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I hate driving, actually. The only reason I do it is because my 10-year-old needs someone to cart him around the city. I consider myself as a weirdo on this front because I know most people love their cars.
A new study from U.S. PIRG and Frontier Group indicates that I may be more normal than I thought. It argues that "the driving boom" -from the end of World War II to 2004--is over. "Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton's first term," it says.
United States policy on transportation hasn't caught up to this phenomenon, the report argues. Plans for expanded roads and highways that were cooked up a decade ago are still in the works, even though the users might not be there to make them worthwhile. What's more, driving is down most dramatically among millennials, the generation aged 23 to 30, and the people who will make the most use of those roads over the next 50 years. Their habits tend to favor city-living (i.e., walking, transit and biking) and car sharing.
This trend is good news for the transportation community, which has been stuck in a dilemma of needing more money to fund roads and bridges but having nowhere to go for it. My National Journal cover story last week illustrates the difficulties of trying to fund transportation with the help of the private sector. Government officials see public-private partnerships as their only option for infusing cash into a state, but the long-term deals that involve tolling and concessions require the public to foot the bill for decades.
If PIRG's projections are right, the cost of maintaining our infrastructure won't be quite as high as some economists project. But with fewer drivers also comes less gas consumption. That's good for the environment but bad for the highway trust fund, funded by fuel tax and drivers' use of roads.
With decreased driving, the investment framework (be it public or private) might have to shift towards alternate forms of transportation. That idea has its own unique problems. When has anyone ever made money on a transit system?
Is PIRG on the mark in terms of its projections about reduced driving? How does the data change the way we should think about infrastructure? Will millennials' driving behavior increase when, like me, they have to start carting children to baseball games and martial arts classes? Is there a business opportunity to be developed in the country's overall change in behavior? If driving continues to decline, how far would that go toward solving the infrastructure funding shortfall?
(By the way, the study is co-authored by U.S. PIRG's Phineas Baxandall, a commenter on this blog, and Frontier's Tony Dutzik.)
A weird thing happened a few weeks ago that I would never have noticed had I not been putting the final touches on a feature story for National Journal magazine on public-private partnerships. (See this week's issue for that story.)
In what locals hailed as a victory against 58 years of toll hikes, a circuit judge in Portsmouth, Va., ruled unconstitutional a $2.1 billion agreement between Virginia's Department of Transportation and two global infrastructure firms to create a new under-river tunnel connecting Portsmouth and Newport. Under the deal, tolls to traverse the tunnel were set to increase from $1.59 to $1.84 per car in 2014, although that tolling schedule is now in doubt.
The ruling left the lawyers and government officials who negotiated the agreement scratching their heads. No one saw it coming. It was a classic case of David and Goliath. The deal with the Australian firm MacQuarie and Swedish firm Skanska had been in the works for years. Former Gov. Tim Kaine, a Democrat, and the current Gov. Bob McDonnell, a Republican, both wanted it to happen. Virginia's transportation department and the attorney general's office are preparing an appeal, which will likely wind up in the Supreme Court of Virginia.
Meanwhile, the plaintiffs--including one flamboyant city council member and several business owners--are still trying to figure out how to pay their attorney, Patrick McSweeney. That kind of situation is not unusual, McSweeney told me last week, fresh off his victory. Locals often don't know where to go or who to fight when big infrastructure deals like this one are announced in their area.
The judge reasoned that the public-private partnership under question had exceeded the bounds of allowable government because it imposed a financing system on travelers and residents that could not be rectified for decades to come. That's a lot of electoral cycles. The Virginia law on which the deal was based "gave unfettered power to the Department of Transportation to set toll rates without any real or meaningful parameters," said Judge James A. Cales, Jr.
I have argued that private-sector deals like this one are the wave of the future as federal funding for infrastructure continues to shrink. But now I'm starting to wonder. What if the laws in this country, and perhaps its citizens, stubbornly won't let that kind of privatization happen?
Should tolls be subject to public referendum? Does it make sense to go to court, as Portsmouth residents did, to stop a major public-private deal from going forward? How can public-private partnerships be crafted such that they don't run afoul of public opinion and/or the law? How much freedom should government have to negotiate with the private sector?
