Last year DOT Secretary Peters issued an extensive, 80-page set of proposals for reauthorization of surface transportation programs, titled “Refocus. Reform. Renew”. http://knowledge.fhwa.dot.gov/tam/aashto.nsf/All+Documents/B9FA645AEA69A10D852574B70063D378/$FILE/reformproposal08.pdf and http://www.dot.gov/affairs/dot10308.htm. Those proposals would have enabled genuine progress towards completing a reauthorization by September 30, 2009, and continue to deserve careful consideration.

But, with regard to the timing, there are some difficult circumstances now facing the Congress. One is that other transportation reauthorizations, such as the FAA and TSA reauthorizations, remain to be completed. Another is the fiscal challenge of a year in which Congress has already appropriated $787 billion in “stimulus” funds, $1.2 trillion in discretionary “minibus”/“CR”/and “omnibus” funds, and $105 billion for the “war and UN/IMF supplemental” funding—and has approved a $3.5 trillion budget resolution for next year with nearly a 20% increase over FY08 levels. And a third is that the next surface transportation bill will confront a situation in which the highway trust fund is no longer gathering a surplus, but is instead facing shortfalls. There are several other important challenges and policy issues as well.

So it is unsurprising that the Administration prefers an 18-month extension. Perhaps that implies they are placing less importance on transportation than the many other topics being pursued this year, which would be unfortunate. But an extension of time is not necessarily a bad thing if it enables the Congress to craft better solutions. And, as D.J. Gribbin noted, a series of very short-term extensions can be worse, especially if they regularly come down to the 11th hour and require preparations for a partial government shutdown. This is not a routine or simple reauthorization; it is a bill of tremendous importance to a critical sector of the U.S. economy at a time when new ideas and solutions are more important than ever.

As the Administration and Congress move ahead to consider the best approach to reauthorizing the Nation’s surface transportation law which expires this September, policy framework and program funding will be key to driving both the timeline and configuration of the final package. With that in mind, we urge all parties to support the following key principles: 1) A significant increase in Federal transportation infrastructure investment including funding needed to bring public transportation into a state of good repair; 2) Program emphasis on energy independence and sustainability, recognizing the connection between transportation, energy consumption and reduction of greenhouse gas emissions; 3) A streamlined program structure and project delivery process; 4) A renewed focus on metropolitan mobility and congestion relief which recognizes that metro areas account for most of the American economy and a majority of its population. The opportunity to craft a new national transportation vision is at hand, the challenge now being how to fund and design the program to match this vision. In the meantime, at the local level, we will continue to deliver service to our customers and advance job-creating capital projects which stimulate the economy.

I think most participants in this discussion would prefer a comprehensive authorization be enacted by September 30th. I am in complete agreement with Chairman Oberstar that the surface transportation system has suffered from consistent underinvestment that has prevented vital repair, let alone improvement. Moreover, the system is in dire need of reform and I commend the Chairman's efforts in that regard, particularly the proposed 90% increase in transit investment over SAFETEA-LU. The draft bill also considerably streamlines the funding programs and puts a real focus on intermodalism, a suggestion of many on this blog.

My concern, however, relates to predictability. It is critical that State DOT's and transit agencies maintain the ability to effectively and efficiently manage capital budgets. These capital budgets assume consistent Federal investment to allow for multi-year project development and construction. Numerous short-term extensions of SAFTEA-LU have the potential to be damaging to these projects, which is why a longer-term extension of a year or 18 months is preferable over a series of short-term fixes. I certainly hope the Chairman is successful in his efforts to push through a comprehensive authorization by September 30th but if not I urge Congress and the Administration to pass at minimum a one-year extension of SAFETEA-LU.

To meet the huge transportation infrastructure needs that beset our country, it is imperative for Washington to move quickly and pass Chairman Oberstar's proposal for a six-year program that will begin to address these critical needs in a meaningful, systematic way. The Chairman's bi-partisan proposal is the result of exhaustive investigations, hearings and studies into the direction of America's transportation system. The experienced leadership of the T&I committee, including Chairman Oberstar and ranking member Mica, is what gives me the confidence that the committee has, and will continue, to debate and agree on a sound proposal for the future.

If we look at what has happened in the past, to do anything less will cause uncertainty in the industry and result in delays in project starts with potential effect on industry employment.

