I apologize for not having responded to Ken Meade's request for an explanation of contract authority and budget authority (I've been out sick today). Hopefully will explain matters:

In the 2010 budget outline, the Office of Management and Budget suggested reclassifying the contract authority that the transportation committees set in their multiyear highway and transit legislation as discretionary spending that instead would subject to the annual appropriations process. Contract authority, which the authorizing committees write into the surface transportation bill for each year over the life of the bill, is now considered mandatory spending for budget scoring purposes. By scoring contract authority as discretionary spending, it would be set by the appropriators on an annual basis instead, although it would be guided by the obligation limits that have always set the ceiling or floor for annual transportation spending.

But remember, the presidential budget that OMB submits to Congress each year is only a set of recommendations, and congressional budget-writers, who use the Congressional Budget Office rather than OMB to calculate their plans, are not required to adopt them. And frankly the Budget committees are unlikely to pick a fight with their counterparts on the transportation panels over a budget scoring matter when they are already facing so many wrenching fights over scarce dollars that they have to resolve. Plus the chairmen and ranking members of all of the House and Senate authorizing committees of jurisdiction have already let the president, Secretary LaHood and their respective budget committee leaders know just how opposed they are to letting this proposal go through.

 

I hope this helps, but I invite the real experts on the panel to join in and correct or improve upon my explanation.

 

Collapse

The Administration's backtracking on the contract authority flap (as reported by Darren Goode in the Congress Daily) suggests to me that:  (1) either the Budget Summary was drafted by a new OMB team that is inexperienced, politically insensitive and ignorant of the need to coordinate its policy positions with line agencies, congressional leaders and the stakeholders; or (2) it was meant mostly as a trial baloon, floating some long-held institutional biases held by OMB professionals, to be modified or disavowed as soon as political heat proved to be too much.

A charitable posture would be to withhold final judgment until the Administration releases its detailed budget in April. In the meantime, Peter Orszag and his staff could profit greatly from perusing carefully the National Journal's transportation blog!  

What's apparent from the budget summary is that OMB sees 2010 as a "hold the line" year in transportation.  Aside from the welcome initiative for intercity rail investment, it doesn't appear that the total can reflect anything more than the baseine levels for the rest of the department.

In the detailed budget, we can confirm that and evaluate what the impacts will be.  I'll be looking behind the budget itself to understand what the funding proposals mean as they affect the Department's performance plan.  What are their expectations for the condition and performance of the system, for safety, and for the measures of efficiency that are reflected in the plan?

Perhaps the budget will explain how baseline levels can be maintained with the current revenues, or perhaps this will not be clear until we see legislative proposals for such programs as surface transportation and aviation.  I hope that Secretary LaHood's message about contract authority being an area subject to negotiation will lead to something more positive than just turning our investment programs into routine annual appropriations.  In the absence of a capital budget, which is still something I would wish for, we need to give more stability in the development of our programs.  Long term investments require it, whereas the implication of the budget summary is that the tools that have worked in the past are going to be withdrawn. 

The workings of the budget process will come down hard on the capital accounts.  You can imagine "across-the-board" cuts that take a small percentage out of every program.  Those that are operational can acheive these with small economies, but the capital accounts are heavy with the spending out of prior year commitments and could be decimated.

A couple of other points that will be interesting.  The budget supports the President's commitment for a National Infrastructure Investment Bank.  This could be a useful and effective vehicle for federal support of major projects (just as the current TIFIA program has been when it has had money and motivation), but we need to know more about how it would work and how it would relate to existing programs.  Similarly, one can applaud the principle that transportation decision making should reflect sound economic analysis.  But the devil is in those details. Can we improve decision making while still meeting deadlines?  Or will all programs sink into the morass of never-ending analysis in lieu of decision making?

Finally, as pointed out by Jeff Shane, there are new opportunites for DOT in both the recovery  bill and in the budget,  In particular, the Federal Railroad Administration will have substantial new responsibilities to make decisions, manage grants and provide project oversight.  The budget should send a strong signal that FRA will have the resources to make a long term success out of intercity rail investment.

