The Top Transportation Issues to Watch in 2013

After detailing the 12 biggest transportation stories of 2012, it is time to detail the transportation issues to watch in 2013.

1) New Ports/Waterways Bill: Ports, inland waterways, and the freight they move are often overlooked in transportation. Currently, the federal government collects a harbor maintenance tax for maintenance dredgings. However, the Army Corps maintains the trust fund and decides to whom and how to distribute that funding. Tax money from ports, such as Los Angeles, that have naturally deep harbors support ports such as Charleston that do not. And other port users such as ships do not pay anything to maintain the harbor. The Army Corps typically spends less than half of that funding on dredging and keeps the remainder in an account. Inland Waterways have a separate trust fund supported by a $0.20 per gallon tax on barge fuels. But $0.20 raises very little funding; it is not a sustainable, robust funding source for waterways. Meanwhile, East Coast ports are seeking earmarks to permanently deepen their harbors ahead of the Panama Canal. However, with the earmark ban in the house, it is not clear how they will obtain any funding. Senators Graham and Lindsey introduced a bill last October and will likely introduce a similar version in the 113th Congress. But whether there is sufficient motivation for a bill is unclear.

2) Sustainable Funding Source for Transportation: While Congress recently approved a new 2-year surface transportation bill, 2 years passes very quickly. As a result, the transportation committees in Congress will be hard at work on a new bill. The top issue to address is funding. For the past 50 years, Congress has been able to rely on the gas tax as the major source of transportation funding. As the federal government has funded ever more transportation projects, Congress has started tapping the general fund. Due to inflation and more fuel-efficient vehicles the gas tax has lost more than 50% of its buying power since it was last increased in 1994. For MAP-21 rather than increasing taxes or cutting bloated unnecessary programs, Congress created an accounting gimmick that uses 10 years of transportation revenue to create a 2-year program. While the gas tax will continue to play a role in the future, Congress will need a new funding source. More general funding is possible; but this further exacerbates the debt and has no users-pay users-benefit link. A national sales tax is another option but it also suffers from the users-pay problem. TIFIA and bonding are excellent ways to leverage funding but require a base amount of money and are not appropriate for every project. Value Capture works well for some but not all transit projects. A combination of mileage-based-user fees and tolling are most experts top choice. But an MBUF system is several years from a national rollout. And both MBUF and tolling are opposed by short-sighted politicians. States are likely to take a larger role in funding transportation because the funding challenge for the next bill will be major.

3) Ray LaHood: President Obama asked Secretary LaHood to stay on temporarily past the election to provide stability in his cabinet. It is not clear if LaHood will stay on for another term. LaHood announced he was leaving after one term but then walked the decision back last fall. Transportation types are hoping Mr. LaHood goes. LaHood, with no professional transportation knowledge of any kind has not been a forceful advocate for transportation and many industry types hold LaHood and Obama responsible for not enacting a new 6-year transportation bill in 2009. A new transportation secretary could explain the importance of transportation to both the President and the American people. He or she could bring analytics back to the DOT and make substantial changes to policy. The three most likely candidates are Ed Rendell, Antonio Villaraigosa, and Steve LaTourette. Of those three, Rendell is the strongest choice. He has been a mayor, and a governor and has worked in policy. He helped set up Building America’s Future to address infrastructure challenges. And as a moderate Democrat from a swing state he could be politically useful to the administration. Villaraigosa has shown a passion for infrastructure. And the President would like to add a Hispanic to his cabinet. But Villaraigosa has no statewide experience. He is not as much a national figure as Rendell. And he is more of a cheerleader for transportation than an analyst. The next Secretary of Transportation should be part cheerleader, but he also needs to understand transportation and be able to balance facts objectively. LaTourette is the weakest choice of the 3. LaTourette abandoned transportation in the House to serve on Appropriations. He announced in early 2012 he wanted to reclaim his seniority on the Transportation and Infrastructure committee and run for Chair. And, the House steering committee’s decision to give the gavel to somebody actually on the T & I committee played a promiment part in LaTourette’s decision to retire from the House. LaTourette may not have the best personality for a cabinet position as he has a bit of a temper.

4) Changes to TSA: The organization set up by Republicans in the wake of 9/11 has proven to be an enormous mess. And fixing the problem is a challenge. Last year Congress required TSA Administrator Pistole to start approving contracted screening at interested airports. Pistole stopped TSA contracting in 2011 because he concluded that there were no cost-savings from contracting. (The facts said otherwise.) But even with the program restarted only 16 airports have opted out in the 11 years the program has been in existence. The TSA has failed to improve security because it concentrates on screening passengers at the front of the airport but leaves the back door wide open. There is no protection from intruders entering the secure side of an airport through a fence or waterway as happened earlier this year at Kennedy International Airport. In Newark a knife-wielding intruder got onto the tarmac by scaling an eight-foot fence. In Dallas a group bypassed all security and posted a video of themselves on YouTube. These problems could be remedied if airports and not TSA oversaw screening on their property. Currently, TSA has dual purposes—conducting the screening and overseeing the screening process. Having airports run security screening and allowing TSA to focus on overseeing screening would end this conflict. But this would require interim legislation. With John Mica in charge of the oversight committee and TSA disapproval from both Democrats and Republicans, Congress could pass a bill to make small but significant changes to TSA. But real change may have to wait until the next aviation bill and a new president.

