Fiscal austerity is the theme of House Transportation and Infrastructure Committee Chairman John Mica’s long-awaited proposal for reauthorizing federal surface transportation funding, which he released Thursday. Unlike the 2005 reauthorization and President Obama’s proposed reauthorization, Mica’s proposal, which is supported by other Republican subcommittee chairs but has been blasted by Democrats, calls for spending no more than revenues.
That means a bill that is less than half as large as Obama’s proposal, and about 30 percent smaller (in real dollars) than the 2005 bill. Gas tax revenues and other federal highway user fees (mainly a tax on truck tires) total about $35 billion a year, which over six years with inflation is expected to produce about $230 billion. This is well short of the $480 billion that Obama wanted to spend and also a painful drop from the $50 billion a year spent by the 2005 law. Mica blamed the shortfall on new House rules that says Congress can’t spend more than revenues.
To save money, Mica proposes to streamline the transportation funding process. It can take 15 years or more to plan and build a new highway or rail transit line, whereas in emergencies (such as after the Northridge Earthquake in California or the I-35W bridge collapse in Minneapolis) the work takes only about a year. Streamlining can make transportation agencies more responsive to need. But whether it can effectively double the amount of money available, as Mica implied, is questionable.
Mica also proposes to “leverage” federal spending by putting some of it in the form of loans. The 2005 reauthorization law spent $122 million a year on “TIFIA” (Transportation Infrastructure Finance and Innovation Act) loans; Mica proposes to up this to $1 billion a year. At the same time, Mica rejected the president’s proposal to create an infrastructure bank. “Rather than create more Washington bureaucracy,” Mica proposes to “empower the states” by encouraging them to create state infrastructure banks instead.
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Another initiative is to consolidate (or eliminate) about 70 of the 100 different transportation funds and programs in the 2005 law. Such a large number of programs puts lots of constraints on state transportation agencies. Many interest groups are likely to oppose consolidation as they want to be able to report to their members that they are tracking spending. For example, if Congress consolidated a program for senior transit riders with a program for disabled transit riders, advocacy groups for seniors and disabled people would not be able to report to their members how much each group was getting.
Crucially, Mica’s proposal does not say how much of the $35 billion a year will go to the two biggest programs: highways and transit. Mica does say that he wants to rely on formula funds rather than competitive grants (a principle supported by the Antiplanner). Republicans have previously proposed to eliminate large competitive grant programs such as New Starts.
With respect to transit, Mica says his plan “removes current barriers that prevent the private sector from offering public transportation services.” It “provides incentives” for private operators and requires that cities give such private operators “reasonable access to federally-funded transit facilities.”
For intercity rail, Mica wants to insure that high-speed rail projects “are truly high speed in their definition and design,” which would let out most projects outside of California and Florida. He also proposes to reduce Amtrak’s operating subsidy by 25 percent. Amtrak and high-speed rail have never been funded out of gas taxes, and it is not likely that this bill will change that.
Many of these ideas sound good, but Congress has a long way to go before passing this legislation. While Obama’s draft bill was nearly 2,000 pages long, Mica’s proposal is just a 20-page outline. While Mica is probably the key player in reauthorization, it seems entirely possible that Congress will still be debating the bill in 2012.
Did he actually say “blame”? If so, Mica is well qualified to be President as everything is always somebody else’s fault.
The revenues are going to be closer to $210 billion ($35B * 6 years). One can believe fantasies like they do in Washington, or one can look at real data.
Year – Revenue – Avg. Daily Petroleum Supply
2007 – $39,361 – 20,940,560
2008 – $36,385 – 20,056,100
2009 – $34,961 – 18,879,420
2010 – $34,992 – 19,270,420
2011 – ??????? – 19,246,350 through June 24
Where is 1.5-2 million barrels per day of supply going to magically show up from to raise the revenue numbers back to the 2007 level? China is consuming all that oil that we are no longer using.
Mica’s proposed funding levels are equal to spending in 2000-2005, while spending from 2005-2010 totaled $300 billion. Spending in 2010 was $61 billion and is projected for $62 billion this year, and 2011-2016 spending was projected at $460 billion. Given what has happened to the price of cement, oil, aggregate, asphalt, steel, copper, aluminum, wood, construction labor, and professional services over the past 10 years, the inflation rate for heavy construction is far higher than the CPI (mostly due to the effects of crude oil, iron ore, and scrap prices), so the real output of transportation infrastructure from the spending will be closer to half of what was accomplished in 2000-2005.
Of course we “can’t” raise gas taxes. Its far too important to our politicians and to Grover Norquist to send as much oil money to overseas tinpot dictatorships as posisble rather than begin to control our national consumption by paying ourselves a larger chunk of what we spend on oil products while simultaneously curbing import demand. Keep that in mind while you are moaning about $3.50+ per gallon prices.
One last thought – if our personal transport habits were closer to the Europeans and Japanese, our current demand for oil products would be closer to 10 million barrels per day than to 19 million. US Supply is 5.6 million barrels and ethanol is 900,000 and natural gas liquids is 2.5 million. Add in refining gain, and its likely our only imports would be from Canada and Mexico. Keep that in mind as our men die and treasure is consumed overseas in pointless middle eastern land wars.
I don’t see anything wrong with this proposal. A smaller role for the federal government in transportation is unquestionably a good thing, especially if it means that people like Mica will have less authority to decide how money is spent. It also brings spending in line with revenues, and so stops adding to our ever-growing debt.
RE: Formula Funds v. Competitive Grants.
Sorry to beat a dead horse but I think exceptions need to be made for specialized services for certain transit dependent cohorts.
Bennett–
You think that transit services can’t be assigned by formulas having to do with how many transit dependent people there are, instead of being based on competitive grants?
John:
You think that transit services can’t be assigned by formulas having to do with how many transit dependent people there are
Why not base it on how many transit users there are, instead of trying to figure out who is transit “dependent”?
Of course that would mean the vast majority of funding would go to about 7 systems (NYC, Boston, Philly, DC, Chicago, SF, LA).
As long as transit gets most of these cuts, I’m all for it. The less rail gets built, the less opportunity for long-term financial damage in the future.
Though Metrosucks, overall rail has lower costs than road transport in high traffic areas.
You don’t want to save money, you just want big oil to have more power over peoples lives.
And I suppose a “high traffic area” is simply wherever you want rail to be built, right? Though I don’t believe the claim about lower costs, considering that roads subsidize rail, and not the other way around.
WTF? Railroads pay property taxes that fund roads.