state’s allocation. In the DRIVE Act, it would come from the local government suballocation. Thus, funds to local governments overall will be reduced from $4.9 billion to $4.6 billion.
 
Local government advocates, including NACO, NLC, Conference of Mayors and T4A have caught on to this reduction and will be working together to increase the STP suballocation to local governments. An amendment is being drafted to reverse the cuts and increase STP for local governments.
 
If this STP amendment fails or is not allowed to be offered, it could lead local governments to oppose the bill. The Senate bill already faces some stiff challenges for other reasons and from different factions, including:

  • General opposition from Tea Party Republicans to transportation investment;
  • Presidential candidates in the Senate promising to hold up the bill to address their pet issues from abortion to the Iran nuclear deal; 
  • Concern over some of the pay-\fors, including revenue from reducing interest rates paid by the Federal Reserve to large banks, selling oil from the Strategic Petroleum Reserve that is used to prevent energy crises and directing fees from the Transportation Security Administration and customs processing. Some Senators just oppose the pay fors, while others wanted to use these pay fors for their pet bills (ie pending Energy Bill and sequestration relief).
  • Concern over some of the environmental streamlining.

 
DRIVE Act highlights include:

  •  A new Freight Mobility Program will distribute $1.5 billion in FY16 and grow from there. Freight corridors throughout the country will see needed influx in resources. In FY 16, Washington and Oregon would receive $34.2 million and $25.3 million to build important infrastructure projects.
  • A new Major Projects Program will distribute $300 million in FY16 and grow to $450 million in FY21. The new initiative will fund large projects of regional and national significance throughout the country.
  • The bill increases funding for the Transportation Alternatives Program from $800 million to $850 million and gives local governments 100% control over the use of funds. TAP provides funding for trails, bike paths, safe routes to school and other local priorities. 
  • The Surface Transportation Program allocation to local governments is increased from 50% to 55%. However, the overall pot has shrunk, so local governments will actually see a reduction. There are efforts underway to offer amendments to increase local governments share of STP funds.
  • The bill increases the funding that must be spent on projects to maintain and repair bridges off of the National Highway System, as these bridges often struggle to find a reliable funding stream. These city and county owned bridges were neglected under MAP-21. The bill requires that states allocate at least 110% of the funds they allocated to bridges in FY 2014.
  • The bill restores funding for the FTA Bus and Bus Facility grant program and increases transit formula dollars for transit agencies in urban and rural areas.

DRIVE Act: The Little Engine That Might

The recent bridge collapse in California is fueling momentum in Congress to act on a transportation package.

The recent bridge collapse in California is fueling momentum in Congress to act on a transportation package.

The updated DRIVE Act cruised up to the Senate floor yesterday weighing in at 3.25 pounds and 1,030 pages. Ultimately, it ran out of gas shortly after the shiny new bill was driven off the lot.

Majority Leader Mitch McConnell gave senators less than an hour to read the bulging bill before voting to proceed. Democrats wanted more time to read the bill, while some Republicans opposed the “pay fors.” Ten Republicans joined every Democrat in opposition to proceeding to the bill and we now await McConnell’s next jump start of the bill. 

While news of our crumbling infrastructure is not new, the recent bridge collapse in California is fueling momentum in Congress to act on a transportation package. Most in Congress believe our country is underinvesting in roads and bridges, but the urgency hasn’t spurred long term action or clever ways to pay for our infrastructure deficit.

The current transportation bill expires July 31 and the Highway Trust Fund is nearly broke. If Congress doesn’t act with at least a short-term extension by July 31, transportation projects around the country will grind to a halt and DOT furloughs will be issued. It’s unlikely Congress will let this happen, but there are a lot of obstacles to quick action on a transportation bill or extension.

The House has already passed an extension to December, along with $8 billion in funding offsets. McConnell doesn’t like that plan and has teamed up with Democratic Senator Barbara Boxer to push for a longer term solution that transportation stakeholders badly crave. McConnell wants to demonstrate the Republican controlled Senate can pass consequential legislation on his watch.