While completion of this monumental task will likely spill over into the first half of 2010, to do anything less will accelerate the erosion of our transportation system and economy, and lead to higher amelioration costs later. The time is now—the need is unprecedented.

Like some of my blogging colleagues, I sense the urgent need to put a new law in place. And the T & I bill provides some of the foundation for a better law by estabilshing a large program aimed at reducing the backlog of deferred maintenance of our infrastructure assets, consolidating programs and providing more funding directly to metro areas where the vast majority the public and the nation's business are located (a state-dominated program no longer makes sense given this reality).

Transportation for America has a brief analysis and critique of the bill on its web site, which makes it clear that while the map is taking shape thanks to T & I, the route ahead is unclear. And as others have noted, the engine which makes this bill go -- revenue from the federal gas tax and/or other sources -- is stalling out, and the bill leaves this key question unaddressed.

Phineas makes one of the more cogent points in the string of entries below: The good news about the T & I bill is that it joins other proposals and assessments about the need for fundamental reform of the program. I would, however, go a step further.

At the risk of taking the analogy of a vehicle crossing new terrain to the breaking point, I would argue that fixing the investment engine in the bill is actually contingent on radical reform of the overall program. The latter has to come first. The President -- and the Congress -- will have to make a sale to American taxpayers. And right now those taxpayers are skeptical about government outlays, increasingly so. Americans aren't dumb. They know the current program is a lemon and won't buy it in anywhere near its current form. The new law has to offer some pretty dramatic benefits to the nation's economy and environment if it is to pass anytime soon.

What does this mean in practice? It means building on what T & I has introduced by aligning the program with a core set of national objectives, in ways specified by Transportation for America. Oil savings and global warming emission reductions should be among those, and that there are others (economic productivity and competitiveness and access to housing among them) that should be added to the list. This program is fueled by federal taxpayer dollars, and it is entirely appropriate that a 21st century iteration direct those dollars towards meeting recognized national objectives, as opposed to the current policy architecture which largely shovels money to states and often merely asks: "Did you spend the money?"

Getting the program right will help us to pass a bill that is as scaled and timely as necessary. So I would urge policymakers to focus on the reforms; the revenue and timing challenges will be much easier to solve with a compelling program in hand. Or, as a famous campaign adviser might say, "It's the program, stupid."

There are three dimensions to this issue. First, the size of the program; Second, how these funds are financed; and Third, how we reform the surface transportation program.

The level of spending should increase beyond recent levels. There are clear reasons to improve the physical condition of the nation’s roads, bridges, and mass transit facilities. We also need to increase the effective capacity of our transport system in order to support (and perhaps stimulate) economic growth. Any effort that focuses solely on improving physical conditions represents a significant move away from meeting the demands of a 21st Century economy. There are many ways to improve effective capacity, including adding new physical capacity, but also making aggressive use of technology and pricing. While an increased level of spending will create jobs, it is important to move beyond the emphasis on “shovel ready” projects contained in the stimulus package and make investments that support long-term growth.

Any short-term measure that is simply a continuation of current levels of spending will fall short of what is needed. Until we know more details about the proposal from Secretary LaHood, it will be hard to determine whether this is a better route than that proposed by the House T and I committee.

Spending is directly linked with finance. To date, no one in a position of political leadership has stepped forward with a clear plan as to how to finance an expanded surface transportation program. An increase in the motor fuel tax is straightforward and practical, but for reasons that have little to do with the economic impacts, this has become the third rail of politics in the US over the last twenty years. Perhaps one option would be to increase fuel taxes over time (starting say two years from now) and then issue revenue bonds backed by these funds to provide the funds needed today. The general fund has become the easy way out, but simply adding on to the federal deficit creates long-term economic problems. Mileage-based fees may be the long-term solution, but they will not be ready by October 1. We might be able to implement a form of VMT fees within the next 18-24 months, however. I would feel better about the proposal by Secretary LaHood if the Obama Administration said that consideration of VMT fees was on the table in 18 months.

Reform is important. This could be done through an 18 month piece of legislation in order to test some new ideas or through a full six year bill. The House T and I bill is the only full option that we have right now. Reform proposals could be put in place without an increase in funding and without a solid financial plan – although having all three would help, in part to offset complaints from folks opposed to reform.

When we strip this argument down to the bare bones, it’s a simple decision: As a nation, we either believe that the challenges facing our transportation systems are a direct and immediate threat to our economic health and well-being, and therefore deserve swift, focused attention, or we don’t. If we believe that they are—which I do—then there really is no question. Delaying the critical reforms and commitment of resources that should/would come from a six-year authorization would, at best, be a band-aid.