 

Collapse

I think an important public service could be provided here if the Journal would post a lay explanation of how contract authority works in operation and the budgetary principle being proposed by the Obama budget. It is not self-defining and not well understood, particularly when the Highway Trust Fund financials appear so negative by the end of this fiscal year.  I think this would help everyone navigate more coherently as Secretary LaHood explores a middle ground.

My colleague Darren Goode reports in this afternoon's CongressDaily PM that Secretary LaHood and the Obama administration are open to working with Congress on the controversial proposal to score contract authority as discretionary rather than mandatory spending :

Transportation Secretary LaHood today opened the door for compromise on a controversial change proposed by the Obama administration that would subject surface transportation projects to annual tinkering by appropriators. LaHood promised Senate Banking Chairman Christopher Dodd at a transit hearing this morning that he would try to find middle ground. Dodd, backed by transportation authorizers from both parties, opposed the proposed change. "I know of your concern," LaHood said, noting his former role as an appropriator and transportation authorizer in Congress. He said the administration would work with the committee "to reach some kind of a consideration."

So what does everyone think?

I agree with the excellent points Greg Cohen of the American Highway Users Alliance made. The budget proposal for the Department of Transportation does not align with the President Obama’s strong statements of support for improving our nation’s roads and bridges. Despite public approval for the funding of roads and bridges, the budget proposal mentions no such support, just increased funding for other areas of transportation.

Not only is there no mention of roads or bridges, but elements of the plan fundamentally change the highway funding process and establish roadblocks that hinder essential highway spending. Eliminating “contract authority” makes it very difficult to plan for multi-year highway projects because an annual appropriations system does not guarantee funds will be available to continue a project from one year to the next.

I’m also concerned that elimination of the firewall around the Highway Trust Fund could reduce already scarce highway infrastructure funds. The White House Office of Management and Budget’s proposal would redefine trust fund spending on infrastructure projects as “discretionary” spending, rather than dedicated expenditures for highways.

A letter, signed by House Transportation and Infrastructure Chairman James Oberstar and a bipartisan group of 13 other Senators and Representatives from major Congressional committees, points out that since establishing the Highway Trust Fund, we’ve had a commitment to ensuring that the user fees deposited into the Fund are in fact used for their intended purposes—to rebuild our nation’s infrastructure. It also states that the Highway Trust Fund represents a contract between the federal government and the user. User fees are levied for our highway system and, in return, the government pledged to build infrastructure for the taxpayers’ use.

User financing is a hallmark of our nation’s highway system and those user charges must be updated and used solely for highway projects. Strengthening the Highway Trust Fund is essential for our nation’s highway infrastructure, which in 2009 received a grade of D- from the American Society of Civil Engineers. Congestion problems annually cost the U.S. economy $78 billion in the form of 4.2 billion "lost hours" and 2.9 billion gallons of wasted fuel. President Obama promised an Eisenhower-like commitment to our nation’s roads and that’s what it will take to create the infrastructure needed to promote economic growth through mobility.

Collapse

Commercial aviation contributes in excess of $1.1 trillion to our nation’s economic activity and 10.2 million domestic jobs, and enables the global economy to function efficiently. In order to maintain this critical role, the details of the complete budget must:

• Assure expedited deployment of the Next Generation Air Transportation System (NextGen) – a modern, satellite-based air traffic management system – that will enable air transportation to grow safely and efficiently with corresponding improvements in fuel efficiency and reductions in emissions.
• Adopt creative financing concepts – such as bonding authority – that bypass the vagaries of the annual appropriations process and will enable the FAA to accelerate NextGen.
• Provide equitable, cost-based recovery for funding the air traffic control system, so that user groups pay in proportion to their use of the system; contrary to the 40-year-old, outdated scheme under which commercial airlines and their passengers pay far in excess of the costs they impose.
• Guarantee a general fund contribution that recognizes the “public good” provided by airports at which there is no commercial service, but that continue to be funded by commercial airlines and their passengers.
• Refrain from further increasing taxes and fees on passengers to fund airport “wish list” projects through increases in the highly regressive Passenger Facility Charge, while airports hold billions in uncommitted reserves.

