Infrastructure finance commission to release report this week

Infrastructure finance commission to release report this week A blue-ribbon panel is scheduled on Tuesday to publish its recommendations to Congress for reforming highway and rail transportation policy and infrastructure funding mechanisms.
   The highway trust fund is nearly in the red, highway capacity has remained static as the volume of vehicles has steadily increased for several decades, infrastructure is aging, major congestion is a reality in most urban areas and import cargo volumes are projected to double or triple by 2025 even as goods movement has already become less efficient the past two years. All those problems have been deferred for political and financial reasons, but are now coming to a head.
   Congress established The National Surface Transportation Policy and Revenue Study Commission in the 2005 SAFETEA-LU multiyear highway reauthorization bill. The 12-member commission, which is supposed to help lawmakers reach consensus on difficult issues, apparently could not unanimously agree on the report themselves and therefore will include a dissenting opinion, according to transportation industry sources.
   Reports that the commission will recommend a large increase in the federal gas and diesel tax (currently 18.4 cents per gallon for gas and 24.4 cents per gallon for diesel) met with a preemptive strike from Sen. Charles Grassley, R-Iowa, and ranking member of the Finance Committee, who issued a statement Friday saying: “A special commission came up with an old, cold, bad idea. We have economists saying the increase in energy costs is adding to recession concerns, while this commission reportedly will say we should add to those concerns.
   “And the commission apparently isn’t even following its mandate, which was to come up with ‘non-tax’ alternatives to the long-term financial stability of the highway trust fund. Raising the gas tax puts the brunt of the long-term trust fund expenses on automobile drivers, when diesel trucks and other heavy vehicles also use the highways.
   “Also, the new law on the Corporate Average Fuel Economy standard might increase the price of all automobiles to the consumer, so consumers could face a double hit. They might drive less, but they wouldn’t be adding to the highway trust fund, which was the commission’s mission. I hope there are more creative ideas in the commission’s report than a gas tax increase. The nation needs innovative ways to meet energy needs without sinking the economy,” Grassley said.
   One of the most contentious parts of the commission’s work was developing recommendations for the role of the federal government in providing leadership and resources for transportation infrastructure maintenance and upgrades during the next 20 to 40 years, Commissioner Jack Schenendorf said.

Schenendorf

   Schenendorf, an attorney with Covington & Burling and former chief of staff of the House Transportation and Infrastructure Committee, provided a preview of the report during a Sunday panel discussion of the week-long Transportation Research Board annual meeting in Washington. He was careful not to discuss any of the body’s specific recommendations, but during the question and answer session hinted that the members favor setting strong performance goals for transportation assets to help metropolitan areas better plan development.
   Performance measures to reduce congestion will require metropolitan planning agencies to produce plans and metrics to achieve the standards and force them to make tough choices about highway capacity, transit, land use and other factors, Schenendorf said. That would lead to a better planning process because transportation projects would not be developed in isolation but as part of an overall plan that can gain public support for financing.
   The commission will also address whether there is an infrastructure investment gap or under funding is due to misallocation of resources and waste, with recommendations on an overall spending level. Schenendorf said highways and bridges alone would not solve the problems of a nation that requires a multimodal strategy in dense corridors to take more people off the roads.
   A large portion of the report covers ways to fix specific transportation programs, especially ways to accelerate project delivery and reduce the delays that lead to massive amounts of waste. Streamlining approvals for transportation projects is critical to keeping costs down and delivering service, Schenendorf said, adding, “There’s no reason why projects need to stretch 10 to 15 years before any dirt is turned.”
   The commission also devoted considerable attention to freight transportation initiatives, Schenendorf said, noting that investment to move goods through gateways such as Los Angeles benefit all Americans.
   Financing options discussed in the report include the gas tax, federal user fees, tolling, congestion pricing, privatization and the role of state and local governments.
   Schenendorf signaled that he has reservations about tolling, noting that it may become convenient for politicians to charge highway users to fund non-transportation priorities.
   He cautioned against “unfettered experimentation” with the highway system and said it is “extraordinarily troubling” to hear states justify toll increases on the backs of out-of-state and commercial interests rather than their own citizens because the highway system is nationally interconnected and pockets of user fees can disrupt competitiveness for those who rely on it.
   “Failure to act is catastrophic,” Schenendorf said because it would undermine U.S. competitiveness. Without the same kind of political leadership that the Eisenhower administration and Congress demonstrated in the 1950s when the Interstate Highway System was built “we’ll be in danger of becoming a second-rate economic power” with fewer jobs, a lower quality of life, fewer travel options and more costs, he emphasized.
   On a typical day, about 43 million tons of goods, valued at about $29 billion, move nearly 12 billion ton-miles on the nation’s transportation network. From 1980 to 2002, the number of freight trucks in the U.S. increased from 5.8 million to 7.9 million, and the average distance traveled by commercial trucks increased from 19,000 miles per truck to 27,000 miles per truck.
   “There is a lack of vision about what government is trying to achieve” compared to a half-century ago when Americans accepted the quadrupling of spending on roads to create the Interstate system, he said. At that time there was no fighting between donor and donee states for their fair share of the federal aid program or congressional earmarks penciling in pet projects in lawmakers’ districts.
   “Right now every state sees it as a revenue-sharing program and lawmakers want to deliver projects. The programs have to be tied to a mission that the public buys into,” he said.
   Schenendorf pointed to the aftermath of Hurricane Katrina as an example of what happens when there is a pattern of underinvestment, adding that “we’ll have the same kind of catastrophic failures as the New Orleans levees to the transportation system” unless the federal government takes action to rebuild the nation’s infrastructure.
   The commission, which has spent the past 20 months reviewing the surface transportation system and holding hearings to gather input, is chaired by Transportation Secretary Mary Peters and represented on the industry side by Burlington Northern Santa Fe Railroad Chief Executive Matthew Rose; Patrick Quinn, co-chairman of trucking firm U.S. Xpress Enterprises; and Steve Odland, chairman and CEO of Office Depot.
   The report offers recommendations for immediate, medium and long-range solutions. Several months ago the commission wrote letters to members of Congress urging them to act quickly to fund the highway trust fund so that projects authorized in SAFETEA-LU can proceed. The short-term fix could rely on increasing the fuel tax, measures to recapture some of the fund’s interest and eliminating some exemptions, it said.
   A second commission also chartered by Congress is essentially just starting its work. The National Commission on Surface Transportation Infrastructure Financing is tasked with studying alternatives to supplement the highway trust fund, the federal repository for gas tax revenues.
   The second commission will issue an initial report in two to three weeks outlining its preliminary observations and methodology, said Commissioner Geoffrey Yarema, a law partner with Nossaman Guthner Knox Elliott. The firm’s infrastructure practices group specializes in advising states and regional planning organizations on delivering infrastructure projects.
   The commission is interested in how the nation can implement more direct user charges and transition away from funding surface transportation through fuel taxes over the long term, he said. Schenendorf revealed that his commission also recommends moving towards a more direct pricing approach for highway usage, but the methods for tracking vehicle movement face challenges regarding privacy and how to collect from 240 million individual users versus a more centralized gas tax collection system. ' Eric Kulisch