5) Bill Shuster in charge of the House Transportation and Infrastructure Committee: Shuster formerly headed the Railroads, Pipelines, and Hazardous Materials Subcommittee but with former chair John Mica term-limited, and now on the House Oversight and Government Reform committee, Shuster takes the Chairman’s gavel. Nobody knows how Shuster will differ from Mica. But most transpo types believe he will be less partisan and have better working relations with the Senate. Shuster’s priorities include a new water resources bill, a railroad reauthorization and groundwork for the 2014 surface transportation bill. Shuster believes that high-speed rail can work in the northeast but not the rest of the country and wants to privatize Amtrak. Shuster is as much if not more of a transportation wonk than Mica and has an ability to explain complex transportation terms in simple language. While Shuster’s dad, Bud, ran the T & I committee with an iron fist from 1995-2001, and earmarked numerous pointless projects for his Pennsylvania district, Shuster Jr. will be more likely to seek consensus.

6) New Amtrak Bill: With Amtrak up for reauthorization in 2013, this could be a critical year for the government corporation. Amtrak has never made a profit; only its higher speed Acela service makes money. All other lines require large annual subsidies from the government. Republicans want to end subsidies and privatize the successful Acela service. There is some precedent as other countries such as Japan have privatized some of their high-speed rail lines. Much has changed in the 163 years since the B & O railroad reached the Ohio River. Passenger service was initially profitable for railroads but with new more cost-effective forms of transport such as cars, buses and planes and faced with bankruptcy, Class I railroads offloaded their passenger service to the federal government in 1970. With the exception of the northeast corridor, passenger rail service has continued to lose money over the last 43 years. With planes offering the speed advantage, buses offering the price advantage, and cars offering the customization advantage, passenger-rail has no advantage over the other transport modes. However, politics are powerful and with jobs at stake Amtrak will most likely continue to receive enough support to survive although not enough to create a robust system.

7) HSR in California: High-speed-rail in California moves onward. CA HSR is similar to the latest big movie flop. It is completely unbelievable but the producer (CA governor Jerry Brown) and the director (Chairperson Dan Richard) want a legacy. That the legacy will be the state drowning in debt is less important than that they will be remembered. Only in this story, federal taxpayers, not the studio head, will be on the hook. And unlike the studio head who could kill this mess, taxpayers seem powerless to derail this project. Republicans from California tried. But since Democrats now have a supermajority in Congress, even with many Democrats trying to kill the project it may live on. What are the facts? To reduce costs the latest version of the CA HSR business plan proposes for commuter and high-speed-rail trains to share tracks around Los Angeles and San Francisco. While this cuts $30 million from the costs, it makes the system less than high-speed. Further, it makes impossible one of the explicit reasons for building the system—to provide a 2 hour and 30 minute trip between Los Angeles and San Francisco. The slower speed will make it more challenging for the service to attract passengers. Most other high-speed-rail lines have attracted primarily airline passengers. Drivers are unlikely to use rail because they value the flexibility to stop for food or stretch their legs or need the car at the other end of their destination. The funding plan relies on money from a cap and trade pollution system intended for environmental purposes and private investors who want to lose money. The circuitous route through the mountains further increases the costs. As a result the GAO estimates the project needs $42 billion from U.S. taxpayers, most of who live far from California. It was time to pull the plug two years ago and concentrate on HSR in the Northeast Corridor. But the politics says this project limps on.

8) Space Travel: With the end of NASA’s space shuttle, privatized space travel is likely to take off over the next five years. While NASA can pay the Russians to get people and cargo to the international space station, Russia-U.S. relations may not make that realistic. Four private companies are competing to provide a vehicle for the Commercial Crew Integrated Capability program. SpaceX, the farthest along, has already carried people and cargo to the space station. Blue Origin, Boeing, and Sierra Nevada are also in the running. NASA has unfunded agreements to collaborate on tourism efforts with United Launch Alliance, Alliant Technsystems/ATK, and Excalibur Almaz. Another company, Golden Spike, plans to charge $1.5 billion for a round-trip expedition to the moon. NASA would like additional federal funding to speed-up development of its craft. But in a time of high budget deficits, it is hard to argue space travel is needed. What is more likely is that a private company such as SpaceX develops a system for tourists and NASA forges a partnership with the company to use its vehicles for its missions as well.