Our blueprint for maintenance of the airline industry’s remarkable safety record, enhancement of our emissions profile, and restoration of fiscal health can be found at the following location:.

Visit Web Site.

Collapse

"User Pays," but not only the user pays...

It is a good principle to have the user pay for transportation services, both for policy and budgetary reasons.  The HTF is a valuable contributor and, until last year, it was a reliable generator of long-term capital, critical for infrastructure investment.

The point is if we had relied solely and exclusively on the HTF we would not have received $8 billion last year and nearly $50 billion in total transportation investment this year.  In addition, we received new infusions of TIFIA money, tax credit bond authority, and useful measures temporarily suspending Alternative Minimum Tax treatment of certain tax-exempt bonds. Fortunately, I would say, our policymakers have had a broader vision and have realized the public and non-user benefits of transportation investments (just as they have for years on the aviation side where nearly 20% of support has been provided by non-users (taxpayers).  

"User pays" also has some concerns which the Commission last week only touched on, understandably avoiding the most controversial issues.  What costs are included? Externalities such as GHG emissions for example?  Congestion?  How will we, in the Commission's words, "subsidize" transportation functions such as transit and small community access?

Ultimately if the user could fully pay and transportation services could generate a profit, public transportatoin as we know it would not need to exist.  Instead, the system would look more like what Gabriel has faithfully advocated.

Steve Van Beek

Collapse

 Emil –

Thanks for pointing out the importance of “User Pays”, in connection with transportation projects.

With regard to investment analysis, if “user pays” is considered an appropriate principle for the provision of transportation facilities, might your NTPP report consider “profitability” as an appropriate tool for comparing projects with one another?

The “user pays” principle, and the “profitability” criterion, are widely used in aviation, railroads and shipping, but not for roads, where it is difficult to establish and recover costs from users. However, GPS-based VMT charges (as recommended by the Financing Commission) would enable cost-based payments to be recovered even from road users.

Could not the profitability criterion, applied when charges are related to costs, be a big help to those in government seeking “multi-modal” comparisons? 

The statements in the President’s transportation “Funding Highlights” document are encouraging.  While spending on highways will always dominate federal transportation spending, it is worth noting that word “highway” appears only twice (both times in the same sentence), and the word “road” appears just once (as in “road pricing”).  In an apparent break from the past, rail, transit and air dominate this document and could well signal a new approach to modal equity; such equity is vital because the country needs strong freight transportation across modes.

Operating roughly one third of the nation's freight rail network, America’s small railroads are a critical part of our national freight system.   Short lines are particularly important to the thousands of small towns and small businesses that have no Class I railroad service.   As the President and Secretary LaHood work on transportation initiatives to make our economy more productive and our communities  more  livable, we hope they will not ignore the significant economic and environmental benefits that short line railroads bring to these many communities and businesses.

Under prior administrations, the short line grant program (49 USC 22301), the rail line relocation program (49 USC 20154), and the railroad rehabilitation and improvement financing loan program (45 USC 822) have been not funded, dramatically underfunded, or opposed from within the administration respectively.  It is my hope that the President’s signals in this document translate into opportunities for freight rail initiatives in the coming years.

Collapse

Much of the discussion in the transportation sector, in response to the release of President Obama's FY 2010 Budget Outline, has focused on the change in the budgetary treatment of transportation spending.  Essentially, as others have pointed out, the Presient would remove the "firewalls" that protect the transportation trust funds from consolidation into the federal government's gneral budget and would treat transsportation spending like other discretionary programs in the federal budget, that is, make it subject to the annual appropriations process and required to compete with all other domestic programs for its share of the federal budget.

