AAA joined many others in expressing strong objection to the proposed rule change in the House, which we believe will encourage transportation spending cuts in order to offset other government spending. Now is not the time to turn back the clock on transportation investment.

Governments at all levels have underinvested in transportation for decades. As the costs of building roads, bridges and transit systems have increased, revenues into the federal Highway Trust Fund have remained stagnant. Federal motor fuels taxes have not been increased since 1993 and have not kept pace with inflation or demands on the system. While many dismiss the gas tax as a relic and insufficient for the task, it remains the best vehicle we have at this time to address near term transportation program needs.

As we have said before, garnering public support for appropriate levels of transportation investment will require re-building a trust that has waned over the years as the federal transportation program has become more complex and convoluted. To reestablish trust with the motoring public, a clear vision, redefined federal priorities and increased accountability are required to ensure motorists understand the value of transportation and see real benefits from their investment.

We agree that transportation investment should be aligned with revenues and that reforms of the current program are required to make it more accountable to the public. The 112th Congress should make enactment of a reformed, more accountable, multi-year surface transportation authorization bill - with sufficient revenue - a top priority. Congress has delayed action on a long-term transportation bill for too long.

The clash between enormous budget deficits and a ballooning national debt, on the one hand, and the need to promote growth in a fragile economy, still facing unacceptable levels of unemployment, on the other, will dominate domestic policy debates over the next few years. Transportation policy and funding decisions will not, and should not, be immune from the need to balance these competing values.

The new rules for spending, proposed by the House Republican leadership and adopted earlier this week, should be analyzed in the context of the need to balance these interests. Specifically, the elimination of the highway spending guarantee and the so-called "firewall," adopted in TEA-21 and re-enacted in SAFETEA-LU, make the decisions of the authorizers subject to limits established by appropriators and by the overall budget process. So, while the debate over this issue is one between competing national interests and values, it is also another chapter in a long struggle between authorizers and appropriators.

The bottom line is that we need more resources for investment in the nation's transportation infrastructure. Even in this uncertain economic environment, America must find the means to invest adequately in transportation facilities and systems. As the National Surface Transportation Infrastructure Financing Commission and the Bipartisan Policy Center's National Transportation Policy Project (NTPP) jointly stated last month, "Investment in transportation will be an important element in building the foundation for long-term economic recovery and growth. . . .[However,] it is of particular importance in these times of severe fiscal constraint that we invest scarce public resources more wisely and efficiently, in order to maximize the reach and impact of what we spend."

Raising the motor fuels taxes that support the Highway Trust Fund (HTF), in order to provide more revenue for transportation investments, and reforming the way that we spend money on transportation, in order to provide accountability for national goals and interests, is the proper course of action, one that will allow us to deal with competing investment needs and fiscal constraints at the same time. However, as others have noted, increasing revenues, in order to invest in economic renewal and growth, does not appear to be a likely outcome of the debate over surface transportation legislation in the new Congress.

We are, instead, likely to face the reality of fewer investment resources, even at a time when we should be investing more. The outcome over this new highway spending rule in the House of Representatives has reinforced the message that deficit spending will not be the answer for the HTF shortfall, and we already know that a gasoline tax increase is unlikely.

For good or ill, the chances of a smaller surface transportation authorization bill in this Congress seem to be enhanced by the House's actions on these new spending rules. The real issue is how we respond to that reality. The transportation community should focus its energies on insuring that the funds available in these times of fiscal austerity are invested in ways that advance clear national economic, energy, environmental, and safety goals. It is now more important than ever that Congress articulate national goals for transportation programs and policies and put in place mechanisms to insure that states, localities, and MPOs are held accountable for meeting those goals with whatever federal resources that are made avaiable to them.

These steps will not only increase the effectiveness of limited transportation investment resources, but will, also, by demonstrating the tangible benefits from transportation investment, lay the foundation for an eventual increase in transportation-related revenues.

