Philly City Council Passes Construction Tax

As D.C. Turns, What Now for Highways?

Sat November 20, 2010 - Southeast Edition
Giles Lambertson



If the 112th session of Congress is to pave America’s transportation system with something other than good intentions, the national legislature may have to do what it has been unwilling to do in the past — prioritize projects. Some people in Congress and inside the Washington Beltway are urging this reform of the funding process, citing political and fiscal realities.

There is no denying that the need for highway and bridge construction — let alone waterways, water/sewer and other infrastructure work — is huge, but the willingness of the electorate and of the newest members of Congress to increase spending seems meager. As the lame-duck session of Congress begins, the odds might favor more prudent funding of transportation this time around.

The takeover of the House by Republicans, including the defeat of Rep. James Oberstar (D-MN), the current chairman of the House Transportation and Infrastructure Committee, means the committee will be chaired in the new session by Rep. John Mica (R-FL). In a release the day after the Nov. 2 elections, Mica summarized how he wants to proceed.

“My primary focus will be improving employment and expanding economic opportunities, doing more with less, cutting red tape and removing impediments to creating jobs, speeding up the process by which infrastructure projects are approved, and freeing up any infrastructure funding that’s been sitting idle,” Mica said.

“Among my top legislative priorities will be passing a long-term federal highways and transit reauthorization, a long-overdue Federal Aviation Administration reauthorization, a new water resources measure, and a long-term Coast Guard reauthorization.”

It is an ambitious agenda.

Notably absent in Mica’s list of means to accomplish it is any mention of an increase in the fuel tax. Mica’s communications director, Justin Harclerode, indicated the omission was not inadvertent.

“The congressman doesn’t support a gas tax increase and doesn’t believe Congress or the administration will either,” Harclerode said. “That’s not going to be in the cards.”

Last year, Oberstar and Mica put their names on a highway reauthorization proposal with a price tag of $450 billion, more than 50 percent larger than the previous highway bill that officially expired in September 2009. However, the two congressmen differed on funding. Oberstar backed a doubling of the highway fuel tax from the current 18 cents a gallon, while Mica balked at raising the tax.

Tax and Reform

American Road and Transportation Builders Association is one of numerous advocacy organizations that support raising the fuel tax to financially re-infuse the Highway Trust Fund. The change in control of the House is not apt to affect the association’s position on the issue.

“The ARTBA has always prided itself on being intellectually honest and not playing partisan politics,” said Jeff Solsby, the association’s director of public affairs. “We have had a very good relationship with Mr. Oberstar and also a good relationship with Mr. Mica. I think our message is not going to change and our industry advocacy is not going to change. I don’t think there is any reason to shy away from the job that Congress has long acknowledged it needs to do. We’ll continue to push that which is right and simply push ahead.”

Indeed, when President Obama’s National Commission on Fiscal Responsibility & Reform called for a 15-cent increase in the gas tax, ARTBA quickly heralded it as a “courageous proposal.”

However, even if the fuel tax is raised and supplemental funding is anted up, a push still may be made from other quarters to prioritize projects rather than to try to simultaneously fund them. If the movement gains momentum and priorities become necessary to pass reauthorizations, the question will be, how will projects be sorted and ranked? It is not a clear-cut process.

The American Society of Civil Engineers issues a grade card each year on the condition of the nation’s infrastructure. The 2009 card gave an overall grade of D, with roads (plus levees, drinking water, wastewater and inland waterways) pulling down the overall average by recording a D-minus. The ASCE’s conclusion: “A large increase in capital investment” is needed.

Yet in a section of the grade card titled “Solutions,” the authors of the civil engineering report said that money alone won’t do the job.

“Infrastructure investment at all levels must be prioritized and executed according to well-conceived plans that both complement the national vision and focus on system-wide outputs,” reads the report.

“The plans must reflect a better defined set of federal, state, local and private sector roles and responsibilities and instill better discipline for setting priorities and focusing funding to solve the most pressing problems.