I will leave to others, more expert than I on fiscal matters, to make the arguments, pro and con, on this proposed change in budgetary treatment.  I would only note that this change would, effectively, destroy the principle of "user pays" that is connected to the dedication of transportation-related revenues to the construction and operation of these systems.  I would argue that there are strong economic and environmental reasons to strengthen, not weaken, this connection.  Moreover, as the UK"s Eddington Report has stated, in the transportation sector, it is critical to get the prices right.  I believe that this recommendation by the President would move us further away from this goal.

Like many others, I'm sure, I was pleased that the Budget Outline called for greater use of economic analysis and performance measurement in transportation, and for targeting transportation investments.  Having said that, I would only note that the "devil is in the details," so I am anxious to see what further proposals the President will make to carry out this promise.  At the Bipartisan Policy Center our National Transportation Policy Project (NTPP) has been engaged in developing proposals in this regard (NTPP expects to issue its final report and recommendations later this spring).  At this stage I would only emphasize that targeting investments and establishing a performance-driven and accountable transportation program will require re-examining national transportation goals, redefining the federal role in transportation, and reforming significantly the federal programmatic structure.

While I recoginze that the President has a lot on his plate at the moment (to put it mildly), I hope that the Administration is prepared to join in proposing such a major reformation of program structure.  Such changes will be essential, if the President is to meet his promise of targeting investments and demanding accountability in transportation.

Collapse

 

I have already submitted one overlong posting for this week, but now I want to compound that sin by supplementing it.  I ask readers' forgiveness in advance.

First, we can now celebrate the passage a short while ago of a bill that establishes, at long last, DOT’s appropriations for FY 2009.  At the risk of belaboring, these are the appropriations that DOT should have received six months ago at the start of the fiscal year.  Again, today’s enactment is the culmination of a process that President Bush launched with his final budget submission in February 2008.  The lesson from all this is simply that, however urgent the need for real change, President Obama’s first budget probably will not have any effect on government policies, programs, or spending any time within the next year – unless, that is, the President is prepared to work closely with Congressional leaders in the interest of getting next year's vitally important budget enacted on time -- i.e., by the end of next September.  

Second, having commented on some elements of the budget summary for DOT, I wanted to note a couple of other important implications for transportation that appear in the budget summary for the Department of Homeland Security.  First, our beleaguered airlines will be very unhappy to see a proposal there to increase aviation security fees – which they say they cannot effectively pass on to their customers in this period of weak demand and which therefore are likely to compromise their financial performance even further. 

Second, at the risk of getting too deeply into the weeds, it was surprising to see in the two-page summary of the President’s sweeping DHS budget a proposal to terminate the U.S. Coast Guard’s LORAN-C system – for a projected savings in FY 2010 ($35 million) that would be lost in the rounding.  Since it was there, however, we should talk about it. 

Unquestionably, the legacy LORAN-C system is no longer essential to navigation, and terminating existing operations may be the right decision, as far as it goes.  But a much bigger issue is at stake:  By Presidential directive, DHS is the agency in charge of establishing a reliable backup system for GPS -- the essential positioning, navigation and timing technology that supports vast amounts of economic activity today.  Among a great many other applications, GPS is vital to the emergence of more intelligent and efficient systems for managing traffic on the ground and in the air and for enhancing transportation safety.  GPS is a major component of America's national security infrastructure today and identifying and deploying that backup system, therefore, is nothing less than a national security imperative. 

DHS and DOT agreed last year, based on a wide consensus among independent experts, that an enhanced LORAN system (“eLORAN”) currently being developed by the Coast Guard is quite simply the most cost-effective and reliable backup for GPS that we know of.  It is essential, therefore, even if LORAN-C is turned off, that we continue to move toward full deployment of eLORAN as quickly as possible, and that we preserve whatever existing LORAN infrastructure might be required by the new system.. 