President Obama's nominee for Transportation Secretary, Charlotte Mayor Anthony Foxx, puts an end to speculation about who will fill the shoes of the outgoing secretary Ray LaHood. (What happened to Los Angeles Mayor Antonio Villaraigosa? He must be destined for other things.)
Last week's nomination of Foxx also sparks other questions.
Policymakers in Washington, D.C. are less familiar with Foxx than they were with LaHood, who spent 10 years in Congress before taking the helm of the Transportation Department. Yet Foxx is like LaHood in that he has no special expertise in transportation issues, but he has a fair amount of experience in government. A Charlotte native, he worked for the House Judiciary Committee and the Justice Department before he returned to Charlotte, where he sat on the city council and eventually became mayor.
The only thing we really know about Foxx's transportation inclinations is that he fought for a light rail and streetcar system in Charlotte. If this fascination with rail turns out to be a passion for Foxx, it could be a huge boon for alternate transportation advocates and urban enthusiasts. "The fact that Foxx comes from a major central city is also a huge benefit. It means he understands urban needs, which aren't just highways," wrote urban planner Dan Malouff on his Greater, Greater Washington blog.
It is unclear how Foxx will handle the highway and road network, which makes up most of the surface transportation budget. But that probably doesn't matter. The Charlotte Observer pointed out in an editorial that Foxx's thin transportation resume is not unusual. "Since 1966, when the post was created, fewer than half of the country's 16 transportation secretaries had expertise in the field."
Foxx probably won't have to worry about surface transportation immediately, as Congress is largely responsible for coming up with a way to fund the highway and transit bill when it expires at the end of next year. If Foxx follows LaHood's lead, he will stay far away from the budget debates on Capitol Hill and weigh in only on proposed policies that could thwart the administration's plans. Of course, there may not be much left to fight for. Congress has already managed to thwart the administration's infrastructure plans by cutting funding for everything it cares about, like high-speed rail, and repeatedly rejecting the White House's $50 billion stimulus and infrastructure bank proposal.
What does Foxx's urban experience bring to the table for the Transportation Department? Does it matter that he knows little about highway funding formulas and infrastructure loan programs? What should Foxx be fighting for in the administration and in Congress? What can he learn from LaHood's experience? How should he handle the big issues coming up this year on water resources and passenger rail?
Rule Number One in Politics: Do not mess with an elected official's local airport or their flight home. With this tenet, we continue the saga of the Federal Aviation Administration and its (good?/bad?) handling of the automatic budget cuts that were set in place earlier this year by sequestration.
Facing the first week of intermittent furloughs of air traffic controllers, which led to airline delays, Congress fought back.The Senate didn't even have to take a vote last week to pass legislation giving the FAA the authority to move money around within the agency to stop the furloughs. The House passed the bill 361-41. President Obama reluctantly signed off, facing outcry from the public about flight delays and accusations from Republicans of political gamesmanship.
The move marks Congress's first step in undoing the cuts that came to be when Republicans and Democrats failed to reach agreement on a broader budget framework. The FAA fix represents a small slice of the overall sequester, but aviation is also the most visible of the government programs being trimmed. It is unclear whether similar populist protests will work on less noticeable programs.
White House spokesman Jay Carney said Obama considers the legislation an exception to the overall rule of not picking winners and losers from the sequester cuts. But in Congress, it is clear that when push comes to shove (particularly at a flight departure gate), partisanship goes by the wayside. Everyone wants to change the scenario, even though Republicans continue to say that the sequester isn't doing any harm and Democrats continue to shy away from mitigating the damage for which they blame Republicans.
It's the start of a beautiful friendship. "Throughout this process, my House and Senate colleagues and I insisted that we put the American people first. I'm glad that all parties came together in the end to do that," said House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., on Friday.
So are we. Despite the White House naysaying, does the FAA sequester bill open new opportunities to mitigate the budget cuts in other ways? How important is the legislation to the FAA and the Transportation Department? What are the harms of keeping air traffic controllers on the job while cutting elsewhere? Are sequester-related harms unique to aviation? What other sectors within transportation could be helped in the same way? Is the new FAA law an admission that the sequester doesn't work? How can infrastructure be supported more efficiently with a smaller budget?