The argument has been made that the extension would give us more time to hammer out a better bill that not only addresses the investment needs but also outlines reforms that would improve the way we approach transportation funding in this country. I question why we aren’t demanding that kind of leadership in time for the authorization. No matter which side of this argument you fall on, it is clear that for decades the nation’s transportation system has not received the kind of attention and support needed to be able to adequately support our people and our economy. If we can’t change that now, what makes anyone think we can change it in the next 18 months?

The last time we had to authorize this bill it took nearly 2 years and 12 extensions to create a program that in the long-run was nearly 100 billion dollars less than the actual need—another example of patch and pray. If we give ourselves 18 months to sort out the details on this next authorization it’s entirely possible that we’ll end up with a successful program. It’s also entirely possible, some might argue probable, that during those 18 months of delay our already crumbling systems will slide closer to failure. Why is that a chance we’re willing to take?

Every participant in this debate has their work cut out for them over the course of the next few months. At a time when many feathers are getting ruffled from Capitol Hill to Pennsylvania Avenue (and spots in-between) I believe the only way to provide this debate some clarity is to take a step back and focus on some core realities.

Reality #1: It is highly unlikely that by September 30, 2009 Congress will pass, and the president will sign, a reformed multi-year transportation program funded through an increase in the fuel tax and coupled with other supportive financing sources.

Reality #2: What is needed at this time for our nation is exactly the type of program and solution described above.

Reality #3: Given that we only have a few weeks to enact a HTF fix, simple is best. Let’s not create some new beast, which would be a Highway Trust Fund (HTF) bailout coupled with some hasty policy tinkering. Congress does not have a long history of revising programs in a sound manner under extremely strict timelines.

Reality #4: We in the transportation community must get behind a clearly defined HTF fix before August, but also must keep the pressure on Congress and the Administration to continue with the hard work of enacting a multi-year bill as soon as possible. The fact is, transportation should be a top priority on the Congressional calendar due to the multiple ways transportation investments can benefit the country – creating jobs, providing the foundation for future economic growth, improving safety and the environment, to name a few.

Political courage will be required throughout this debate if we are to accomplish what we all agree needs to be done: Adequately fund an improved and modernized, performance-based transportation system that is accountable to the American public.

Clearly the events of last week indicate there is some work to be done on getting the Administration and Congress working in a coordinated fashion to get the bill done. It is also clear that there is consensus emerging that major restructuring or reform of the program is likely. That is good news. The bad news is that there is no consensus on how to pay for it. Everyone would like to get the bill done this year but I would prefer that it be done right even if that means a delay. The fact that we have no agreement emerging on funding means that we have a long way to go. We can't ignore that question. Until there is a robust discussion of the best way to pay for the transportation infrastructure we need, this bill is not going anywhere. Having a discussion of how to spend the money is nice but largely irrelevant unless you can cover its cost. And in that regard, everything needs to be on the table. The options are clear. What we need is the political will to deal with them.

Last week we witnessed a highly unusual discordance between Congress and the Obama Administration on transportation issues when Secretary LaHood suggested an 18-month postponement in surface transportation reauthorization. This suggestion received less than favorable comments from T&I Chairman Oberstar.

Whether surface transportation reauthorization should be delayed by 18 months is more a question of politics than policy. The next reauthorization is going to be uniquely challenging because it cannot be solely a simple extension of current law. In fact, it is almost universally acknowledged that our country needs to fundamentally reform how we finance surface transportation infrastructure (although there is quite a bit of disagreement over the nature of that financing). Yet, fundamental reform inevitably carries high political costs.

In proposing an 18-month extension of reauthorization, Secretary LaHood apparently disagrees with Chairmen Oberstar and DeFazio that an acceptable agreement on reauthorization can be reached this year in the current political environment. Observers have concluded that the Secretary’s timing is driven by the need for a future increase in gas taxes, and the seemingly rational conclusion that a gas tax increase is not possible in the near future. If the Secretary’s agenda for reauthorization included only a simple extension of the current program coupled with a streamlining of USDOT, little political capital would be required and such legislation could easily be accomplished this year. But this reauthorization will not be simple. And if undertaken now, a more robust debate on fundamental reform, would have to compete with debates on health care, financial industry reform, climate change, energy legislation, and the need to restore fiscal discipline, all of which would overshadow the arguments of those advocating additional transportation funding.