Collapse

 

It’s time for a reality check. As we think about President Obama’s preliminary budget, it is useful to recall that the budget DOT is operating under as I write this (on March 10, 2009) is based on a budget proposal that President Bush submitted to Congress in February 2007 – more than two years ago (DOT’s Fiscal Year 2008 appropriation extended by successive continuing resolutions). If Congress passes an omnibus appropriations act for FY 2009 today (halfway through the fiscal year it’s meant to cover) and the President signs it, DOT’s new funding will be the end result of a process begun over a year ago with President Bush’s final budget proposal. Whatever we think about President Obama’s proposals, in other words, nothing will change the way our government works until Congress enacts appropriations. That’s likely to take a while.  

 

This year’s appropriations process will be made even more complicated than usual by two factors: (1) the requirement that Congress rewrite the enabling legislation for our aviation, highway, highway safety, and transit programs; and (2) the likelihood that the stimulus money sloshing around in the economy – and possibly deliberations on a second stimulus package -- will mean Congress feels very little pressure to act on appropriations in a timely way. 

 

Let’s hope that these trying times engender a bit more alacrity among our legislators. Everybody knows that we need to transform our transportation programs in the interest of both economic recovery and a sustainable system for the future. Reauthorization is necessary to inform the appropriations process, and appropriations legislation is necessary to affect the way government actually works. It’s essential that Congress try, for the first time in this millennium, to get its work done on time. 

 

That’s particularly the case because there’s a lot that’s good for transportation in President Obama’s preliminary budget for DOT, and we should look forward to seeing more details. The Administration’s understanding that we need meaningful reform, not merely incremental reauthorization, tracks signals we have been hearing from House Transportation and Infrastructure Committee Chairman Jim Oberstar, and thus bodes well for the quality of the debate we’re likely to have about the future of these programs. 

 

As Lisa notes, there aren’t many actual numbers in the budget outline. One that caught my attention was $800 million for NextGen. I hope Congress will look closely at that figure. There can be no more effective way of enhancing aviation’s contribution to economic recovery and reducing its greenhouse gas emissions than by deploying of a state-of-the-art air traffic management system. Congress should analyze carefully whether a higher number might accelerate that deployment.

 

The second notable number was $5 billion – for grants to states for high-speed rail over five years. Combined with the $8 billion made available earlier through the American Recovery and Reinvestment Act, it should be clear that intercity passenger rail will play a much bigger role in America’s future. That’s a very good thing. My worry, as a recovering federal bureaucrat, is that the amount of activity being stimulated in the passenger rail sector will simply overwhelm the resources of the Federal Railroad Administration. The Administration and Congress need to make sure they beef up the FRA’s professional staff pretty significantly in order to ensure that the program lives up to the welcome promises we’ve heard regarding efficiency, integrity, and transparency.

 

Collapse

 

The American Recovery and Reinvestment Act (ARRA) has rightly recognized the need to invest significant resources to rebuild the nation's infrastructure.  ARRA includes over $17 billion in public transit and high-speed rail investment and $40 billion for road, bridge, port and water resource investment.  It is critical that the President's FY10 budget maintain a similar level of effort to address the $21.6 billion (FTA estimate) needed annually to improve our public transit systems and the $190 billion (American Society of Civil Engineers estimate) needed annually to improve our nation's highways and bridges.  FY10 also serves as what I hope will be the first year of the next surface transportation bill -- thus the President's Budget should compliment and help focus efforts to  not only appropriately fund the next surface transportation bill but continue our collective efforts to create and maintain jobs.

I was also pleased to hear that Secretary LaHood is considering framing the administration's goals for the next surface transportation authorization around the idea of "livable communities" that coordinate land-use, multi-modal transportation and housing to achieve smart growth and environmental sustainability goals.  The President's Budget would be wise to recognize this vision through greater funding for programs and projects that help meet these laudable goals.  As I have said before, this means providing more money for public transportation and rethinking land-use regulations to concentrate economic development around multi-modal locations, including a greater reliance on walkable communities.  This type of development can also be a very effective means of creating economic activity centers.   If we could move to 10 percent transit share nationally like they do in NJ, we could reduce oil imports from the Middle East by 40 percent. That is where we should be headed."  I hope President's Obama's budget reflects the Chairman's sentiment. 
NJ TRANSIT has prioritized the "livable communities" vision  by making it one of our fundamental transit planning thrusts.  We have an onogoing effort to educate communities and work with them in making transit facilities and services a focus of good community planning.  To date we have worked with over 40 communities throughout New Jersey and have seen countless development projects become real as a result of these efforts.   In fact, 10% of NJ's population uses public transportation exclusively.  As Chairman Oberstar mentions often (paraphrase), "