Arguably, prioritized investment and congressional discipline to solve “the most pressing problems” are not hallmarks of transportation funding bills. Rather, the bills are notable for $200 million bridges to nowhere and other earmarking by members of Congress who are as interested in taking home bacon as in making investments that “complement the national vision and focus on system-wide outputs.”

Another snapshot of infrastructure is provided by Reason magazine, which has issued a highway report annually for 19 years. It measures the condition and cost-effectiveness of individual state highway programs by looking at such factors as bridges, highway surfaces, congestion and safety issues. Ironically, perhaps, the latest report — which is based on 2008 data — said conditions are the best they’ve ever been. The magazine reported that pavement conditions on urban Interstates are the best since 1993, and rural primary roads are the smoothest since that same year.

Spending varies widely from state to state according to local factors, however, with North Dakota, Montana and Kansas deemed to have the most cost-effective roadway systems and Rhode Island, Alaska, California, Hawaii and New York having the least effective.

Furthermore, the cost-per-mile of highway work varies tremendously among the states. New Jersey leads the pack by dropping $1.1 million per mile on its largely urban highways while South Carolina averages $34,000 per mile. Administrative costs vary greatly, too. California expends more than $93,000 in administrative costs for every mile of roadway worked compared to Virginia’s $6,370.

Such variance in spending complicates the funding reform process.

The Chamber’s Push

Janet Kavinoky knows all the arguments for smarter funding. As the U.S. Chamber of Commerce director for transportation infrastructure, she has been raising them for some time. Last year, she testified in Congress in support of an increase in a user fee — a gas tax — in exchange for a congressional pledge to limit transportation earmarks and reform the program.

“Congress must ensure federal transportation policy, programs and resources are oriented around national needs…” Kavinoky testified at a House Ways and Means Committee hearing.

“Over the years, these programs have devolved into a political redistribution of federal dollars, instead of thoughtful investments benefiting the nation as a whole.”

Her thinking in 2010 hasn’t changed. Still supportive of a gas tax, Kavinoky calls the willingness to prioritize “a foundation. We have to find the things that have the biggest economic impact and say no to a lot of things.”

When the Obama administration took office, the Chamber and a consortium of other organizations lobbied it and Congress to concentrate on transportation projects, including timely reauthorization of the SAFETEA-LU highway bill. In the end, the highway bill was extended again rather than reworked. The administration’s $787 billion stimulus bill did contain nearly $50 billion for “shovel-ready” transportation projects. Unfortunately, in many cases, state transportation departments offset the new revenue by cutting back on their own appropriations, and many of the shovel-ready projects turned out to be far from ready.

However, Kavinoky believes the stimulus was a plus.

“It would have been a whole lot worse without that bill,” she said. “Yet trying to sell the promise of a new transportation measure that will stimulate the economy is pretty hard now because of people’s perceptions about the stimulus bill.”

The Chamber was jabbed hard by President Obama during the midterm campaign, alleging that the Chamber had accepted foreign money to spend on candidates. The Chamber roundly denied it and the allegation disappeared. While Kavinoky said the Chamber has moved on from that confrontation, she expressed frustration with the administration.

“We’ve said our piece about the administration choosing to demonize business,” she said a week after the election. “They can’t say they want business to provide jobs and then not provide a more certain regulatory environment. There is no other way to do it.

“We were very hopeful when this administration came in. This man was going to make infrastructure part of what he was going to do. Well, he’s still talking about it, but we have to see some actual plans from the president. Infrastructure can be a part of an economic plan, but we have to see a plan from the president, not just platitudes.”

The Chamber official believes she is beginning to see signs of more official willingness to prioritize, to defer one worthy project for a more urgent one. This particularly is happening at the state and local levels of government. She cited cooperation among transportation planning units in the metropolitan Miami area.

“I certainly hope we find some real leaders in the incoming congress,” she said, acknowledging that she doesn’t have “a lot of faith in the political process. It’s all about what’s in it for me.”

She noted that the Tea Party movement, which mostly is characterized by cost and constitutional consciousness, might help.

