TRANSPORTATION:

Funding bills offer small measures of reform but leave the big problems on the table

As the Senate Finance Committee moved through a markup of its revenue package for the surface transportation bill earlier this week, Sen. Mike Enzi made a declaration that caused more than a few jaws to drop: He wanted to raise the gas tax.

"I just about fell out of my chair," said Janet Kavinoky, executive director of transportation and infrastructure for the U.S. Chamber of Commerce. "It took a lot of courage for Mike Enzi to get up there and talk about indexing the gas tax. That was the first time I had heard that discussed in such a public forum."

The Wyoming Republican immediately withdrew his amendment, which would have simply indexed the 18.4-cent gas tax to inflation. But the measure -- thought to be too boat-rocking to be politically feasible -- drew praise from committee members as diverse as Sens. Tom Coburn (R-Okla.) and John Kerry (D-Mass.).

Chairman Max Baucus (D-Mont.) even acknowledged that it could open the door for talk of bigger reform down the road, but acknowledged, "This bill isn't that bill."

For some Capitol Hill observers, the fact that Enzi was able to bring up such a substantial amendment showed that there could be political will down the line for a total overhaul of the broken transportation funding system. But for others, it served to highlight the notion that, for all the talk of enacting real change, the transportation reauthorization bills moving through the House and Senate don't upend the traditional order to the extent many think is necessary.

Sponsors of both bills have promoted the idea that they contain meaningful reforms. In introducing the Senate's two-year, $109 billion bill at a November markup, Sen. Barbara Boxer (D-Calif.) said simply, "This bill is a reform bill."

Last month, Rep. John Mica (R-Fla.) said the five-year, $260 billion House bill was "the largest transportation reform bill since the creation of the Interstate Highway System in 1956."

But the actual language, which doesn't add a new user fee and doesn't boost funding levels to early expectations, has left some stakeholders feeling underwhelmed. John Horsley, executive director of the American Association of State Highway and Transportation Officials, said that the bills' funding levels and reliance on the gas tax as the principal financial source are a far cry from the grand talk of expanded revenue when the reauthorization process first began in 2009.

"Two years ago, the expectation was that the program was going to grow from $300 billion [over six years] to $500 billion ... but when push came to shove, no one was ready to raise taxes," Horsley said. Now "both bills want to sustain spending and find ways to do that without raising the fuel tax. That's a solution that will work in the short term, but that is something that's going to have to be revisited."

Given the current fiscal and political situation, Horsley said states would take what they could get. And, he added, each bill does take significant steps to fix current problems. Stakeholders point to a collapsing of some 70 federal programs, a streamlining of the project review process and a new emphasis on performance measurement as signs that legislators were trying to change the status quo.

And the House legislation does work to introduce a new revenue stream through expanded domestic energy production.

But the bills don't address the core issues with the federal gas tax. Its problems have been well established: The 18.4-cent-per-gallon tax has not been raised or pegged to inflation since 1993, leaving the Highway Trust Fund perilously low. According to the Congressional Budget Office, the highway fund could be insolvent as early as the fiscal 2013, which begins in October.

But raising the gas tax, especially in the current fiscal environment, is a political nonstarter and neither chamber nor the White House has shown any willingness to peg the tax to inflation even after a recommendation from the bipartisan Simpson-Bowles Debt Commission. Enzi acknowledged the political difficulties of the move when introducing his amendment Tuesday.

"This isn't something that's easy to do and even drafting this amendment will bring a lot of pressure," he said. "But I'm willing to take all the flak because I think this is the right thing to do."

The political pressure won't stop him -- Enzi told E&E Daily yesterday that he had already filed the amendment again to bring up on the full Senate floor, although he did not say whether he would push for a full debate or a vote.

Although simply indexing the gas tax this year is not expected to bring in the $12 billion to $13 billion the Senate bill needs to supplement the current gas tax over two years, it would be a promising start. Stakeholders say they were encouraged to see any sort of discussion and said it could indicate that legislators are willing to take up the big reforms before the next reauthorization, when the Highway Trust Fund could be completely dry.

Wonky steps

Still, stakeholders and lawmakers are quick to point out that the two bills do contain some substantial reforms, although many happened out of public view. For one, the new bills contain no earmarks, an impressive feat for the usually laden transportation bill, which saw more than 6,000 earmarks in its most recent iteration.

Brendan Buck, a spokesman for House Speaker John Boehner (R-Ohio), fired off at some conservative criticism that said the bill would funnel money to pet projects, noting the earmark ban.

"That is a sea change in Washington that conservatives should be proud of, not cloud with false statements like that," Buck said in a post on the conservative website RedState.com.

The bills also shrink the federal bureaucracy, eliminating or consolidating 70 programs. That follows a similar proposal from the Obama administration to break down barriers between agencies and trust funds. Stakeholders also argue that the bills' increased focus on performance measurement and accountability will mean big strides in ensuring that money is spent on the best projects.

And House and Senate leaders are particularly proud of their work to streamline project delivery, eliminating duplicative environmental reviews and allowing some overlapping. That, they say, can cut in half the amount of time it takes to deliver a large project, which will in turn create more economic investment.

Even though the reforms do not fix the headline problem with the gas tax, Kavinoky said that doesn't mean they are not substantive.

"In some respects, that's what reform is. It's on the wonk level," Kavinoky said. "For any change to take root, you'll have to get into the details."

But more troubling for some stakeholders is the amount of negative passion the reforms have stirred up. Environmental groups have blasted the House bill's tweaks to the review process, saying they will harm the environment and violate the original intent of the National Environmental Policy Act, or NEPA, process.

A House proposal to boost highway funding by stripping the transit account out of the highway trust fund and eliminating its share of the gas tax has been openly opposed by more than 600 groups, including AASHTO and the U.S. Chamber. Horsley said his group had already written to the House to see what could be done about reversing that move, saying that it was necessary to keep transit funding secure and stable.

But perhaps no reform has caused as much disruption as the House proposal to supplement gas tax revenues with domestic drilling in offshore areas and the Alaska National Wildlife Reserve (see related story). Democrats and environmentalists hate the move and even some conservative groups have questioned whether it will bring in enough money in the time that it is needed.

Kavinoky said the amount of uproar over the new measures in the bill indicated that there was real change happening.

"If you say it's a reform bill and some people aren't happy with it, then it's probably a reform bill," she said.

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