Commentary

Transportation Reauthorizaton Ping Pong

Transportation reauthorization is going through more hoops, down more valleys, and up more hills than many people can count. James Oberstar, Chairman of the U.S. House Transportation and Infrastructure Commitee, wants to report a bill out by June 1st, but, as the National Journal reports today, he’s facing severe resistance within his own party.

Having spent nearly a trillion dollars on the stimulus package, Congressional leaders are reluctant to get behind a bill that would also increase funding for infrastructure.

House Speaker Pelosi repeatedly stresses that “jobs, jobs, jobs” are a top priority for this Congress, and advocates say a $450 billion, multiyear transportation funding bill is just the medicine. But that effort is almost certain to be punted to next year, if not significantly scaled back, according to aides and stakeholders involved in the talks.

The central problem facing House Transportation and Infrastructure Chairman James Oberstar, other than the packed legislative calendar, is a lack of money.

The most obvious method to raise the needed revenues — raising federal gasoline and diesel taxes — has fallen flat with members of his own party, and Oberstar appeared to back away from the idea last week in a meeting with House Ways and Means Committee Democrats. “It isn’t a subject of discussion, frankly,” Oberstar said.

Transportation Secretary LaHood has repeatedly swatted away the notion, and House Ways and Means Chairman Charles Rangel has told Oberstar privately that increasing the gas tax would be a tough political sell.

The biggest stumbling block is coming up with a funding source for the investments necessary just to keep our transportation system going. Gas taxes are out, at least during the recession, and other ideas have their own political liabilities.

A vehicle miles-driven tax has been summarily dismissed as a longer-term project. Diverting revenues from a carbon tax or cap-and-trade regime to transportation funding has been suggested — but Democrats are embroiled in internecine warfare over how to curb emissions at all, let alone how to spend the revenues. Options such as a tariff on imported oil face political and international obstacles. Even increasing car registration fees could be viewed as a tax increase.

That all leaves Oberstar with a huge hole to fill as the surface transportation programs expire Sept. 30, and no consensus on how to pay for them. The last time the programs were up for reauthorization, it took a dozen short-term extensions to get it done — almost two years.

This time, the program is practically broke absent new funding sources, and the problem gets worse the longer lawmakers wait. The highway program will have $940 million left on Sept. 30, OMB reported last week, and could face severe cash-flow problems even sooner.

That could require a similar action from Congress as last fall, when it approved an $8 billion emergency cash transfer from general revenues to the Highway Trust Fund. Moreover, next year Congress would have to spend around $11 billion to avoid the same type of cash crunch at the end of the year, estimates Jeff Davis, publisher of Transportation Weekly, a widely read newsletter among insiders on and off Capitol Hill.

That is still better than the alternative — providing $36 billion to fund highway programs in FY10 out of the general fund as proposed by the Obama administration. That would leave the money at the mercy of the Appropriations committees, which have to fund schools, hospitals, parks, housing, defense and veterans’ programs — all from the same pot of discretionary funds.

It’s an interesting dilemma: The short-term political need to infuse cash into the economy is undermining the real investments and policy changes necessary to encourage long-term growth.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.