Transportation chiefs in Congress were a bit stymied over the last two years when they crafted a surface transportation bill that didn't have earmarks. House Republicans were resolute in their determination to get rid of the legislative goodies that have given elected officials a bad name. But it also made a transportation legislator's life that much more difficult: It's hard to write legislation about maintaining roads, bridges, runways, and transit without identifying the specific areas that need tuning up. It's even harder to pass it.
Lawmakers have a similar challenge before them this year in the Water Resources Development Act, which authorizes the Army Corps of Engineers to conduct water-related projects such as flood control, port improvements, and river cleanup. Some transportation experts point out that WRDA, which dictates the country's major water infrastructure projects for the next five to 10 years, is actually nothing but earmarks.
"How do you move a WRDA bill forward when historically it's been line after line, naming a project, naming a study," Transportation Committee Chairman Bill Shuster, R-Pa., said at a National Journal event last week. "We're trying to figure out a way to live through the moratorium on earmarks, which is very difficult."
Read more about Shuster's interview with National Journal here.
You can view Shuster's full interview here, which covers a wide variety of topics.
On WRDA, Shuster's first concern is reining in the Corps such that projects don't extend 15 years or longer without results. He also wants to make sure Congress doesn't hand over its authority on water projects to the executive branch, an easy trap for lawmakers who are handcuffed by budget constraints and the no-earmark rule.
Shuster is just getting started, and we'll eagerly wait to see how he navigates those impediments. Some of the federal streamlining he envisions for the Corps mirrors language in last year's surface transportation bill, which helps. And it will be a warm-up for the highway and transit reauthorization debate next year, where the same problems remain.
Did transportation get unfairly shafted in the rush to ban earmarks, which were really intended to combat questionable appropriations practices? Is the WRDA bill worse, in terms of looking like a pile of earmarks, than a surface transportation bill? Are there lessons from last year's highway and transit bill negotiations that can help lawmakers drafting a water resources bill? What other issues that could cause problems in that process?
I have to admit, I was barely able to keep my eyes from glazing over when I scanned the White House's budget proposal for transportation. It's not that I don't buy the argument that infrastructure investment is important and necessary for economic growth. It's just that I've heard it too many times from the White House to get excited about it.
Then I talked to a guy who makes his living on it, and he's really excited about this year's budget proposal. D.J. Gribbin heads U.S. Government Advisory and Affairs for Macquarie Capital, an Australian firm that does business with state transportation agencies on major infrastructure projects all over the country. For the first time, Gribbin said, Obama is proposing lifting the cap on private activity bonds, which are issued by local or state governments for the purpose of financing projects through a private investor. Currently, there is a 25 percent limit on the use of this kind of bonding for land acquisitions and an annual cap their use to finance water infrastructure projects.
Gribbin says the lifting the caps would open a host of new possibilities for private-sector investment in infrastructure, in essence leveling the playing field for companies like Macquarie that want to get in on ground floor financing big local projects, but are limited in the amount they can invest. The bond proposal has been a priority for many people who get in the weeds on public-private partnerships, like Rep. Bill Pascrell, D-N.J., who applauded the provision in his response to the president's budget.
But let's face it, it's not front-page news.
No one questions Obama's commitment to infrastructure, but his repeated calls for an immediate $50 billion stimulus that won't go anywhere in are starting to look like lip service. "In the past, [the White House] was sort of focused on grander gestures, like the national infrastructure bank," Gribbin said. Now, the administration is proposing highly doable, highly leverageable changes that could actually make a difference. "That hasn't been out there before."
Has the administration gotten more sophisticated on its approach to infrastructure? Does easing the bonding restrictions make it easier for state transportation departments to make deals for major projects? Are there areas where this kind of bonding doesn't work? How should advocacy groups approach the president's budget if they like this idea? Is this a big step in the White House's endorsement of public-private partnerships?
Transportation gurus are fond of saying that the gas tax is a defunct, antiquated, good-for-nothing way of financing roads, bridges, and railways. They are right, of course, but sometimes I forget that despite all that, gas taxes still exist. Until governments come up with a better way to finance their infrastructure, they are probably here to stay.