I agree with all the respondents who say we have underinvested in transportation for a long time and we need to increase, not decrease those investments. I also agree with those who say we need predictability in the funding system so states can make appropriate plans. However, I most agree with a wise person who commented to me that a successful reauthorization may be a hindrance to innovation because it’s the strangling of the system that’s causing people to think outside the box. Those who say “yes, we need to debate what our priorities should be and how we should fund things…BUT NOT NOW” are dooming our country to continued band-aid fixes that never really fix the problem. In terms of highway funding, we are on a train that has been running off the rails for a long time. Two congressional commissions, the Bipartisan Policy Center report, and the recent Miller Center report all point us in a new direction that says change the way we fund the system to a vehicle miles traveled charge and improve the performance of the system. If we are not willing to begin to implement these changes now, we never will. The debate on our priorities and the best way to fund transportation will always be 5-10 years in the future. And the crisis will get deeper.

When AASHTO, APTA, the organized labor community, and the U.S. Chamber of Commerce all agree on something, there’s usually a good reason. And TEN agrees with them on this too. The proposed rule change is part of a transparent and incredibly destructive strategy to further starve the public investments we need more than ever now.

For months, we’ve heard all kinds of destructive economic proposals justified by the need to cut deficits—except when we suddenly haven’t. After months of talk about cutting deficits and living within our means, politicians of all stripes did a 180 to praise tax cuts for the rich that will add $700 billion to the federal budget deficit over the next decade. How much more reason do we need to look skeptically on the endless refrain about “living within our means”?

Some politicians like to talk about fiscal responsibility in terms of family budgets. “Ordinary American families know they have to live within their means.” That’s true. And families know more than that. They know that living within their means does not mean cutting family transportation budgets to the point where Mom and Dad can’t get to work and the kids can’t get to school. That’s not fiscal responsibility—that’s insanity. Ordinary Americans know that long-term investments—like sacrificing to send the children to college—will pay off in the end for the entire family. Families figure out how to balance the budget while keeping their long-term interest in mind.

That's what we need to do as a nation. We at TEN make the argument that public transportation is a long-term investment that will bring economic prosperity to communities for decades to come. We need to find innovative ways to finance the kinds of investments that will build America’s future prosperity—not succumb to fear-mongering and political point-scoring.

The rule change proposed by House Republicans is a short-sighted policy that might allow them to score some political points now, but only by neglecting our country’s basic needs, putting its economic future at risk, and failing to create the good jobs that are essential to America’s economic recovery.

While the deficit is a serious problem that needs to be addressed, using the Highway Trust Fund as a scapegoat will, in the long term, only make America’s economic problems worse. With our global competitors, like China and India, investing 10 percent of their GDP on super-highways and other infrastructure, now is the absolute worst time to threaten the already small amount we invest in our own roads and bridges.

All over the country, we hear from contractors who say they can’t go forward with major equipment purchases and, most importantly, hiring large numbers of workers because of the lack of certainty surrounding federal highway investment. This rule change would only make that problem worse. Unemployment in the construction industry is staggering – nearly 19 percent. That number won’t go down if transportation investment is put at further risk.

Our highways and bridges are in poor condition and getting worse. Real progress won’t come by playing with rules inside the Beltway – real progress would be passage of a six-year surface transportation bill that invests in roads and bridges and creates millions of jobs at a time when we need them the most.

The Proposed Rule Change: Bad Policy in the Wrong Place at the Wrong Time

The House Republican Conference should vote for Congressman LaTourette’s amendment over the leadership proposal

The U.S. Chamber supports federal investment in highways and transit. We oppose the Republican Leadership's proposed rule -- and support Congressman LaTourette's amendment and here's why.

The Proposed Change is...

1. Bad Policy: Funding guarantees -- enacted in TEA-21 (not in SAFETEA-LU as the author states) -- should be maintained.

When they aren't, two things can happen: first, the trust with users is broken because the receipts are not being used as they are allowed by law (and yes, transit is a valid use of federal funding when it comes to reducing congestion and providing mobility), and second, there is an opportunity to cut the excess contract authority in order to provide budget authority elsewhere in the federal budget. So the proposed rule does not protect the HTF, nor does it keep highway and transit resources from being used in other ways.

2. In the Wrong Place. Yes, it is worth debating what should and should not be prioritized and funded by the Federal government. But that's what an authorization process is for -- not the House rules or appropriations bills.

What's most important -- especially when it comes to debating things like high speed passenger rail that have nothing to do with this rules debate -- is for Congress to act quickly to develop a successor to current highway and transit law, SAFETEA-LU. If Members want to make cuts to specific programs, narrow the Federal role, or even reduce overall funding levels, debate it in that arena. Not this one.

