Management & Operations

Reauthorization Update: On the Road to Funding Transportation's Future

Posted on February 27, 2008 by Alex Roman, Senior Editor

With the New Year bringing the usual hope and optimism many typically feel around this time, this year’s resetting of the calendar has moved those in the surface transportation industry closer to the expiration of the SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) transportation funding bill, which was signed into law by President Bush in 2005 and runs through 2010. Even as Congress passed its recent Omnibus appropriations bill, finally ensuring monies for fiscal year 2008, which began in October, many are beginning to focus on the introduction of a new measure to take SAFETEA-LU’s place after it expires.

With rail safety legislation and corrections to SAFETEA-LU still pending Congressional approval, many involved in the industry already know what some of the issues are that need to be addressed when the new measure is introduced, namely improving the New Starts and Small Starts programs, finding a way to create a dedicated source of funding and perhaps finding new ways to fund projects, with Public Private Partnerships (PPP) playing a much larger role. There is also much focus being paid to who will succeed President Bush and what the make-up of the Congress will be following the upcoming election year.

Latest developments

In the final days of 2007 Congress passed the long-awaited $555 billion Omnibus appropriations bill that included $9.492 billion for public transportation in fiscal year 2008 — a $517 million increase compared to 2007. The amount is a 5.8 percent increase from FY 2007 and is an all-time high for transit, but falls $240 million short of the levels authorized in SAFETEA-LU.

Big appropriation winners included programs for over-the-road buses (9.2 percent) and alternative transportation in parks (8.7 percent), with bus and bus facilities (-3.8 percent) and alternative analysis (-1.2) programs suffering cuts.

Also in December 2007, the Senate Committee on Environment and Public Works approved the Lieberman-Warner Climate Security Act of 2007, which includes language that dedicates one percent of revenues generated from the legislation to support growth in transit system capacity. Another proposal by Senator Thomas Carper (D-Del.) that seeks additional revenues and expands the list of eligible expenditures to include transit, transit-oriented development and infrastructure improvements may be considered at a later date. According to Jeffrey Boothe, partner at Washington, D.C.-based Holland & Knight LLP, if Carper’s proposal is approved, it would create a $6 billion to $12 billion annual pot for which the transportation industry could vie.

Under the Lieberman-Warner bill, certain large-scale emitters of carbon dioxide and other greenhouse gases, such as utility companies and manufacturers, would be required to submit emission allowances. Transit agencies would not be required to submit allowances, but instead agencies would receive a portion of the revenues generated from the sale of allowances to large-scale emitters. With public transportation preventing the emission of 6.9 metric tonnes of carbon dioxide in 2005, according to a Science Applications International Corp. study, the legislation could be one more way to increase the amount of funds for transportation.

“We were pleased to see that the bill that was approved by the Environment and Public Works committee in the senate does direct some of the cap and trade proceeds toward public transportation investment,” says APTA’s Vice President of Government Affairs Rob Healey. “Clearly we feel that public transportation can play a large part in controlling or reducing greenhouse gas emissions.”

Starting the process

The National Surface Transportation Policy and Revenue Study Commission was created by Congress under SAFETEA-LU to analyze the future needs of the transportation network over the next 30 years and make recommendations to address urban congestion, rural access, project delivery, freight and intermodal needs.

As preparations begin for reauthorization of a transportation funding bill, the industry is anxious to see what the 12-member commission will say after 20 months of nationwide hearings and deliberations (See sidebar for Commission Report findings).

“Obviously a major focus has got to be the magnitude of the existing deficit, which most people now recognize exists, and how we’re going to address that, what funding resources we can bring to deal with that deficit across all modes,” says Peter DeFazio (D-Ore), chairman of the House Subcommittee on Highways and Transit and member of the House Transportation and Infrastructure Committee (Rep. DeFazio’s comments were made prior to the release of the Commission Report). DeFazio adds that his committee’s plan to continue holding background hearings, as well as trying to gather information, but that the major effort won’t start until the next Congress takes shape.