This country needs a thorough re-thinking of how we finance and build surface transportation infrastructure. Cobbling together something that is passable in the current environment, thereby pushing the real debate on fundamental reform until the next reauthorization, is not in our nation’s best interests.

In addition, we should avoid at all costs what FHWA and state DOTs had to endure during the last reauthorization debate. As Chief Counsel at FHWA, I had a front row seat to the chaos that resulted from a dozen different extensions, some only for days at a time, that stretched out for almost two years. If reauthorization has to be postponed, it is far better to do it once.

If we have the political will to fundamentally reform the financing and oversight of surface transportation, then Congress should pass a reauthorization bill on time and without extensions. If external forces, however, will deprive Congress from being able to engage in needed reforms, then an 18-month delay is better than putting off the hard issues until the next reauthorization.

Don’t rush the bill

The passage of every highway bill in the last two decades has happened because passion and politics prevailed over logic and performance. If we really want to “reform” the system, then a new bill can wait until the passion subsides and the logic rises.

When I hear someone say we must (MUST!) enact transportation legislation before the September 30 deadline, I feel as though I’m being pressured by a pushy salesman. If the future of our highways is a genuinely good deal, then we shouldn’t be forced to get it the way we would buy a diamond necklace hawked on television by someone who tells us it will double in price tomorrow. Let’s look at the transportation bill for what it is: an important policy statement that will determine how and why we invest in our nation’s transportation system for the next generation. This is not something we should rush. It calls to mind the old saying, “Marry in haste, repent at leisure.”

Here are a few of the statements by my fellow expert bloggers that strike me as slightly less than convincing arguments to enact the House T & I Committee bill IMMEDIATELY:

“Delaying the surface transportation reauthorization is unacceptable.” (Terry O’Sullivan) Well, that’s certainly a very passionate statement, but I’m still not convinced why we should enact this particular bill right this minute.

“An extension should not let Congress and the Administration off the hook.” (Janet Kavinoky) True, we don’t want to let anyone off the hook, but it’s still not a good reason to enact this legislation now.

“We owe it to our future generations to act now, not in two or three years.” (James Oberstar and Peter DeFazio) Yes, we owe a lot to future generations, especially since we are forcing them to accept so much debt from the self-indulgent activities of their parents and grandparents in the 1980s, 1990s and 2000s. However, this by itself is not a convincing reason to enact this particular bill.

“What will we know in 18 months that we don’t know now?” (David Raymond) Maybe we won’t know anything more in 18 months than we know now. What we DO need to decide, however, is whether the T & I bill is the best blueprint for our nation’s transportation system for the next generation.

On the other hand, a couple statements by my fellow expert bloggers DO seem logical and resonate with me.

“No legislation should pass and no new money should be allocated without significant reforms.” (Phineas Baxandall) That is the conclusion of the Peters/Schenendorf Commission, the Atkinson Commission, and the Bipartisan Policy Center. We must reform the current system. I’m not convinced the T & I Bill provides the right reforms.

“Putting the bill on a fast track means this country will forego what should be an extended debate on whether this measure is the right path to pursue.” (Bob Poole) Good point, Bob. We are just now seeing for the first time a very lengthy bill that articulates a new vision for transportation. Shouldn’t we have a productive debate on the merits of this bill before swallowing it whole?

In summary, let’s have a healthy debate on the merits of the T & I bill. Let’s implement the time honored tradition of ready, aim, fire – as opposed to the all too common and regret producing ready, fire, aim.

I am disappointed the Obama Administration has proposed an 18-month extension of the current authorization. This action undermines Chairman Oberstar’s and my efforts to move forward with this important reauthorization process.

An extension would have unfortunate and unintended consequences, delaying major infrastructure projects across the country. Numerous projects, capable of creating desperately needed jobs, would be left in the lurch for nearly two years.

With the economy continuing to hemorrhage jobs, and less than seven percent of the “stimulus” devoted to transportation and infrastructure investment, the entire country needs a real effort that focuses on job creation.