Collapse

FY 2010 Budget and Future Needs

The brief outline of transportation priorities contained in the 2-page FY 2010 budget narrative signals that the Administration will be serious about several important issues, including: putting the surface transportation program on a sustainable foundation; institutionalizing its priority to high speed rail; modernizing air traffic control; and grappling with the dramatic decline in rural access to aviation (scheduling data confirms that in the last 10 years, traffic is down 40% at small airports).  These are all welcomed priorities.

I understand my fellow bloggers' concerns about budgetary rules (a frequent dispute over the years). Fortunately, however, the Administration has not limited investments in transportation to the dollars that are being collected into the Highway Trust Fund and Airport and Airway Trust Fund.  If they did, we would not have seen the nearly $50 billion in general fund monies invested in our system (and we may even have more in the event of a second stimulus bill). 

Moreover, modernizing air traffic control will require an additional $20 - $50 billion in additional spending to meet the requirements being discussion for NextGen (2018) and by the JPO (2025).  Two commissions on surface transportation have found needs for highway, transit, and rail overwhelm available resources as well.

Given these needs and the current funding gaps to meet them, urging that we stay within the walls of the trust funds may hurt us, not help us.  Why?  Because it will lead us to a situation where our only chance for additional revenue and to meet our needs is to massively increase increase fees on our users to support necessary investments.  Does anyone see this as likely in the short- to medium-term?  I don't. 

Rather than getting drawn into the typical Washington "small ball" and argue with the green-eye shades,  I suggest advocates in both the surface and aviation sectors focus on (1) a vision for the new transportation system, (2) how we can contribute to funding needs out of user fees, (3) make the case for why general fund dollars should be put into our systems, (4) relate transportation investments to increasing national wealth and helping our economy, and (5) accommodating the challenge of climate change within our plans.

It our goal is to transform transportation, not merely reauthorize it, we need to think bigger, much the way we did in the 1950s.

Steve Van Beek

 

Collapse

Given President Obama’s strong statements about the need for investment in transportation infrastructure,  the modesty of the proposed increase in overall transportation spending, less than $2B, will disappoint many. But, the biggest cause for concern may have to do with the footnote on page 3 of the Technical Changes document which says, “… the Administration does not support an extension of the minimum funding level contained in House rules.”  

The implication of this is a return to a pre-TEA 21 unified budget when Congress was able to use balances in the Highway Trust Fund to finance non-transportation general fund expenditures. Post 1997, the minimum level of funding and guaranteed spending of the Trust Fund thwarted Appropriators from accumulating large balances to use as an accounting gimmick to balance spending going all the way back to the Vietnam War – which maybe helps explain how we got on the path of underinvestment in the first place.

But that’s all water under our falling-down bridges at this point and it can be argued that there is little danger of accumulating balances in the HTF now. The harm, of course, is in the perception that the fee paid by the user is no longer related to its use. In fact, the last line of the Administration proposal calls for changes to “more transparently convey to the taxpayer the real costs of supporting the transportation infrastructure our Nation needs.” Yet, the effect of rolling back the minimum funding requirement is to further disconnect motorists from the cost of infrastructure.  

In this context, it's ironic that the proposal also calls for eventually establishing new aviation user fees. Worse for future funding potential, should the Administration viewpoint prevail, is the clear evidence that a user-pay system with dedicated funding is always exposed to the changing attitudes of Congress or the Administration, regardless of mandates or other points of law. Since there's little likelihood we'll abolish user fees for surface transportation, whether the current fuel taxes or tolls or a future VMT, users need the confidence that money paid in is fully used for its intended purpose.