2. At the Wrong Time: Policy debates don't exist in a vacuum. Exposing businesses, employees, states and communities to the uncertainty this proposed rule creates is never good, but now it's especially bad.

• Construction unemployment is at 18.8%. Introducing uncertainty into federal investment, which accounts for about 45% of total highway investment nationally, will put more people out of work.

• Uncertain federal funding undermines state and local transportation planning processes. In fact, this rule change contradicts existing requirements for state and metropolitan multi-year planning and matching fund commitments.

• As a result, states and communities can’t make commitments to major multi-year capital investments like critical bridge replacement, Interstate Highway System reconstruction, highway and transit capacity expansion, and technologies that make transportation systems work better.

• Investments in safety and economic infrastructure will be set aside.

• This rule promotes cutting already insufficient federal resources for projects critical to U.S. exports competitiveness, economic development, safety and quality of life.

• The short-sightedness of this change will hamper long-run economic growth, as proven by the Chamber's Transportation Performance Index.

Make no mistake, the Chamber supports fiscal responsibility, living within our means, and program reform when it comes to highways and transit. But this rule change is the Wrong Policy, in the Wrong Place, at the Wrong Time.

The proposed rule change should not stand: the Republican Conference should vote for the LaTourette amendment at 4 pm today.

The American Association of Port Authorities (AAPA) believes it would be a mistake to remove current provisions that ensure that money collected from users to fund surface transportation infrastructure is spent as intended. These funds need to be “firewalled” to protect them from being spent elsewhere because efficient transportation infrastructure is absolutely vital to the American economy.

The port industry has argued that the same protections should be given to the taxes collected for maintaining America’s federal navigation channels at their authorized and required dimensions. Currently, the Harbor Maintenance Trust Fund has a $5.6 billion “surplus” of money that was collected from importers and domestic shippers specifically to pay for channel maintenance. However, critically-needed maintenance projects have been neglected and under-funded because, in a typical year, only about half of the Harbor Maintenance Tax collected is used for maintenance needs while the rest is siphoned off for unrelated other purposes.

Our nation’s transportation system, particularly infrastructure related to the movement of freight, is already severely underfunded. Removing the spending protections on money collected for the Highway Trust Fund could further undercut infrastructure investment and significantly harm the U.S. economy and undermine our efforts to create jobs.

Funding for projects and corridors of national and regional significance based on benefit/cost analysis can target limited funding to where it would be of most value. For example, the current system doesn’t address freight needs adequately. A national freight program is needed to increase efficiency and decrease road congestion due to freight movement, which will result in decreases in fuel use, pollution and transportation costs. Furthermore, because seaports are our connection with the world, support more than 13 million U.S. jobs and generate some $3.2 trillion in economic activity annually, surface transportation improvements in and near our ports will positively impact immediate and long-term prosperity, the environment and quality of life.

Reliable, uncongested roads, rails, bridges, tunnels and waterways give American businesses a competitive advantage in the global economy by providing them with the ability to deliver products at lower costs while reaching larger markets. And the role of international trade is only projected to increase.

China currently spends about 9 percent of its GDP on infrastructure. India spends about 3.5 percent. Compare that to the U.S., which spends less than 1 percent. Yet, the freight tonnage carried by U.S. trucks is expected to increase by 41 percent between now and 2035, while U.S. railroads are forecast to carry 38 percent more than they do today.

According to the National Surface Transportation Policy and Revenue Commission, freight movements are increasingly choked by a lack of capacity, and the current system of funding improvements won’t even sustain what we’ve already built. Inadequate infrastructure hurts the economy, and the businesses, workers, farmers and consumers that drive it.

The answer to this dilemma is to raise the priority of freight transportation infrastructure, including infrastructure in and around America’s ports, in the next surface transportation bill. This will help reduce congestion, improve the environment, facilitate goods movement, enhance our international competitiveness, and create jobs.

The New Year’s dustup over proposed rule changes to federal transportation funding pits the traditional highway establishment against new Republican leadership. Both sides make a common appeal to the notion that the Highway Trust Fund should continue to pay for surface transportation through user fees.

A major new report released today shows that common premise is false.

Highway advocates have long claimed that roads “pay for themselves,” with gasoline taxes and other charges to motorists covering – or nearly covering – the full cost of highway construction and maintenance. Both sides of the present debate also insist they seek to improve transportation spending by restoring the age-old principle of user-fee financing.