The 18 month delay presumes that (1) we’ll know more by then than we do right now about what entails an effective program, and (2) that the political situation by then will be more favorable for bill passage than now. What will we know in 18 months that we don’t know now? What will we know that is not included in the reports and recommendations of the two outstanding bi-partisan blue ribbon commissions that offered up their analysis and concrete proposals over the past year? And, politically, will we be in a better position when we are on the brink of the next presidential election season and facing onerous deficits? Obviously there is no perfect time, but right now we can link investments in infrastructure directly to sustainable economic recovery, and I believe what the President said about health care reform applies even more aptly to the transportation reauthorization – “What we can’t accept is endless delay and denial that this needs to happen.” So count me a strong supporter of Chairman Oberstar’s proposal to move this bill aggressively right now!

Secretary LaHood’s proposed extension of the transportation bill is understandable given the many issues the Administration and Congress are juggling, but a disappointment to those of us eager to see reforms this year. However, an 18-month extension bill that patches the Trust Fund could also provide an opportunity to include a limited number of strategic, legislative provisions that could lay the groundwork for true reform in the next bill.

For example, Chairman Oberstar’s blueprint emphasizes a shift to a performance-based system that would hold funding recipients accountable to meeting national objectives, such as safety, state of good repair, and environmental sustainability. Measuring performance in some of these areas will be difficult because current data collection is insufficient or ineffective (See Polly Trottenberg’s paper on this topic: “Getting the Federal Government to Do the Math.”) The 18-month extension bill could establish data collection in new areas, such as measuring baseline carbon emissions attributable to transportation. Currently, the Blueprint anticipates that states and metropolitan regions would set greenhouse gas emissions reduction targets working with the EPA and DOT. To set these targets, first, states and metros must understand how many emissions they are currently generating using a standard methodology. This process could be established in the extension bill, in addition to other data collection that is needed.

Another area that could use some work is defining the “National Transportation Strategic Plan,” described in the Blueprint. For a National Transportation Strategic Plan to be truly strategic and not a collection of pork barrel projects, an objective process is needed to evaluate proposed projects against uniform national goals, evaluating criteria, data, and analysis. The extension bill could begin the process to create the National Transportation Strategic Plan, so that projects can be pre-approved when new financing is made available in the authorization of a new bill.

But the clearest reason for delaying the bill is to put off the difficult political process of raising new revenue – most likely through an increase in the gas tax. While there’s never a good time to raise new revenues, if the Obama administration has judged correctly that this will be an easier political lift after mid-term elections and a hopeful rebound of the economy, and we can accomplish some transitional measures in the interim – I’m willing to wait.

The good news from both the administration statement and the Transportation & Infrastructure committee is that no legislation should pass and no new money should be allocated without significant reforms. Whether the next legislation covers six years or 18 months, this is an important starting point.

The draft from the T&I committee contains many important improvements, such as measures to ensure that “public private partnerships” would actually benefit the public and some that would allow recognition of the benefits of streetcars. In addition to administrative changes, we hope that Congress will not shy away from commitment to forward-looking performance outcomes.

Luckily, a growing number in Congress have put forward an excellent list of what those outcomes should be. House Bill 2724 stipulates that over the next 20 years America’s transportation system should, for instance, shift travel toward more energy efficient modes, and substantially reduce traffic delays and pollutants. Steps to clearly advance these kind of serious objectives should be embedded in the next transportation bill, whatever its duration.

I agree with Bob that the 18-month postponement is a good idea, and need not repeat the points he makes.

But I seek to take issue with Congressman Oberstar (one of the nicest people I’ve ever had the pleasure of meeting) that “Every day that we wait for reform, more lives are lost unnecessarily in motor vehicle crashes”. As many of the “reforms” are designed to save fuel by forcing further reductions in vehicle weights, their postponement may save lives, not lose them.

According to the Highway Traffic Safety Administration, vehicle downsizing in the 1970s and 1980s resulting from CAFE regulations is responsible for some 2,000 extra deaths each year on US roads. So the enactment of further fuel-saving policies, to which the Obama administration is committed, is likely to further increase road deaths.

This is but one of the issues that needs to be explored and publicized before enacting the proposed reforms.

Two experts on our Transportation Blog are weighing in with a joint response -- Rep. James L. Oberstar, D-Minn., chairman of the House Committee on Transportation and Infrastructure, and Rep. Peter DeFazio, D-Ore., chairman of the Highways and Transit Subcommittee:

The Administration’s proposal to extend the current surface transportation programs through March 31, 2011, fails to acknowledge the severity and urgency of the challenges facing the nation’s surface transportation system at this critical time. This proposal locks us into the broken policies of the past and prevents us from moving toward the transportation system of the future.