There is no better example of this phenomenon than the state of Maryland. The state Legislature last week sent a bill to Democratic Gov. Martin O'Malley to increase gas taxes by 3 percent this year, and to subsequently index the tax to inflation on an annual basis. The Maryland Motor Truck Association claims the hike would make the state's fuel taxes the highest in the country, but O'Malley insists that the tax is necessary to decrease traffic congestion and build a 21st century transportation network.
Maryland isn't the only state going the way of raising taxes. The New Hampshire House recently approved a 12-cent-per-gallon gas and diesel tax increase. In tight budget environments, it's hard to come up with alternatives.
Virginia is following a more experimental course, but there is no way to get around the taxation. Republican Gov. Bob McDonnell last month inked a new law that eliminates the state gas tax and replaces it with a wholesale tax on fuel distributors and an increased sales taxes. Hybrid vehicle owners will be required to pay a separate fee, and the state's vehicle titling tax also goes up. To win the Democratic votes needed to pass the package, McDonnell withdrew his controversial request to institute tolls on Interstate 95.
The coming year will offer an opportunity for transportation wonks to observe how the various highway payment methods work, politically and fiscally. Underlying it all is a fundamental truth--that transportation networks are expensive and the public pays no matter what.
What are the pros and cons of raising the gas tax? What are the advantages of finding other taxation mechanisms for transportation, as McDonnell has done? How do governments explain a tax increase to their constituents? What are common misconceptions about taxation for infrastructure? Realistically, how much infrastructure investment can taxpayers take on? Is it enough?
President Obama upped his own ante on public-private partnerships last Friday, plugging a major construction project that will allow PortMiami in Florida to be linked directly to Florida's interstate highways through an under-the-bay tunnel. "State, county, and local governments got together and agreed to jointly fund PortMiami Tunnel. Everybody had some skin in the game," Obama said after touring the project. "They did something else--they partnered with a group of private sector companies to finance the design and construction of the project."
The PortMiami tunnel is being paid for by two French companies--Meridiam Infrastructure and Bouygues Travaux Publics--and several state and federal government funding sources.
It is also worth noting that the technological centerpiece of the PortMiami project is a "Tunnel Boring Machine" nicknamed Harriet by the Miami-Dade Girl Scouts that is 42.3 feet high (as high as a four-story building) and a 361 feet long. There's a great picture of Harriet on the Port of Miami Tunnel's web site.
Obama wants the business acumen that came with the PortMiami tunnel deal to be replicated elsewhere. He is proposing a $21 billion infrastructure plan that includes a national infrastructure bank, direct-subsidy bonds designed to attract new capital to infrastructure investment, and an expansion of the Transportation Department's TIFIA loan program. The details of the proposal, much of which have been discussed by the White House before, will be spelled out in the president's budget that will be released on April 10.
One of the more intriguing parts of the proposal involves increasing the size of private activity bonds that can be tax-exempt to attract private investors to large, complex projects like the MiamiPort tunnel. The ability to issue tax exempt bond to raise money has become increasingly more attractive to private investors since the upheaval in global bank markets, according to David Narefsky, a partner at the legal services firm Mayer Brown who specializes in infrastructure.
Obama's proposal also is a tacit acknowledgement that public-private partnerships are the one of the only ways major projects will get financed over the next several decades, absent billions of dollars magically appearing in the federal treasury. The goal of increasing the volume of the bonds, according to Narefsky, is "to make more of this incentive available and there's a recognition that the use of this will be increasingly popular."
TIFIA, the Transportation Department's direct loan/loan subsidy program already is tremendously popular, with a hand most major projects underway in the United States. Both the private bonds and TIFIA also enjoy wide bipartisan support in Congress, which must approve any of the changes Obama suggests.
What does Obama's latest infrastructure proposal indicate for the future of transportation and the role of government? How would raising the cap on private activity bonds impact the transportation construction market, and how quickly would the effects appear? Is expanding TIFIA a viable option? What about the infrastructure bank, which has consistently been rejected on Capitol Hill? Can there be new life breathed into that tired proposal?
The American Society of Civil Engineers released its 2013 Report Card for America's Infrastructure last week, giving the nation a D+ overall for the state of its roads, bridges, levees, aviation, dams, energy, etc. Generally, that puts the country somewhere between "poor" and "mediocre." Sounds about right.
