Budget, taxes will determine next transportation bill

Posted on September 15, 2009 by Cliff Henke

A showdown is coming; everyone can see it. The only question is when it will happen. How it plays out will determine the size and, in large part, the shape of the next federal surface transportation policy bill.

Rep. James Oberstar (D-Minn.), the chair of the House Transportation and Infrastructure Committee, has already reported a policy bill out of his panel, ready for a vote by the full House. Major changes are in his bill, including the elimination of the alternatives analysis process, much greater power and funding to metropolitan planning, and a weakening - and to some degree de-funding - of urban rail's chief competition, bus rapid transit. His ambitious bill would spend $450 billion over six years, a more than 50 percent increase over the current bill.

Who will pay?

The trouble with his committee's bill is there is no way to pay for much of it, mainly because that issue is within the provinces of the House Ways and Means Committee and, later, the Senate Finance Committee. It is also because the primary source of federal assistance revenue, the gasoline and diesel tax, now pays for a declining share of the program, requiring ever-larger bailouts with borrowed money.

The lack of resolution of the funding issue is the major reason why a consensus has formed around an 18-month extension of the existing law, so that renewing the program is put off until the more contentious and even larger issues of paying for health care reform and energy/climate change policy are taken up.

Some Washington, D.C. observers believe that how these larger issues come out might affect transportation funding, because the political capital for tax increases will either be exhausted, if health care reform and climate change pass, or left unused if these bigger deals fail.

Another connection: Some in Congress also continue to advocate for reserving part of the climate change revenues for public transportation and sustainable communities. Oberstar and his allies think it could and should get done without resolving the trust fund issue in order to stimulate the economy, because the first stimulus bill passed earlier this year may have been too small.

Welcome to 1981

All this feels very much like three decades ago. In 1981, Ronald Reagan's program of tax cuts and massive military spending was not moving the economy fast enough. He was forced to give back some of it to close a mounting deficit in the very next budget year. His party lost seats in the 1982 mid-term election, and to answer concerns he was not doing enough about unemployment, he signed a large transportation bill and nickel gas tax increase (with a penny of it for transit, which created the Mass Transit Account of the Highway Trust Fund).

The moral of the story: Keep watching the deficit and unemployment numbers, and don't be surprised if authorization doesn't get done until a lame duck session after the mid-term Congressional elections in 2010.


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