TRANSPORTATION:

Road and rail spending proposals stall as lawmakers punt on revenue fix

On Capitol Hill, House and Senate leaders agree on one thing when it comes to overhauling the national transportation strategy: They have no plans to raise taxes to pay for the reform.

Off the Hill, however, most transportation experts agree you cannot address the nation's infrastructure without a new revenue source.

"There has to be a paradigm shift where suddenly nothing is free anymore," said Jeffrey Shane, who served as Transportation Department undersecretary in the George W. Bush administration. "It's like cable TV, it's like cell phones, it's like EZPass. People are used to getting bills for some aspects of our infrastructure but for some reason not for roads."

But with very few exceptions, politicians have been loath to even suggest raising taxes or imposing other user fees during the current economic recession. And many in the transportation community are warning that any reform efforts -- including attempts to cut greenhouse gas emissions -- will fail if Washington does not find the political courage to tell Americans that they will have to foot the bill.

Shane, a fellow at the University of Virginia's Miller Center of Public Affairs, was one of roughly 80 transportation attorneys, engineers and other stakeholders on hand at UVA last week for a summit meant to form a consensus on how to pay for the nation's transportation infrastructure and how to organize the other sweeping reforms many in the field want in the next highway and transit bill.

In a sign of how much work remains to be done on the authorization's next incarnation, the UVA working group does not plan to release its recommendations to Congress until early next year, at least three months after the current authorization is set to expire.

A host of discrepancies were on display during the invitation-only event, but throughout the three days there was clear agreement that lawmakers must tackle the funding issue regardless of what other changes they pursue.

"I have been extremely disappointed on the financing side," said Jack Schenendorf, an attorney who served as vice chairman of a congressionally created blue ribbon transportation panel last year. "I don't think we're making any real progress on the Hill."

Schenendorf's panel, the National Surface Transportation Policy and Revenue Study Commission, made headlines last year for proposing a 40-cent bump to the federal gasoline tax, the increased use of tolls and other user fees. A second congressionally created panel, the National Surface Infrastructure Financing Commission, this year similarly called for an increase to federal fuel taxes followed by a transition to a system where Americans are charged for every mile they drive (Greenwire, Feb. 26).

The Highway Trust Fund, the federal account that pays for the bulk of the nation's transportation work, is currently funded primarily by federal taxes on gasoline and diesel. The fund faced a looming shortfall for most of last year as revenues shriveled with Americans driving more fuel-efficient cars and fewer total miles.

The account would have run empty this month if it were not for an 11th-hour transfer of $7 billion by Congress this summer to keep it solvent, the second multibillion-dollar infusion for the cash-strapped fund in the past 12 months (E&E Daily, July 31).

But the White House and Congress have routinely balked at such proposals.

Earlier this year, Transportation Secretary Ray LaHood received a strong public rebuke from the White House after suggesting user fees might play a role in solving the funding crises and since has routinely stressed that raising the gas tax during the current economic climate is not an option.

Even House Transportation and Infrastructure Chairman James Oberstar (D-Minn.), who is fighting to pass his six-year, $500 billion authorization before the end of this year, has refused to stump for a gas tax hike, instead punting the financing portions of his bill to the Ways and Means Committee.

During the summer of 2008, when gas prices soared to a record high, Sen. John McCain (R-Ariz.) and then-Sen. Hillary Rodham Clinton (D-N.Y.) both called for a gas tax "holiday" as part of their presidential campaigns. While the effort failed to gain traction, it was seen by many as a sign of how difficult it is to separate transportation investment needs from political gamesmanship in Washington.

'We get this knee-jerk reaction'

Schenendorf, who served as a Republican T&I Committee staffer for more than two decades, said that political promises from both parties make even a conversation about a gas tax hike all but impossible.

"My party's answer to taxes is no to every single one of them," he said. "Despite whatever great transportation program we come out with, we get this knee-jerk reaction that we're going to say 'no' to any new taxes."

As for Obama, "We have a president from the other party that in the election was painted into a corner and forced to say that he wasn't going to raise taxes by one dollar or one dime on anyone making less than $250,000 a year," Schenendorf said. "Well, how do you raise the motor fuel tax when you have a political system ... that has gravitated into that debate?"

The unwillingness to increase the federal gas tax is not exclusive to the current administration or economic climate.

Norm Mineta, who served as Transportation secretary under President George W. Bush, recalled his own attempts to insert a small gas tax increase into the current authorization, which was signed into law in 2005.

He said his plan called for a 2-cent increase in the first, third and fifth year of the bill, and that he received a green light from a number of Bush's closest advisers, including Karl Rove and Andy Card -- only to have the president strike the tax hikes from the bill.

"I went in and briefed the president," Mineta said at the UVA summit. "We went in and went through the whole 17 PowerPoint slides and he said, 'Norm,' as he took out his Sharpie pen, 'those 2-cent increases, I don't want any increase in taxes, take them out."

Mineta said policymakers face the same dilemma now that they did during the last reauthorization. "The basic need that we all have is the funding for what we're after," he said. "And that funding issue still hasn't be solved."

Still, there are a few in the transportation community that believe there is a distinction between what is politically unpopular and what is publicly unpopular. "I think the view that many people have that the citizens of the United States simply won't let this happen is not right," said Robert Atkinson, who chaired the second of the two blue ribbon panels created by the current bill.

"I think if you ask people, 'Will you pay more money?' the answer would be no," Atkinson said. "But I think, frankly, if Congress raised the gas tax 10 cents a gallon, there will be a deafening silence because no one will know or care."

But, Atkinson said, a gas tax increase alone won't solve the problem. His panel called for a temporary 10-cent increase to the federal gas tax, along with a 15-cent bump for diesel. The report estimates that the increases would generate $20 billion annually, which would close less than half of the federal funding gap but would enable current spending levels to continue.

"There is a debate in the field, should you do gas tax [increases] or should you do tolling?," he said. "The answer is: Yes, you should. To divide it into one or the other really misses the scope of the problem."

Temporary extension looms

Environment and Public Works Chairwoman Barbara Boxer (D-Calif.), whose committee is one of three in the Senate with jurisdiction over transportation legislation, said last week that she hopes Congress will pass an 18-month extension before the end of the month, in part because of the looming revenue question.

"In order to do a major rewrite of a six-year bill or a five-year bill, it'd take so much time and it'd take increasing revenues," Boxer said. "And people don't really have the revenue package together."

But with less than a dozen work days remaining before Sept. 30, when the current authorization expires, it appears all but certain that the House and Senate will find common ground to provide a shorter extension to prevent roadwork across the country from coming to a grinding halt.

"We're going to have an extension," said Steve Heminger, the executive director of San Francisco's Bay Area Metro Transportation Commission. "We don't know how long, we all hope it's not going to be two weeks at a time. What's being talked up is a year, year and half, who knows. I'm hopeful that we can somehow take advantage of that time."

Rep. Oberstar, who had long vowed to block any temporary extension, has softened his opposition slightly, but has remained steadfast in his goal of passing his bill this year. In an op-ed published in Politico yesterday, Oberstar wrote that, "Delay for the sake of delay is unacceptable."