Decades of underinvestment have taken their toll on our nation’s transportation infrastructure. Almost 61,000 miles on the National Highway System are rated in poor or fair condition, and one of every four bridges is structurally deficient or functionally obsolete.

On the transit side, more than 32,500 public transit buses and vans have exceeded their useful life, and the maintenance backlog for the nation’s largest rail transit systems is nearly $80 billion. As transit ridership continues to grow, these systems must be repaired and vehicles need to be replaced.

The Administration wants an 18-month delay because it has no plan to meet our transportation challenges. However, we do. The legislation that the Subcommittee on Highways and Transit will mark up this week delivers on what the Administration has said it wants – transformation of the current programs, a metropolitan mobility and access initiative to reduce congestion and greenhouse gas emissions, accountability for how federal transportation dollars are spent, and increased livability for our communities. In addition, our bill builds upon the President’s investment in high-speed rail and will create a National Infrastructure Bank to better leverage limited transportation dollars. In total, this legislation will create or sustain six million family-wage jobs.

Every day that we wait for reform, more lives are lost unnecessarily in motor vehicle crashes. Every week we delay, parents spend more useless hours stuck in traffic trying to pick up their children at school. Every month we extend the current system, the economy suffers and goods movement inefficiencies grow. And ever year that we fail to act, the cost of reform only gets more and more expensive.

We owe it to our future generations to act now, not in two or three years.

Haste Makes Waste

Congressmen Oberstar and Mica have proposed a sweeping revamp of the federal surface transportation program, which they hope to move quickly to enactment this summer. Doing so would be a mistake.

Putting the bill on a fast track means this country will forego what should be an extended debate on whether this measure is the right path to pursue. And with other key Administration priorities—health care policy and global warming/cap & trade, in particular—already in play and requiring extensive debate, a rush to enactment of the surface transportation bill would almost certainly lead to changes we’d come to regret.

Moreover, since greenhouse gas reduction and reduced petroleum dependence are two objectives of Oberstar/Mica, it would make sense to see what Congress enacts on energy and climate change before finalizing a six-year transportation bill that also deals with these subjects.

I outlined some of my concerns about the bill last week on the Reason Foundation blog (www.reason.org/blog/show/1007784.html). Five major concerns, all of which need serious debate and consideration of alternatives, are as follows:

1. The proposal would convert the Highway Trust Fund into an all-purpose transportation public works fund, forcing highway users to pay for additions to other modes in addition to the long-standing provision for mass transit aid.
2. It would institute what amounts to federal smart-growth land-use planning on all urban areas.
3. Though it claims to be a massive streamlining of federal transportation programs, it actually protects numerous special-interest programs, some of which appear not subject to performance requirements (which is a major theme of the bill).
4. At a time of large-scale highway funding shortfalls, it proposes federal regulation of tolling and public-private partnerships, reversing nearly two decades of federal liberalization in these areas.
5. And, of course, it proposes $500 billion in spending, which is $200 billion more than current revenue sources can accommodate.

These and many other points need thorough, wide-ranging debate, rather than a rush to judgment. That’s why I support Secretary LaHood’s call for an 18-month delay in reauthorization.

Urging the passage of a new transportation legislation without knowing where the money to pay for it will come from is an exercise in sophistry. I take the liberty of posting the latest issue of our NewsBriefs which tries to understand what lies behind the Administration's decision to seek an 18-month extension of the current program.

June 20, 2009

The House Transportation Bill: Two Key Questions Remain Unanswered

Rep. James Oberstar (D-MN), Chairman of the House Transportation and Infrastructure Committee, unveiled his "blueprint" for the next surface transportation authorization bill on June 18 to generally positive reviews. However he left two key questions unanswered: Can the bill be enacted this year? and, Where will the money to fund the ambitious $500 billion program come from?

