While sequestration, per se, will have only modest direct effects on federal transportation spending (contract authority, deriving from both the highway and aviation trust funds, is excluded from sequestration), the long-term trend is for stagnant, if not declining, federal support for state and local transportation investment. As the National Transportation Policy Project (NTPP) of the Bipartisan Policy Center (BPC) noted in its June 2011 report and again in its more recent "Consequences Report" (September 2012), the nation's on-going fiscal challenges and the likelihood of severely constrained investment resources make fundamental programmatic reform even more urgent.

Even though the recently enacted MAP-21 would maintain -- or even slightly increase -- current levels of federal surface transportation funding over the now-remaining two years of this legislation, to do so will require an additional transfer of almost $20 billion from the general fund to the Highway Trust Fund (HTF), on top of almost $35 billion of such transfers over the last few years, and would still leave HTF essentially bankrupt at September 30, 2014, when MAP-21 expires. Clearly, these circumstances are not sustainable.

For purposes of both its June 2011 report and the Consequences Report, NTPP assumed that federal surface transportation funding would be limited to the revenues generated by federal motor fuels taxes at current rates. This is the level incorporated into the House-passed "Ryan Budget" and would require an approximately 35 percent reduction in federal surface transportation funding. In its June 2011 report NTPP stated, "In this context it is arguably more important than ever to ensure that all federal resources directed to transportation -- albeit never enough to keep pace with the nation's vast and growing transportation needs -- are invested wisely."

To that end, NTPP proposed a new and more performance-driven programmatic framework for federal transportation funding and urged that federal funds be used in a way to better leverage non-federal resources. Specifically, federal surface transportation funding should be organized around core national interests, such as asset management, metropolitan accessibility, national and rural connectivity, and improvements to freight and safety. Under this proposal, all existing federal programs would be consolidated into ten core areas across modal lines, consistent with clearly articulated national goals. Programs lacking a specific national purpose should be eliminated, and the remaining core programs should be perfomance-based, including bonuses, based on meeting specific measurable goals.

Such a consolidated and performance-based program framework would promote more targeted and prioritized investments and greater accountability. MAP-21 took some important initial steps, in consolidating programs and in moving toward a goal- and performance-directed federal program, but it will be necessary to build on this foundation and to implement much more far-reaching reforms, if we are to increase the likelihood that available federal funds will be invested in those programs and projects that promise the greatest economic benefits.

The other key element of the necessary programmatic reform is to design federal programs that will encourage and reward greater state, local, and private roles, in funding transportation improvements. Here, too, MAP-21, in its expansion of the TIFIA credit and credit-enhancement program, took an important step in this direction, but far more must be done, including eliminating federal barriers to state and local funding innovations (such as the federal ban on tolling Interstate Highways), so that these levels of government are better able to design and implement their own sustainale revenue and investment streams.

Whatever the impact of sequestration on federal transportation funding, the reality is that this area, like all parts of the federal budget, will be under enormous pressure for many years, despite the obvious need for, and the essential benefits of, investment in the nation's transportation infrastructure. Of course, it is not realistic to believe that we can do more with less, but we have to do the most we can with whatever resources are available. That will require even greater and more fundamental reforms of federal surface transportation programs and of the institutional structures through which we make investment choices and decsions.