The DRIVE Act would reauthorize federal highway and transit funding at an increased funding level of about 3.3 per per year for six years, from FY 2016 through FY 2021. Highway funding would increase 19 percent over the six years of the bill. Transit funding programs would increase from $10.862 billion in the current year to $11.797 billion in FY 2016 and to $13.26 billion in FY 2021. 

Only three years of funding offsets have been identified. After the third year, additional funds would need to be raised to prevent a shutdown.  The complicated provisions of the bill leave many policymakers asking questions, while other senators are concerned about the pay-fors. 

How Is the Bill Paid For?

The multi-year highway bill includes approximately $47 billion in offsets from other areas of the federal budget to help pay for new highway funding over the next three years. The proposal relies largely on revenue from reducing interest rates paid by the Federal Reserve to large banks, selling oil from the Strategic Petroleum Reserve and redirecting fees from the Transportation Security Administration and customs processing. The offsets are typical for Congress, they found three years’ worth of funding over a 10-year budget timeline. 

Many Democrats wanted simply to raise the gas tax to cover the cost of a long-term bill. However, nearly all Republicans and President Obama have expressed opposition to raising the tax, even though it hasn’t been raised since 1993.

DRIVE program highlights include:

  • A new Freight Mobility Program will distribute $1.5 billion in FY2016 and grow from there. Freight corridors throughout the country will see a needed influx in resources. In FY2016, Washington and Oregon would receive $34.2 million and $25.3 million to build important infrastructure projects.
  • A new Major Projects Program will distribute $300 million in FY16 and grow to $450 million in FY2021. The new initiative will fund large projects of regional and national significance throughout the country.
  • The bill increases funding for the Transportation Alternatives Program from $800 million to $850 million and gives local governments 100 percent control over the use of funds. TAP provides funding for trails, bike paths, safe routes to school and other local priorities. 
  • The Surface Transportation Program allocation to local governments is increased from 50 to 55 percent. However, the overall pot has shrunk, so local governments will actually see a reduction. There are efforts underway to offer amendments to increase local governments share of STP funds.
  • The bill increases funding that must be spent on projects to maintain and repair bridges off of the National Highway System, as these bridges often struggle to find a reliable funding stream. These city and county owned bridges were neglected under MAP-21. The bill requires that states allocate at least 110 percent of the funds they allocated to bridges in FY2014.
  •  The bill restores funding for the FTA Bus and Bus Facility grant program and increases transit formula dollars for transit agencies in urban and rural areas. 

It’s unclear what’s in store next for the DRIVE Act. The Senate was expected to take up the bill again today, but the bill has yet to make an appearance. If senators move to proceed, there will be a flurry of amendments and likely a rare weekend Senate session to complete the bill.

Even if senators pass the long-term measure, the House could reject the bill and opt for its short-term measure extension.

Senate Panel Approves 6-year, $278 Billion Highway Bill

the bipartisan committee vote on the DRIVE Act signals that lawmakers see political value in spending on transportation infrastructure.

the bipartisan committee vote on the DRIVE Act signals that lawmakers see political value in spending on transportation infrastructure.

A Senate committee unanimously advanced a 6-year, $278 billion highway bill amid lingering doubts the measure can actually be funded, let alone by July 31 when current highway spending authorization expires. A more likely next step is an extension until December.

If nothing else, the bipartisan committee vote on the DRIVE Act signals that lawmakers see political value in spending on transportation infrastructure. Whether the institutional obstacles can be surmounted to pass a bill and fund it, remains a big question. Chances are the eventual bill that passes will have a shorter timeframe.

Here is a recipe for how we get something other than a simple extension this year  – The 6-year DRIVE Act would need about $100 billion in additional funds to remain solvent through September 30, 2021. Even in DC, $100 billion is a lot of money. It's more likely the tax writing committees would come up with a smaller amount, something closer to $35 billion.