The first question has been pushed to the forefront by the Obama Administration. Last Thursday, Transportation Secretary LaHood surprised the transportation community and members of Congress with an unexpected announcement: the Administration will seek an 18-month extension of the current surface transportation authorization. An estimated $13-$17 billion will be needed to fund the program extension. "I recognize that there will be concerns raised about this approach," the Secretary said in his statement. "However with the reality of our fiscal environment...we should not rush the legislation...If this step is not taken the (highway) trust fund will run out of money as soon as late August." Senator Barbara Boxer (D-CA) chairman of the Senate Environment and Public Works (EPW) Committee, who will steer the Senate version of the authorization bill, quickly endorsed Secretary LaHood’s proposal. "This will give us the necessary time to pass a more comprehensive multi-year bill with stable and reliable funding," she stated. Other Senate leaders, such as Patty Murray (D-WA), chairman of the Senate Transportation Appropriations subcommittee, indicated no objection to an extension. Ensuring the continuity of funding offered by Sec. LaHood's proposal seems to take precedence in the Senators’ minds over long-term reform of the program. Needless to say, Rep. Oberstar is of a different mind. He called any temporary extension of the law beyond September 30 completely unacceptable.

What has motivated the Administration to seek a delay in enacting a new transportation law? Secretary LaHood has joined a growing body of doubters that the crowded legislative calendar— controversial climate legislation, contentious health care reform, a Supreme Court confirmation, among others— would permit the House and the Senate to reach agreement on a new bill before the current law expires at the end of September, thus leaving the next years’s program funding in a precarious state. "Even if the House were to pass a bill by September 30, it is highly unlikely that the Senate would," LaHood said in an interview. "So rather than stringing Congress along with three-month or six-month extensions, let’s face reality," he added, to justify the unusually long extension that would delay a new transportation bill by a full year and a half.

Other motivation may also lie behind Sec. LaHood’s proposal. The White House may reason that by mid-2011 the economic climate will have recovered sufficiently to allow the Administration to propose a gas tax increase without suffering serious political repercussions. With mid-term elections behind them, Congress also might be less reluctant to vote for a tax hike. Moreover, by pushing enactment of the new legislation closer to the next presidential election, the Obama White House could take credit for a major piece of legislation.

Another motive for a postponement could be the Administration’s desire to assert a more active role in influencing the multi-year legislation. Secretary LaHood may have taken to heart the advice he has received from several sources, that he should take a more proactive role in shaping the surface transportation legislation and not surrender all the initiative to the House T&I Committee. However, he has been unable to devote much attention to the bill, having had his hands full since taking office with the economic recovery bill, the high speed legislation and recruitment of key personnel. His senior policy team is likewise spread thin. Some key policy officials--- such as Deputy Secretary John Porcari, Assistant Secretary for Transportation Policy, Polly Trottenberger and FHWA Chief Counsel Karen Hedlund--- are new to their jobs or still await confirmation. An 18-month postponement would afford the Secretary and his team a welcome pause "to catch their breath and get up to speed" as one U.S. DOT watcher put it to us. He thinks the DOT leadership would welcome a chance to revisit some of the provisions in Oberstar’s bill.

Finally, the decision to seek an extension could be motivated by the Administration’s legitimate concern that Congress has not put forward a solution to the central problem: how to raise the additional $265 billion needed to pay for the proposed $500 billion highway/ transit/high speed rail program ($350 billion for highways and highway safety, $100 billion for public transportation and $50 billion for high-speed rail ). According to estimates developed by the National Transportation Infrastructure Financing Commission and the Congressional Budget Office, the federal fuel tax and other excise taxes are expected to generate no more than $235 billion in revenue under current law over the FY 2010-2015 period.

The House T&I Committee bill does not include a revenue chapter. That is the responsibility of the House Ways and Means Committee whose subcommittee on Select Revenue Measures will hold a hearing on the funding options on June 25. At this time, no one knows what position the Ways and Means committee will ultimately adopt concerning the level of funding and how to bridge the potential $265 billion gap. Equally unknown are the positions of the House leadership and Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee whose assent to the bill’s funding provisions will be necessary.

One possible source of supplementary investment capital could be the much discussed National Infrastructure Bank. A bill that would establish such a bank has been introduced in the House by Rep. Rosa DeLauro (D-CT) and 26 Democratic co-sponsors (HR 2521). The proposed Bank, modeled after the European Investment Bank, would invest in transportation, environmental, energy and telecommunications infrastructure projects. Rep. Oberstar’s proposal would locate the Bank within the Transportation Department and capitalize it at a much higher level ($100 billion). The Bank would fund three new initiatives: Metropolitan Mobility and Access, Projects of National Significance and High-Speed Rail. The "Bank" would be essentially a federal credit assistance program, to be financed either through Treasury or through externally raised private capital. Any decisions about the level and form of the Bank's capitalization are probably out of the hands of the T&I committee. Like Rep. DeLauro’s bill, the T&I Committe's Bank proposal could be referred to Rep. Barney Frank's (D-MA) Financial Services Committee or to the Ways and Means Committee. The possibility of enactment of either version of the bank during this session of Congress is uncertain.