There is some mild good news. ASCE does this report ever four years, and the country's infrastructure actually showed improvement since 2009 and 2005, when the all-around grade sat stubbornly at a D. Of course, in 2001, the grade was a D+. But then again, it was a D in 1998. The country's infrastructure is definitely a problem student.
Let's put this in perspective. These engineers are not grading on a curve. To get an A under ASCE's framework, the utility under its inspection needs to be "exceptional." That has never happened. The highest overall grade, a C, came in 1988 from a similar report card issued by the National Council on Public Works. (ASCE cautions against making direct comparisons between the 1988 report card and the grades issued in the last 15 years because the categories and measuring tactics are different.)
Excluding 1988, then, the only infrastructure category that has ever earned above a C is solid waste disposal, which was rated at a B- this year. That's somewhere between "mediocre" and "good." That's because people are recycling. ASCE applauded the 34 percent recycling rate, which has doubled since 1980.
Even though the grades persistently hover around Ds, the report card is useful because it provides the transportation community the ammunition to push for more infrastructure investment. The players all weighed in when the report was released, saying more or less the same thing--the economy depends on a functioning roads, railways, aviation, [fill in the blank]. Senate Commerce Committee Chairman John Rockefeller, D-W.Va., used the report to plug his legislation creating an infrastructure fund within the Transportation Department. Rep. Peter DeFazio, D-Ore., used the report to plug his proposal to index the federal gas tax to construction costs and fuel economy standards.
What does the report card tell us that we didn't already know about the nation's infrastructure? Is ASCE being too tough? What would an "exceptional" road, runway, or levee look like? How does the United States compare with other countries on a similar grading scheme? What are the most pressing needs for the United States, and how can they be addressed?
Here is a puzzling quandary: If an industry--say, airlines--struggles under federally-mandated taxes that must be added to the price of tickets, how can a federal agency--say the FAA--not struggle under a mandatory 2.5 percent cut? Or can both the industry and the federal agency handle a little bit of belt tightening?
This was a question that piqued my interest at the Aero Club luncheon last week, which was keynoted by House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa. The newly minted committee chairman must have made the airline industry cheer when he said that airlines are "the most regulated deregulated industry."
"We treat [airlines] like a piggy bank" with the various taxes and fees that lawmakers attach onto airline tickets, Shuster said. Taxes make up 20 percent of the cost of an airline ticket, according to Airlines for America. "Only alcohol and tobacco do we tax as high as that. It's like it's a sin to fly," Shuster said.
Airlines are forever on the defensive about their ticket prices, and they repeatedly remind anyone who will listen that their profit margins are extremely narrow. It's a tough industry, and Shuster seems sensitive to that fact.
Yet Shuster has a lot less sympathy for the Federal Aviation Administration, which is operating under mandated budget cuts that went into effect at the beginning of the month. "The sky isn't falling. Everybody realizes that a 2.5 percent cut in your budget is doable," he said Friday. Speaking specifically about the FAA, Shuster said, "They have monies they can move around. ...The FAA's workload has gone down 17 percent."
Nonetheless, furlough notices have already gone out for FAA workers. Greg Stanton, the mayor of Phoenix, Ariz., was in town earlier in the month to beg FAA to keep its federal resources flowing to air traffic control towers at two of his local airports to keep them from closing. Like many other state and local officials who were pleading their cases to the FAA, Stanton was told he would have to find the money elsewhere.
As far as I can tell, Shuster's sympathies lie with the airline industry and its tax burden but not with the sequester burden that is weighing down the entity that regulates the same industry. Shuster's biggest complaint with the FAA is that he has not gotten good information about how they are implementing the mandated cuts. More broadly, Shuster is like most Republicans who have lost faith with the administration on negotiating overall deficit reduction. The FAA is caught in the middle.
Given the general animosity, any communication between the FAA and Shuster is laden with political overtones and competing visions: For Shuster, the FAA has a bureaucratic mess to clean up. For FAA employees and the administration, the cuts are nothing short of a crisis.
Is it fair to compare the airline industry's tax burden with the FAA's cuts under the sequester? Are airline ticket taxes appropriate? Should they be changed in any way? Is Shuster right that the federal government treats the airline industry like a piggy bank? How serious is the FAA's budget cut? Is the sky falling or not?