Infrastructure & Environment

A Decade in the Making, Congress Strikes a Deal on Transportation Funding

Here's how the new bill, which has been signed by Obama, will impact states and localities.
by | December 2, 2015
The new bill would, among other things, something about tolling. (AP/Ted S. Warren)

*Update: Obama signed the bill Friday Dec. 4. 

Congress is likely to pass its first major transportation bill in a decade, after House and Senate negotiators brought out a five-year, $305 billion package late Tuesday. The so-called FAST Act includes a 15 percent increase in highway spending and an 18 percent boost in transit spending.

The agreement irons out the differences between bills passed previously by the House and Senate. Observers expect the bill to pass Congress and reach the president within the next week.

“From a state DOT perspective, we’re really excited about the prospects of having five years of predictability at the federal level. That’s something we haven’t had in 10 years, since 2005,” said Jim Tymon, the director of policy and management at the American Association of State Highway and Transportation Officials (AASHTO). 

For years, Congress avoided long-term commitments to transportation funding because it could not agree on how to pay for the improvements.

In the current deal, Congress still couldn’t agree to a long-term plan for paying for infrastructure. It left federal fuel taxes untouched at 1993 levels (18.4 cents per gallon of gasoline), even though the per-gallon fees don’t keep up with inflation and have generated less money as vehicles improve their fuel efficiency. But this time Congress found money to boost funding for several years. The cash comes from selling oil from the Strategic Reserve, raiding reserves held by the Federal Reserves and cutting bank dividends from the Fed.

Many transportation advocates are uneasy because the bill still would rely on one-time money, instead of finding a long-term funding source for transportation. “We’ve unhinged the idea of users of the [transportation] system paying for it,” said Stephen Davis, the director of communications for Transportation for America, a group that emphasizes “smart” transportation projects and local control. “All of us will be paying for Congress’ refusal to have an adult conversation about revenue this time around. It also means, that in five years, we will have a big hole to dig out of.”

The new agreement could settle long-simmering policy disputes for the next five years. The proposal avoids big, controversial new initiatives, offering even more certainty. But it came as a let-down for reformers who wanted to see a bigger share of money go to local entities rather than the states, as well as to some safety advocates who wanted more aggressive measures.

“If you like what we’re doing with how we invest in transportation, how the decisions are made and where the money goes, you will probably be excited today,” Davis said, “because we’ve essentially doubled down on the status quo.”

Here’s how the proposal would handle several key issues.

Loans for Complex Projects

The proposal would scale back a popular federal lending program, created under Transportation Infrastructure Finance and Innovation Act (TIFIA). Initial estimates are that the $1 billion program could be reduced to $250 million. TIFIA loans are common in large projects, especially those involving public-private partnerships. They’ve gone toward transit expansions, construction of toll lanes on highways, airport parking facilities, bridge replacements and the construction of the Chicago Riverwalk.

“It’s probably right to say that a $1 billion-a-year TIFIA program was a little ambitious,” said AASHTO’s Tymon. “But we’re a little concerned that a $250 million to $300 million TIFIA program may not be big enough.”

The proposal would make other changes within the program as well. Significantly, it would allow smaller projects -- with a minimum cost of $10 million, rather than the current minimum of $50 million -- to qualify for the loans. The agreement would also let public transportation-oriented-development projects, which have become a popular economic development tool, qualify for the financing as well.

State vs. Local Control of Funding

Localities have long bristled at the fact that federal transportation funds are distributed largely through the states, especially because states and cities are often at odds politically and philosophically over how best to use that money. The current proposal, though, would channel 93 percent of federal highway funding through states.

But the proposal also increases the share of money from the Surface Transportation Program (the biggest pot of money in the transportation bill) that is dedicated to specific metropolitan regions from 50 percent to 55 percent. Metropolitan areas with more than 200,000 residents can help steer that money toward projects they choose, but in smaller areas, the state decides how the money is spent in those communities.

Transit

Along with the overall increase in transit funding, the proposal would make it easier for agencies buying buses or building bus facilities to apply for one-time grants. Currently, the money is distributed more evenly through formulas, but agencies tend to need money in spurts -- when they want to upgrade their fleets or build a new depot, Tymon said.

Positive Train Control

The proposal allocates $199 million for competitive grants to commuter railroads to help them install positive train control systems, which are designed to prevent derailments and train-to-train collisions. Congress recently extended the deadline for railroads to install PTC from the end of 2015 to the end of 2018, after both freight and passenger railroads said they would not be able to meet the earlier deadline.

Other Safety Measures

The proposal would allow states that use programs to crack down on repeat drunk drivers to qualify for federal money previously set aside only for states that require all drunk driver offenders to install breath-testing devices in their vehicles. The measure allows military veterans younger than 21 to drive trucks and buses across state lines. It would also prevent states from using federal money to set up checkpoints to ensure motorcyclists were wearing helmets.

Tolling Existing Interstates

Federal law generally prohibits states from adding tolls to existing interstates. The proposal would extend a pilot program that lets as many as three states toll existing interstates, even though the three states with permission -- Missouri, North Carolina and Virginia -- have no plans to do so. The agreement, though, would add a three-year deadline for states to use their authority to toll interstates, or else that permission could be given to another state instead.

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