Rep. Oberstar’s transportation bill leaves few other funding/financing options on the table. It explicitly forecloses tolling of the Interstate Highway System —a potentially large source of revenue — even though consumer surveys show that tolls are generally viewed more favorably than higher gas taxes.

The bill also severely constrains the use of private investment capital and concession-based public-private partnerships, approaches that potentially could be a source of significant supplementary revenue for transportation infrastructure. The bill would establish a new Office of Public Benefit within the Federal Highway Administration to review and approve (or reject) State plans for toll roads and to oversee new federal requirements for public-private partnership agreements. Instead of doing its best to create a climate favorable to tolling and public-private partnerships, the bill would appear to set up new barriers that could seriously discourage private investors from participating in the nation’s infrastructure renewal.

In the coming days, we can expect much discussion and analysis of the T&I Committee’s 100-page report that outlines the proposed policy and procedural reforms. Let us hope that some of the deep thinking will also be devoted to figuring out where the money will come from.

This one is easy. Janet is certainly right about the need for stable long-term funding and Terry is spot-on about the benefits that transportation investments make to the economy. And, as Chairman Oberstar has indicated, there is plenty of time this fiscal year to reform surface transportation. After all, we have discussed the good work that has been done in town on policy, finance, and performance to reform our outdated policy architecture.

The Problem? Money. Until we identify an adequate revenue source to back the program we should not reauthorize the program whether this year, 18 months from now or beyond.

The most likely source for the level of funding we need is a federal gasoline tax increase, which as we know will deliver not only additional money to back an expanded and reformed program, but a more sustainable energy policy and greenhouse gas emissions reductions so important to avert further global warming.

We either provide the leadership necessary to convince the public and elected officials that transportation is important enough to pay for, we muddle through with general fund transfers and extensions, or we cut the program and stop projects all across the nation, doing great damage and defeating the stated purposes of the economic recovery program. It is that simple.

Steve Van Beek

At the end of the day, the decision on what to do about extensions should be made so that the thousands of businesses and their employees can keep doing the construction, design, engineering, operations, maintenance, and financing to improve the physical platform of our economy in a way that maximizes the productive capacity of this country.

It is also important that any extension maintains the link between user funding and Federal transportation programs. This is the essential foundation of contract authority, which is what allows multi-year investments through the Federal government. (By the way, is it just me, or contemplating shifting highway and transit programs back to the general fund crazy with all of the talk of PAYGO these days? After all, how often in history have the American Trucking Associations and the U.S. Chamber of Commerce asked for an increase in user fees? This reauthorization should be the darling of the PAYGO crowd!)

And an extension should not let Congress and the Administration off the hook to get their proposals developed. The business community is going to keep the pressure on to get reauthorization done.

Delaying the surface transportation reauthorization is unacceptable.

Any delay in building America’s surface transportation system will cost jobs, hturt our economic recovery efforts by undermining the stimulus, worsen the condition of our roads, bridges and mass transit and make the problem more expensive when we do fix it.

A series of extensions – like the two year delay before the last authorization – will hinder the planning of transportation projects. When projects cannot be planned, jobs get cut. The stimulus is putting people back to work building America but it is a temporary fix and only enough to create jobs for 700,000 of the 1.7 million currently unemployed construction workers. Construction workers will complete stimulus projects and go back to the unemployment lines if we do not come up with a long term solution to build our surface transportation system. The news is grimmer for the more than one million unemployed construction workers who will not find work on stimulus projects.

In his Inaugural Address President Obama called for a new era of responsibility, meaning that we must boldly face America’s problems and solve them with vision and innovation.

For too long we have neglected the basics of our country. America’s transportation system is overcrowded, outdated and crumbling – a condition that hurts our economy, wastes time and money, diminishes quality of life and costs lives. Ignoring the problem won’t make it go away and delaying action will only make it worse. A responsible country can no longer put off building America.

A commitment to build America provides the opportunity to create millions of jobs, lays the foundation for new economic prosperity and leaves behind a lasting legacy for generations to come. We cannot blow this opportunity by delaying the work that needs to be done for another 18 months. It’s time now to build America, so America works.