If that happens, the EPW authors will be forced to downsize the bill. The result would be a mini-DRIVE Act that funds transportation for two fiscal years and keeps the policy changes from the DRIVE Act intact. This two-year timeline is similar to MAP-21, the previous transportation bill that passed in 2012. 

If these pieces come together quickly, there is a slight chance the mini-DRIVE Act could pass by July 31. If they can't pull all the pieces together by then, but still show good progress, it's possible a very short-term extension will give leaders some breathing room and we could see a 2-year bill pass in the fall.

A simple extension through December would cost somewhere between $8 and $11 billion, so it seems plausible the tax writing committees could find another $20 billion or so to fund a 2-year bill, satisfy some transportation stakeholders and prove the Congress can actually govern. If they can't find more money, a simple extension of current law through December is the most likely scenario. 

The DRIVE Act

Components of the bill include the following: 

Fully-funds highway programs for 6 years

The bill reauthorizes the Federal-aid highway program at an increased funding level for six years, from FY 2016 through FY 2021. Funds are increased by 3% each year over the six years. Transit programs aren't included in this draft as FTA is under the jurisdiction of the Senate Banking Committee.

Increases support for core formula programs and more local control

The existing consolidated core highway program structure from MAP-21 is maintained, including: the National Highway Performance Program; the Highway Safety Improvement Program; the Surface Transportation Program; and the Congestion Mitigation and Air Quality Improvement Program.

The local MPOs share of Surface Transportation Program (STP) dollars are increased from 50% to 55%, with the state DOTs share reduced from 50% to 45. 

Also funding for the Transportation Alternative Program is increased from $800 million to $850 million and state DOT's are required to distribute funds to MPOs based on the proportionate share from FY2009 - Pre-MAP21 levels. This should provide significantly more money to local governments through TAP.

Funds major projects - A Return to Congressionally Directed Spending

Funding for Projects of National Significance starts at $300 million in FY16 and grows to $450 million in FY2021. Grant requests in urban areas must be at least $50 million to be eligible. 
This section is sure to get the most play in the press. The legislation tasks the Administration with compiling a list of eligible projects. However, the Administration is then directed to send a list of projects to Congress which includes "at least 2 times, but not to exceed 4 times, the authorization level for each fiscal year." This wish list will be sent to the Senate EPW Committee and House T&I Committee, where they will select the final awards. I guess it was only a matter of time. Basically, the Administration will send a big list of possible projects that are eligible and scored well and Members of the Committee will whittle it down and make the final selections. 

The program includes a set-aside for rural areas (20%) and ensures an equitable geographic distribution of funds.

Prioritizes bridges and large, nationally-important facilities 

The bill increases the funding that must be spent on projects to maintain and repair bridges off of the National Highway System, as these bridges often struggle to find a reliable funding stream. These city and county owned bridges were neglected under MAP-21. The bill requires that states allocate at least 110% of the funds they allocated to bridges in FY 2014. This will ensure more funds go to local bridge projects.

The bill also shifts additional revenue towards the Interstate System and the National Highway System to address the significant maintenance backlog on those facilities.

Provides substantial new funding to focus on freight and goods movement

The bill establishes a formula-based freight program, which will provide funds to all states to improve goods movement, reducing costs and improving performance for business. Funds for the freight program start at $2 billion in FY16 and increase to $2.5 billion in FY2021. 

It expands flexibility for both rural and urban areas to designate key freight corridors that match regional goods movement on roads beyond the Primary Highway Freight System.
The legislation improves efforts to identify projects with a high return on investment through state freight plans and advisory committees established under MAP-21.

Other important program funding levels

The bill funds the Federal Lands Access Program at $255 million in FY16 up to $280 million in FY21.

University Transportation Centers are funded at $72.5 million each year of the bill. 
TIFIA is funded at $675 million/year from FY16-FY21.

Accelerates project delivery and increases flexibility

Building on the reforms in MAP-21, the bill continues to accelerate the project delivery process. 
New reforms would improve collaboration between the lead agency and the participating agencies, allow for greater reliance on documents prepared during the planning process, and reduce duplication between agencies involved in the federal environmental review and permitting process.