Highway Trust Fund

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.

Propping up the Highway Trust Fund

Congress has less than three legislative work weeks until the Highway Trust Fund runs dry and highway and bridge projects across the country grind to a halt, resulting in the loss of thousands of construction jobs, further slowing economic recovery. By law, the Trust Fund cannot shell out more money than it has.

The Highway Trust Fund sends approximately $35 billion annually to states for new construction and road repair. According to the Department of Transportation, the fund began FY 2014 with roughly $1.6 billion in cash. In October 2013, $9.7 billion was transferred from the General Fund to the Highway Account. The latest projection from the Department of Transportation monthly "ticker" showed $8.1 billion available as of June 1, but depleting rapidly by late August.

With the clock ticking and no bipartisan consensus on a long-term solution, members in the House and Senate are scrambling for a short-term fix. Filling that gap to December will require something in the $8-$10 billion range. Senate Finance Committee Chairman Ron Wyden is leading the charge, contained in what he calls the Preserving America's Transit and Highways Act of 2014 (PATH).

Road Congestion and Political Gridlock

The cost of congestion continues to rise, but not enough apparently to break political gridlock on how to modernize, expand and diversify the nation's aging transportation system.A new report says bumper-to-bumper congestion on American roads and highways cost the economy $121 billion in 2011 in lost hours of work and wasted fuel. The cost of congestion is predicted to rise to almost $200 billion by 2020.

The report says Portland has the sixth worst commutes in the country, resulting from a relatively small, circular freeway system that bunches up traffic, especially when there are multiple accidents or bad weather conditions. Portlanders drive fewer miles, one of the report authors says, but travel times can be unreliable and often stressful.

Meanwhile, political gridlock in the nation's capital and many state legislatures is blocking measures to invest in roads and bridges. Roll Call's John Boyd reports President Obama backed off his call for new money for transportation in negotiations to avoid the fiscal cliff. Senators from both political parties, Boyd adds, flirted with a transportation funding package in the lame duck session last year, but gave up.

While motorists dislike congestion, they appear to hate proposals to raise the gas tax, switch to a mileage-based fee, resort to toll-ways or pay in some manner for road use if they drive an alternative fuel vehicle. An sudden, sharp jump in gas prices in the last two weeks hasn't made motorists less grumpy.