But highways do not – and, except for brief periods in our nation’s history, never have – paid for themselves through the taxes that highway advocates label “user fees.” Long-term trends toward reduced driving and fuel consumption mean that even gas taxes that keep up with inflation will cover a dwindling fraction of surface transportation costs.

Saying goodbye to the Great Myth of highway finance is not a cause to grieve. While it has been a useful political fiction, the user-fee myth is a major reason that transportation funds get allocated with little concern for societal needs or long-term transportation objectives.

Let’s look at the facts:

• Highways don’t pay for themselves -- Since 1947, the amount of money spent on highways, roads and streets has exceeded the amount raised through gasoline taxes and other so-called “user fees” by $600 billion (2005 dollars), representing a massive transfer of general government funds to highways.
• Highways “pay for themselves” less today than ever. As of 2007, highway “user fees” covered the lowest share of highway costs since the launch of the Interstate system in 1956. According to a Pew study, user fees in that year covered half the cost of building and maintaining the nation’s network of highways, roads and streets. Since 2008, with four bailouts of the Highway Trust Fund plus Economic Recovery funds, the fraction gets even smaller.
• Gasoline taxes aren’t “user fees” in any meaningful sense of the term – The amount of money a particular driver pays in gasoline taxes bears little relationship to his or her use of the roads funded by gas taxes. At its inception in 1934, federal gas taxes were dedicated to debt relief. Since then, the norm has been for gas taxes to fund other purposes in addition to roads.
• Even state gas taxes are usually subsidized by general funds – Most states exempt gasoline from the state sales tax, diverting much of the money that would have gone into a state’s general fund to roads. In New Jersey the “user fee” is actually a net subsidy.
• ‘User fees’ don’t begin to include costs imposed by highway construction on non-users of the system, including damage from dependence on oil and problems to public health and the environment.

To make the right choices for America’s transportation future, the nation needs to weigh the full costs and benefits of its investments and then allocates the costs fairly—taking into account the many ways that transportation investments can benefit or harm individuals and businesses. As today’s report makes clear, if America is going to get its financial house in order and make transportation spending more efficient, a first step is to put conventional myths behind us.

As one senior congressional aide told me "Predictable revenues rather than undocumented 'needs' will dictate the level of future transportation budgets." For the foreseeable future, "predictable revenues" for surface transportation will mean gas tax receipts and interest at current rates, which the Congressional Budget Office estimates at $40.1 billion in Fiscal Year 2012 and $40.9 billion in FY 2013 A $40 billion annual budget is not exactly starvation diet.

The Highway Trust Fund was created to protect two parties from each other: highway users and the U.S. general fund. On the one hand, the Trust Fund was designed to protect highway user fees (gas taxes and weight fees) from diversion to general governmental purposes. With notable exceptions, this form of protection worked reasonably well over the years and ensured -- together with occasional increases in the user fee rates -- successful completion of the Interstate highway system. As Jack Basso points out, abuses that had crept into the federal budgeting process were cured through the firewalls and funding guarantees established by the TEA-21 legislation in 1998.

On the other hand, Highway Trust Fund protection was intended to be a two-way street. The Trust Fund also was established to protect the U.S. general fund from claims by highway users and their allies that the nation's transportation system was entitled to additional federal support beyond the revenue generated by user fees. This form of Trust Fund protection has crumbed in the past few years, as Bob Poole illustrates. General fund bailouts of over $30 billion have kept the transportation program afloat as user fee revenue has not kept pace with authorized funding levels -- you can more than double that number if you include the 2009 stimulus bill.

The simple fact is the transportation community can't have it both ways. We can't insist on continued protection from general fund diversion if we're not willing to offer the general fund similar protection from continued bailouts for the beleagured transportation program. The President's deficit reduction commission figured out the right answer: raise the federal gas tax for the first time since 1993 and make its spending on transportation programs mandatory. They recommended this course of action not only as a way to restore the nation's infrastructure and spur economic growth, but also as an explicit means of protecting the general fund from further transportation borrowing.