“If we can get across to them that transportation funding is an investment, not just spending, that it’s investing in something that is constitutionally required, it might help focus the discussion. We haven’t started having that conversation to differentiate between spending and real investment.”

A New Congress

A new member of Congress who will be interested in the conversation is Bill Huizenga of Zeeland, Mich., a Republican now representing the 2nd District.

Huizenga owns a gravel supply business and his family owns a ready-mix concrete business. He is one of the new members of Congress that ARTBA, for example, is counting on for sympathetic responses to calls for transportation funding.

Zeeland is straight west of Lansing and northwest across Lake Michigan from Chicago, Ill. His district is “harbor intensive,” he noted, with both commercial and residential harbors lining the district’s shoreline. The ports add to his interest in transportation issues.

The new congressman served three terms in the Michigan House, the maximum under the state’s term limits law. He was a member of the transportation committee one term and chaired the banking and commerce committee another term. In short, Huizenga is business-oriented. Yet he is not ready to throw all kinds of new money at the nation’s transportation needs without some reform of the process.

Michigan’s jobless story has been extraordinarily bad. Last July, the unemployment rate hit 15 percent, the first state to reach that level in a quarter century. Though the rate has dropped slightly since then, Michigan lost another 9,000 construction jobs in the second and third quarters.

“I have good construction friends who say, ’I don’t care how you get it, just get us some more money,’” Huizenga recalled during an interview the week before he headed back to Washington to begin orientation. “I don’t disagree. But the answer is not just more money, but smart money.”

He believes the question of how to fund highways is the key discussion. He leans toward a formula that gives states more leeway in project funding, with less of the fuel tax money being sent to Washington in the first place.

“We see the bridge-to-nowhere problems that everyone looks at and views as unacceptable. We have got to have some sort of process that makes it more transparent, that reinstates public trust.”

And it won’t be easy, he acknowledged.

In the Michigan legislature, an outcome-based budgeting reform proposal backed by the state chamber of commerce and supported by the House and the governor failed when a state Senate appropriations committee nixed it.

“And it sank,” Huizenga recalled. “You have to have all players willing to take some compromise on this. I really hope that what happened last Tuesday [election day] is sticking in people’s minds. The people want better outcomes in spending.”

Huizenga said he will be “very reluctant to raise any kind of tax,” but neither will he favor wholesale cuts in programs — transportation or otherwise.

“We need to be talking about priorities, about outcome-based programs,” he said. “One, what should our money be funding and, two, what’s effective? Those are the questions. We need to fund the things that are effective and the things we are supposed to be doing as a government.

“In my mind, the call of the Constitution to help control trade is a pretty strong call and if there is a role it seems to me that transportation is one that makes sense. Over the years we’ve gotten wobbly about what funding transportation means and it is now a pretty ugly process. We’ve got to reform the process. In fact, we’ve got to reform a whole litany of things that fall under federal government.”

While not a Tea Party candidate as such, Huizenga hears from Tea Party-minded people all the time, he said.

“They aren’t waving ’Don’t Tread on Me’ flags, but they are watching from their living rooms. They are especially concerned about debt, deficits and spending, and that concern is going to influence virtually every bill that spends money.”

Huizenga believes the country is at a “fundamental crossroads” in governance, especially as it relates to spending public funds. Reform might be more possible.

“If we can’t do it now, I’m not sure it can ever be done.”

Kavinoky, the Chamber’s infrastructure director, cited a Gallup poll that indicates 65 percent of Americans believe the federal government has a legitimate role in the nation’s transportation.

“We have a new opportunity,” she said. “We have to strike a balance in fulfilling the federal role in the current budgetary context. It’s a challenge, but we have to make sure transportation fits into an agenda of smaller government and lower spending.”

Kavinoky doesn’t believe the national grassroots movement pushing for better transportation has been fractured, but she believes it is frustrated.

“I think it is time to really push hard on the new Congress and the administration for commitments to put transportation at the top of the legislative agenda. If there ever was a time to reach out and let your congressman know what the priorities ought to be, people should begin to do so now.” CEG