Executive Briefings

Not So FAST: What the New Transportation Funding Bill Lacks

The reviews are in, and they're nearly all raves. Just about everyone seems happy about the enactment of a long-term, long-awaited transportation bill.

Not So FAST: What the New Transportation Funding Bill Lacks

Some blurbs about the recent passage of the Fixing America's Surface Transportation (FAST) Act:

"… a priority not only for our industry, but for the long-term prosperity of all who rely on freight movement." – David French, senior vice president for government relations with the National Retail Federation.

“We applaud lawmakers for crafting a bill that makes great strides in reversing many years of neglect.” – Edward Wytkind, president of the Transportation Trades Department, AFL-CIO.

“… a major achievement, and not just for seaports and the freight community. Passenger mobility will also be improved through congestion relief with … provisions that fund and promote more efficient goods movement mobility.” – Kurt Nagle, president and chief executive officer of the American Association of Port Authorities.

“… a monumental break-through in funding for surface transportation.” – Jack Basso, chairman of the Mileage-Based User Fee Alliance.

“It is a tremendous relief to know that … state departments of transportation will have some reasonable long-term certainty regarding the levels of federal investments for surface transportation.” – Paul Tombino, president of the American Association of State Highway and Transportation Officials.

“NECA applauds Congress for ending the cycle of extensions and patches and finally providing the funding and certainty necessary to plan and execute long-term construction projects.” – John M. Grau, chief executive office of the National Electrical Contractors Association.

Others weighing in with positive comments include Building America’s Future, the American Public Works Association, Associated General Contractors of America and the National Governors Association.

Their enthusiasm is understandable. For decades we’ve seen Congress address the issue of the nation’s crumbling transportation infrastructure with one short-term extension after another. Meanwhile, the Highway Trust Fund teetered on the edge of bankruptcy. Support for a more meaningful approach – one that would lock in funding and project selection criteria for years to come – was repeatedly heard from both parties of Congress. Yet no action was forthcoming, thanks to the gridlock and partisan rhetoric that has paralyzed lawmakers in recent years.

So why a bill now? “I think we were working with a lot of strong-willed members of Congress who saw the writing on the wall – that once we get into the new year, it’s going to be election talk full-speed through 2016,” says Elaine Nessle, executive director of the Coalition for America’s Gateways and Trade Corridors (CAGTC).

Of course, the looming prospect of a presidential election year didn’t accelerate efforts in the past – on the contrary, it served to shove the debate aside, time and again. But legislators finally summoned up the gumption to address a problem that was only going to get worse: the lamentable state of the nation’s infrastructure.

CAGTC, too, is a big supporter of the FAST Act. “Congress showed a commitment to manufacturers, retailers and farmers, all of whom rely on the multimodal freight network to get goods to market,” Nessle said in a statement following President Obama’s signature on the bill.

Unlike some previous efforts to overhaul the transportation system, this new law actually has some real money attached to it. Over the five-year period from 2016 to 2020, spending from the Highway Trust Fund would total $280bn. According to the Congressional Budget Office, approximately $208bn would come from revenues and interest, while another $70bn would be in the form of transfers from the general fund. By the end of 2020 there should be an estimated $10bn in the Highway Trust Fund – $8bn in the highway account, and $2bn in the transit account.

A closer look at funding sources, however, prompts one to take a less-enthusiastic view of the FAST Act. Consider some of the ways in which lawmakers intend to pay for critical projects: revoking passports for tax “scofflaws,” allowing the Internal Revenue Service to hire private tax collectors, reducing the Federal Reserve’s dividend payments, drawing on transfers from the Fed’s surplus account, and selling 66 million barrels of crude oil from the Strategic Petroleum Reserve.

One can’t help thinking of the accounting hijinks contained in earlier versions of transportation funding measures: allowing corporations to reduce near-term pension funding contributions, and taking money that had been set aside for repairing leaks in underground fuel-storage tanks.

The reason for these manipulations is simple. Congress still refuses to raise the federal gas tax, which has stood at 18.4 cents per gallon since 1993, and has historically provided the bulk of the money within the Highway Trust Fund. Lawmakers’ knee-jerk opposition to any form of tax increase, no matter how necessary, has led directly to the decline in U.S. roads, highways, bridges, waterways and intermodal access.

For all the excitement over passage of the FAST Act, that particular reality hasn’t changed. But some are willing to point out the deficiency in the bill. “We’re playing accounting games,” said Robert Voltmann, president and chief executive officer of the Transportation Intermediaries Association. Speaking at the recent Cargo Logistics America conference in San Diego, Calif., he noted the practice of borrowing from an airport tax 10 years in the future, in order to fund transportation spending. “Which CEO would allow you to borrow a non-contingent revenue stream 10 years in the future for spending today?” he asked. “Nobody would.”

“Everybody wants infrastructure,” Voltmann said. “Nobody wants to pay for it. “The fuel tax has to be raised.”

In fact, you’ll find more criticism of the FAST Act among industry representatives than is evident at first blush. Nessle believes the law doesn’t adequately fund crucial intermodal projects. Robert Guenther, senior vice president for public policy with United Fresh Produce Association, is unhappy that it doesn’t propose national hiring standards for motor carriers, or give states the option to raise weight limits on interstate routes within their borders. Others say the funds authorized by the bill, large as they might seem, simply aren’t enough. The Act is “cause for optimism,” said Marcia Hale, president of Building America’s Future, but “we are nevertheless concerned that the funding levels … will not sufficiently dig us out of the hole we’ve created by neglecting our infrastructure and transportation.”

