Reason Foundation, Bipartisan Policy Center, Building America’s Future and Others Urge Congress to Give State and Local Governments More Transportation Flexibility

Fix the highway bill so state and local governments have flexibility to use pricing, private capital and other needed funding sources

Today, Reason Foundation’s Robert Poole joined a diverse coalition urging Congress to fix the highway bill’s problems and highlighting the need to free state and local governmets to use pricing, tolling, private sector capital and other available funding options to solve their transportation problems. The Bipartisan Policy Center, Building America’s Future, former Secretary of Transportation Mary Peters, and Department of Transportation officials from several states were among those signing the letter that says:

As the Senate-House conference on the reauthorization of the surface transportation authorization bill begins, we hope that there will be significant attention directed towards enhancing the capacity of states and localities to attract new and expanded sources of investment capital. Unfortunately, while federal dollars for infrastructure are declining, the demand to fund projects to maintain, restore, and improve our current system is growing. We urge you to eliminate federal barriers to state and metropolitan flexibility and innovation, in raising investment capital and in generating revenues.

In the current era of severely constrained investment resources for surface transportation at all levels of government, states and metropolitan regions should be afforded greater flexibility to fund and finance their transportation facilities and networks. Congress does not seem inclined to raise funding for surface transportation through increasing federal motor fuels taxes or by replacing those taxes with other dedicated funding. In the absence of new funding sources, at a minimum, Congress should provide states and metropolitan regions with the tools to develop and expand their potential sources of revenue and investment capital. To that end, federal barriers to state innovation and flexibility should be substantially reduced, and no new ones should be erected.

While the Senate-passed surface transportation authorization bill, S. 1813, Moving Ahead for Progress in the 21st Century (MAP-21), contained many important steps toward the establishment of a performance-based transportation program, it did not reduce these barriers. A bipartisan amendment to extend the Federal Highway Administration’s tolling and highway user pilot programs and to expand the number of eligible participants was offered by Senators Carper of Delaware, Kirk of Illinois, and Warner of Virginia, but was ultimately withdrawn. This means that several states that wish to fund the reconstruction f aging and deteriorating Interstate highways with tolls under existing pilot programs will be unable to do so. Additionally, it will limit the ability of states to utilize some of the innovative tolling programs that would assist in managing traffic congestion, such as establishing high occupancy-tolled (HOT) and variably priced or managed lanes.

Fifteen states are currently moving major projects forward thanks to innovations allowed under the Value-Pricing Pilot Program, Urban Partnership Agreements, and Congestion Reduction Demonstration Programs, and we would not want to see the pace of these innovations falter. More fundamentally, in failing to include such provisions in MAP- 21, the Senate has denied states and metropolitan regions the ability to create innovative and flexible programs to finance their transportation needs, as federal funding stagnates or declines.

While we recognize that the scope of this conference may limit Congressional authority to expand the flexibility of states and metropolitan regions to introduce tolling and user-charge regimes beyond current law, we urge the conferees to seek all available opportunities to maximize such state and local discretion.

The ability to establish these new user-related revenue streams would greatly enhance the capacity of states and metropolitan regions to leverage additional private capital for investment in the restoration, rehabilitation, and expansion of major transportation facilities through such credit and credit-enhancement programs as TIFIA and through public-private partnerships (PPPs). MAP-21 would greatly expand TIFIA, and a comparable expansion of TIFIA was contained in the bill adopted by the House Transportation and Infrastructure Committee (T & I) in this session of Congress. Such a provision would have much greater impact in the context of expanded opportunities for tolling and user-based fees at the state and local levels.

We are also are concerned that certain provisions incorporated into MAP-21 could discourage states from partnering with the private sector and from developing innovative tools to attract private capital to transportation investment, for fear of losing a percentage of federal funding.

The full letter and list of signees is here. (.pdf)

Reason Foundation’s recent policy brief detailing some of the problems with the Senate’s version of the surface transportation reauthorization bill is here.