Collapse

The transportation section of the budget is just a little more than a page of text, but it focuses on two much-needed reforms. 

 

First, the President’s budget calls for “the use of economic analysis and performance measurement in transportation planning.”  While the concerns about bridges to nowhere can be blown out of proportion, I think it is fair to say that the American public has lost the faith it used to have in how our highway dollars are spent.  During the Interstate era, the need for a federal highway tax was compelling, and the progress and value in completing the Interstate system was clearly visible to the public.  Today, highway dollars are sifted into over one hundred different programs, almost all of which are outside the public view.  Retooling the current planning system to include performance measurement will provide additional incentives to build projects where they are most needed, and thus where the public will value them the most.  As a side note, the President’s call to “reform” surface transportation programs, as opposed to just “reauthorizing” them, is also encouraging. 

 

Second, highlighting modernization of the nation’s air traffic control system is appropriate.  Air travelers and airlines have had to endure an antiquated system for far too long.  Transitioning to a new system, however, is legally, politically, and operationally very challenging.  All of us who frequently rely on air travel hope the brief mention of Next-Gen in the budget presages a concerted effort on the part of the Administration to continue progress toward expediting implementation of a satellite-based system.

 

Collapse

Those who believe that transportation is too important to be left to the whims of politicians, and would rather see it in the market economy, might be reluctant to join Gregg and Craig in calling on the federal government to “re-authorize” highway and aviation “trust funds”. We would prefer these funds to be phased out in an orderly manner, and arrangements made to have their vital services funded by those who use the facilities.

Gregg: For highways, might it not be helpful to include in the budget funds to started implementing the proposal made in 2003 by Bob Poole and Ken Orski (in Reason Foundation Policy Study 305) to establish “HOT Networks” in major urban areas?

These would be networks of “HOT lanes” — limited-access tolled express lanes. Payments would be collected electronically – and voluntarily – from customers’ pre-paid accounts, with charges varying to ensure congestion-free operations at all times. Launched (by a private entity) in 1995 on State Route 91 east of Los Angeles, HOT Lanes have been replicated in other cities and are planned for Washington’s Beltway.

HOT Networks would:

- Reduce urban traffic congestion and air pollution;

- Stimulate job creation by improving mobility; and

- Provide cities with congestion-free networks for use in emergencies;

Unlike most government spending initiatives, HOT Networks would help pay for themselves out of toll revenues.

Bob and Ken: You estimated that HOT Networks in eight cities could cost some $44 billion. Might you suggest how the budget could be used to get them going soonest?

Craig: As you well know, US Air traffic control (ATC) has been languishing under federal oversight. Proposals to upgrade it have become out-dated as soon as approved. In 1996, Canada, in contrast, transferred its ATC activities to the non-profit NAV Canada, which was established by airlines and other stakeholders.

NAV Canada is already introducing ADS-B (Automatic Dependent Surveillance-Broadcast) to replace its radar system, a process that could take a decade in the US. Might an organization such as NAV Canada be helpful in the US? Would it need budget funding to set up?

Collapse

I was extremely disappointed with the FY10 budget framework for the Department of Transportation. It represents a sudden and surprising reversal in priorities at a time when continued Presidential leadership is critical to advance Congress toward a timely, well-funded highway authorization. I hope that the reaction is being heard loud enough at the White House to bring substantive changes to the plan by its final submission in April.

A little background is needed to understand why so many people are so frustrated by the budget plan:

Throughout the election campaign, President Obama was an ardent supporter of mobility and improvements to highway infrastructure. When he accepted the Democratic nomination, he discussed how modern roads and bridges are a part of "America's promise". When fuel costs were rapidly rising, Obama took the politically risky step of denouncing a plan to suspend fuel taxes endorsed by both Senators McCain and Clinton -- noting that user fees like the gasoline tax fund our nation's federal-aid highway program. During his inauguration speech the President spoke of the need for rebuilding our roads and bridges. More recently, he promised an investment that would be the largest new investment in America's infrastructure since President Eisenhower built the Interstate Highway System.