APTA’s Healey says that his association’s efforts are slowly beginning this year, with a reauthorization task force charged with making recommendations for the next bill, meeting for the first time at the end of January. At this point, APTA continues to focus on creating an awareness of how important a good transportation system is in providing options for the day-to-day travel of citizens, including those with mobility issues, and the important role it plays in energy conservation and the reduction of greenhouse gases. With meetings planned throughout the year, Healey says that APTA hopes to have some more definitive recommendations by the fall.

“This a process whereby our members will identify their respective needs, and certainly the needs of some systems differ than others and I think that it’s important for the transit community and for APTA to have some consensus on what we’re seeking and to speak with one voice on those to Congress and the administration,” he says. Time for a change

Many in the industry were pleased that SAFETEA-LU increased the investment in transportation, but with oil hitting $100 a barrel for the first time and the country suffering from a ballooning deficit, monies to fulfill all transportation needs ranging from infrastructure to equipment, and everything in between, may be hard to come by.

One popular theory — ¬ a dedicated source of funding that would help prevent transportation funding from being cut — is raising a gas tax that hasn’t been raised since 1993. Other early ideas include creating a tax that would be paid upon vehicle registration that would take into account the number of miles driven, congestion pricing and focusing on more PPPs.

“There are a lot of things being talked about, but I don’t know that anybody has found a particular solution yet,” says Boothe.

Another major area of focus in reauthorization efforts seems to be improving the New Starts/Small Starts program.

“This administration has misinterpreted and misapplied our New Starts/Small Starts criteria and has really thwarted the intent of the Congress,” says DeFazio.

Now is a great time to take another look at the New Starts/Small Starts program and examine if the current structure is working, or if changes need to be made, including the criteria used by FTA to make decisions on projects, says Boothe. “The fact that it’s taking longer today for projects than it did 10 or 15 years ago, points to it being time to look at trying to simplify the process to make decisions sooner because there are project savings associated with moving a project quickly,” he says. “Time does have value.”

What is necessary is an adjustment in the FTA review process that reflects what is at risk and what’s not covered by a contract and takes into account other types of project delivery besides the traditional design/bid/build delivery approach, Boothe adds.

“If the private sector or a PPP identifies the project elements, quantifies the cost, determines the contingency of each of the elements and, therefore, risk is absorbed in the contract, then why is the FTA running a risk assessment process against the entire project?” he asks. “It should be only focusing on that portion which they are contributing or that portion which is not covered by contract.”

Adds APTA’s Healey; “We want to make sure there is recognition in the New Starts process, not only of the cost effectiveness but also what is the future growth of a system or the economic benefit, for example. We’d like to see recognition that those things produce a larger ridership in the long run.”

Election impacts

The impact of the upcoming elections this fall will be felt throughout the nation but could potentially have a much greater impact on the surface transportation industry. Questions such as where the presidential administration will stand on transportation funding and the makeup of Congress will be huge factors in the reauthorization effort.

Boothe believes that solutions such as funding for streetcars would find a much more sympathetic ear in a Democratic administration that would ideally be more focused on redevelopment and creating densities around transit stations.

“There’s a very different philosophical, ideological bent,” he says. “If there were a different administration, they would be focused more on density, changing trip patterns and development around transit, using it more as a catalyst for redevelopment in metropolitan areas.”

Boothe points to the highly successful Portland westside streetcar system, which has failed to secure funding for an eastside expansion because of the current administration’s focus on cost-effectiveness, while paying less attention to Congress’ intent to give equal credence to land use and economic development during the approval process.

“What you see emerging out of Small Starts is predominantly BRT with a smattering of commuter rail projects as opposed to congress’ intent,” Boothe says. “Certainly the house had a major focus on streetcars, and yet to date there’s no streetcar that has emerged out of this administration and nor will there be. I think that is not an accident, that is a matter of policy by the FTA; their policy is leading to that as an outcome.”

Like Boothe, Rep. DeFazio believes that an administration change could be crucial to the authorization efforts. “The upcoming elections could have phenomenal implications for transit and other modes,” he says. “If we get somebody that wants to continue the policies of the Bush administration, it’s going to be a mess.”

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