I know, I know: the politics of raising the gas tax are tough. Over the past three months, however, the U.S. average price of gasoline has risen by 34 cents. It seems that someone has figured out how to raise the cost of a gallon of gas without the sky falling down. Too bad it's not the U.S. Congress. And too bad not one of those 34 pennies will be spent to fix a pothole on an American road.

Last week 21 transportation organizations sent a joint letter to the House leadership urging them to scrap a proposed rule change affecting federal highway and transit funding. My initial reaction was to agree with them, but I’ve changed my mind.

Prior to the TEA-21 reauthorization, the appropriations committees often approved spending from the Trust Fund that was less than the user-tax revenues coming in. That made the overall budget deficit look smaller than it really was, but was manifestly unfair to the highway users who were paying the bills.

To fix this problem, In TEA-21 Congress created a “firewall” around the Trust Fund. A new provision guaranteed that annual highway and transit funding during the years of a reauthorization bill would equal the user-tax revenues coming in to the government each year. It’s this rule that the new House leadership proposes to scrap.

The way the existing rule works is that in a six-year reauthorization bill, Congress adopts an estimate of each year’s highway user tax revenue. Based on that, it legally guarantees those same total annual amounts in highway and transit spending for every year of the reauthorization period.

Thanks to higher oil prices and the recession, those fuel-tax projections were wildly optimistic this decade, to the point where the “guaranteed” spending in the last two years was 40% more than the revenue. And that is why Congress has poured some $34 billion in general tax money into the Trust Fund over the past three years.

General funding of the Trust Fund undercuts the users-pay/users-benefit principle. It therefore opens the door to attempts by the White House and other interested parties to divert Highway Trust Fund money to things like “livability,” “distracted driving,” and even high-speed rail (as many have advocated). If this continues, it will transform the Highway Trust Fund into a general public works fund, removing the link between users-pay and users-benefit.

The rule change proposed by the House leadership would remove the firewall guarantee, thereby removing the excuse for supplementing highway user-tax revenue with general fund monies. In addition, it would explicitly prohibit the Appropriations Committee from funding any new programs (such as “livability” or high speed rail) out of the Trust Fund unless Congress specifically authorizes such spending.

I sympathize with state DOTs that appreciate the certainty of guaranteed federal funding levels for five or six years at a time. But at this juncture, the users-pay/users-benefit principle underlying the Trust Fund is seriously at risk. The proposed rule change may be a blunt instrument, but it’s less bad than continuing a highly flawed and unsustainable status quo.

Dedicated, predictable and guaranteed funding for highways and transit are the bedrock of an effective surface transportation system. Eliminating the predictability and guaranteed nature of the Highway Trust fund will be a disaster and will lead to further dinintegration and inability to effectively plan for orderly repair and improvement.. We don't need to modify the structure, we need to increase the funding amount to permit the nation to compete in world trade .

The questions raised by the House leadership’s efforts to change the rules on the Trust Fund are critical to the Nation’s future. What does that mean?

First, two major commissions the Policy and revenue Study Commission and The National Transportation Financing Commission have documented the massive infrastructure investment deficit facing the nation. Second, the reason we are in this condition is politics trumping what is essential to the nation which is massive infrastructure investment increases... What I mean is the mindless unwillingness to raise a dedicated user fee to begin to meet needs and to have refused to do so since 1993 is the real issue.

As to the user fee model, it as a concept is not outdated. However, the gas tax must be raised to generate the necessary fees and we need to look at long-term collection methods that will work in a world where we will see increases in fuel economy and alternative fuel vehicles.

In 1998 hard fought battles restored integrity to HTF spending and those guarantees are what keep the faith with users.

The proposed rule requires that a transportation bill be out of order if it allows money from the Highway Trust Fund (HTF) to be spent for non-transportation purposes. This is not good enough. A cost-conscious congress would spend HTF monies only for highways, as was originally intended when the HTF was established. Why should federal taxpayers pay for other people's transit?

If the HTF is short of money, the appropriate action is to raise the fuel tax. But, as highway revenue needs vary, would it not be more efficient for road-use charges to be left to the states?

Before the 21st century, most long-distance roads were entirely financed by users, often under conditions much more difficult than those prevailing today.

An economical way to get roads properly maintained would be to concession the work to private providers, who would be paid on the basis of traffic counts, as has been successfully done in Britain for the last twenty years. The payment per vehicle-mile could be determined by competitive bidding, in response to requirements laid down by government.