Unanimous raves? Hardly. When it comes to the contentious issue of ensuring the long-term viability of the nation’s infrastructure, there’s a long road ahead.

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Some blurbs about the recent passage of the Fixing America's Surface Transportation (FAST) Act:

"… a priority not only for our industry, but for the long-term prosperity of all who rely on freight movement." – David French, senior vice president for government relations with the National Retail Federation.

“We applaud lawmakers for crafting a bill that makes great strides in reversing many years of neglect.” – Edward Wytkind, president of the Transportation Trades Department, AFL-CIO.

“… a major achievement, and not just for seaports and the freight community. Passenger mobility will also be improved through congestion relief with … provisions that fund and promote more efficient goods movement mobility.” – Kurt Nagle, president and chief executive officer of the American Association of Port Authorities.

“… a monumental break-through in funding for surface transportation.” – Jack Basso, chairman of the Mileage-Based User Fee Alliance.

“It is a tremendous relief to know that … state departments of transportation will have some reasonable long-term certainty regarding the levels of federal investments for surface transportation.” – Paul Tombino, president of the American Association of State Highway and Transportation Officials.

“NECA applauds Congress for ending the cycle of extensions and patches and finally providing the funding and certainty necessary to plan and execute long-term construction projects.” – John M. Grau, chief executive office of the National Electrical Contractors Association.

Others weighing in with positive comments include Building America’s Future, the American Public Works Association, Associated General Contractors of America and the National Governors Association.

Their enthusiasm is understandable. For decades we’ve seen Congress address the issue of the nation’s crumbling transportation infrastructure with one short-term extension after another. Meanwhile, the Highway Trust Fund teetered on the edge of bankruptcy. Support for a more meaningful approach – one that would lock in funding and project selection criteria for years to come – was repeatedly heard from both parties of Congress. Yet no action was forthcoming, thanks to the gridlock and partisan rhetoric that has paralyzed lawmakers in recent years.

So why a bill now? “I think we were working with a lot of strong-willed members of Congress who saw the writing on the wall – that once we get into the new year, it’s going to be election talk full-speed through 2016,” says Elaine Nessle, executive director of the Coalition for America’s Gateways and Trade Corridors (CAGTC).

Of course, the looming prospect of a presidential election year didn’t accelerate efforts in the past – on the contrary, it served to shove the debate aside, time and again. But legislators finally summoned up the gumption to address a problem that was only going to get worse: the lamentable state of the nation’s infrastructure.

CAGTC, too, is a big supporter of the FAST Act. “Congress showed a commitment to manufacturers, retailers and farmers, all of whom rely on the multimodal freight network to get goods to market,” Nessle said in a statement following President Obama’s signature on the bill.

Unlike some previous efforts to overhaul the transportation system, this new law actually has some real money attached to it. Over the five-year period from 2016 to 2020, spending from the Highway Trust Fund would total $280bn. According to the Congressional Budget Office, approximately $208bn would come from revenues and interest, while another $70bn would be in the form of transfers from the general fund. By the end of 2020 there should be an estimated $10bn in the Highway Trust Fund – $8bn in the highway account, and $2bn in the transit account.

A closer look at funding sources, however, prompts one to take a less-enthusiastic view of the FAST Act. Consider some of the ways in which lawmakers intend to pay for critical projects: revoking passports for tax “scofflaws,” allowing the Internal Revenue Service to hire private tax collectors, reducing the Federal Reserve’s dividend payments, drawing on transfers from the Fed’s surplus account, and selling 66 million barrels of crude oil from the Strategic Petroleum Reserve.

One can’t help thinking of the accounting hijinks contained in earlier versions of transportation funding measures: allowing corporations to reduce near-term pension funding contributions, and taking money that had been set aside for repairing leaks in underground fuel-storage tanks.

The reason for these manipulations is simple. Congress still refuses to raise the federal gas tax, which has stood at 18.4 cents per gallon since 1993, and has historically provided the bulk of the money within the Highway Trust Fund. Lawmakers’ knee-jerk opposition to any form of tax increase, no matter how necessary, has led directly to the decline in U.S. roads, highways, bridges, waterways and intermodal access.

For all the excitement over passage of the FAST Act, that particular reality hasn’t changed. But some are willing to point out the deficiency in the bill. “We’re playing accounting games,” said Robert Voltmann, president and chief executive officer of the Transportation Intermediaries Association. Speaking at the recent Cargo Logistics America conference in San Diego, Calif., he noted the practice of borrowing from an airport tax 10 years in the future, in order to fund transportation spending. “Which CEO would allow you to borrow a non-contingent revenue stream 10 years in the future for spending today?” he asked. “Nobody would.”

“Everybody wants infrastructure,” Voltmann said. “Nobody wants to pay for it. “The fuel tax has to be raised.”

In fact, you’ll find more criticism of the FAST Act among industry representatives than is evident at first blush. Nessle believes the law doesn’t adequately fund crucial intermodal projects. Robert Guenther, senior vice president for public policy with United Fresh Produce Association, is unhappy that it doesn’t propose national hiring standards for motor carriers, or give states the option to raise weight limits on interstate routes within their borders. Others say the funds authorized by the bill, large as they might seem, simply aren’t enough. The Act is “cause for optimism,” said Marcia Hale, president of Building America’s Future, but “we are nevertheless concerned that the funding levels … will not sufficiently dig us out of the hole we’ve created by neglecting our infrastructure and transportation.”

Unanimous raves? Hardly. When it comes to the contentious issue of ensuring the long-term viability of the nation’s infrastructure, there’s a long road ahead.

Comment on This Article

Not So FAST: What the New Transportation Funding Bill Lacks