Obama garnered public support for the economic stimulus bill in large part due to his repeated promises of money for roads and bridges. Prior to the bill's passage, a national Frank Luntz poll found that 94% of Americans were concerned about the country's infrastructure, with 84% supporting increased funding and 81% willing to pay more taxes to make improvements happen. Roads and bridges were the second highest priority after energy facilities.

Congress' response to the President's call was a massive $789 billion bill with some funding for highways: $27.5 billion (about 3.5% of the total). Several opportunities to raise the funding level in the Senate were missed, in most cases due to the inability of amendment sponsors to get early floor time for debate and votes.

Yet, despite the small percentage of funding in the total economic recovery package, we applauded the inclusion of any road infrastructure funding in the final bill. Since 1956, when the national Highway Trust Fund was created, it has been very rare for highway programs to receive general government funds that are not directly tied to highway user fees. But we also understood that the investment needed to rival the Eisenhower Interstate System must be yet to come.

Unfortunately, last week we were all shocked and bewildered by the preliminary budget proposal for the Department of Transportation. My association, the American Highway Users Alliance, engaged the media to point out how the proposal reflecting the priorities of bean-counters and not the President himself.

First, the budget framework made not a single mention of President Obama's support for roads and bridges, instead touting only the importance of increased funding for other modes. The budget left almost no room for funding increases for roads. Most importantly, the proposal would eliminate an 87-year old budgetary mechanism known as "contract authority", which allows multi-year contracts for highway projects to be approved before the government enacts its annual transportation appropriations bill. Contact authority has been the most important budgetary rule that keeps federal highway aid stable from year-to-year. Finally, the budget retreats to the tired rhetoric of Bush Administration officials, when it suggests that road pricing (or tolls) could help us deal with the meager federal funds to come in FY10.

There are other troubling deficiencies in the budget request. Thankfully, many Members of Congress and groups have taken the Administration to task for the short-sighted proposal. We applaud their swift and bipartisan action. Hopefully, the President will take control of the situation, reassert his leadership on highway and mobility issues, and match the themes of his speeches with real monetary support.

To show an Eisenhower-like commitment to the cause of economic growth through mobility, President Obama should seize this moment, and prepare a final budget for FY10 that endorses contract authority with a reasonable increase in obligation authority above the FY09 baseline (which should include the increased spending in the stimulus bill) and an explicit statement recognizing that full funding will require Congress to authorize a robust and reformed six-year highway bill by September 30th. This type of funding commitment and statement of support for a robust authorization bill would provide exactly the type of leadership that Congress needs to move forward. If the final budget proposal included these key points, it will be a document that we would all applaud.

Collapse

I have seen a good many trial balloons from administrations, but even I was surprised to see the Obama administration wade into the very dicey aviation user fee debate via a footnote in their budget documents. That's all it was, but it suggested in 2011 there would be user charges amounting to over $7 billion a year assessed on the aviation community.

Seems like this initiative may have been launched at OMB. They are understandably in search of revenue. But, someone forget to mention to Congressional leaders just what was intended and even the Department of Transportation asked for time to develop a position.

So, we have a footnote and we have a very big number. What we lack are details and surely there will be a devil in these details.

We sincerely hope with so many important initiatives in aviation - especially the modernization of air traffic control - to be worked on in the months and years ahead, that this debate about user fees for general aviation aircraft can be avoided. A pay to play air traffic control policy is neither sound nor safe. With all the aviation groups wanting to work with Congress and the Administration on constructive approaches to real issues, we can only hope that this old initiative, already hotly debated and settled in past years, can be put back in the drawer.

There is a very clear path available for the Administration as it develops it's budget. The legislation introduced by Chairman Oberstar provides the necessary details for the FAA Reauthorization in a four year package containing fuel tax increases that we continue to support as a means of providing additional revenue. I along with the leaders of other aviation groups expressed our support for the measure in recent hearings.

All of us are interested in tackling important aviation challenges without a replay of a past debate.

Collapse