Congress inaction could snarl highway program

Congress inaction could snarl highway program Washington Notebook

By Eric Kulisch
   Highway and transit programs will shut down at the end of September jeopardizing thousands of jobs unless Congress takes immediate action upon returning from summer recess on Sept. 7, state transportation officials warned Tuesday.
   The most immediate threat stems from the expiration of authority to deposit gas and diesel tax receipts, which pay for federal transportation programs, in the Highway Trust Fund. Other taxes that cannot be collected without an extension include the retail sales tax on commercial vehicles, the tax on heavy-duty truck tires, and the annual usage tax for trucks.
   Also expiring on Sept. 30 is the surface transportation bill that authorizes the U.S. Department of Transportation to operate programs and dispense highway aid to states.
   On March 4, President Obama enacted a short-term legislative extension of the Safe, Accountable, Flexible, Efficient Transportation Equity Act through the end of the fiscal year. The DOT has been operating under a series of short-term extensions since the multiyear spending and policy blueprint expired at the end of September 2009.
   The American Association of State Highway and Transportation Officials urged Congress to pass a long-term reauthorization that maintains funding at the current annual level of $42 billion for highway programs and $11 billion for transit.

Boxer

   The second action is not as urgent, since Congress retains the option of passing another extension of the surface transport bill. Sen. Barbara Boxer, chairman of the Environment and Public Works Committee, last week proposed a four-month extension of the surface transportation bill to give both chambers more time to agree on a multiyear reauthorization. Rep. John Mica, who as chairman of the Transportation and Infrastructure Committee is shepherding legislation through the House, has not commented on the Boxer proposal.
   Officials expressed confidence that lawmakers could rush through the necessary legislative fixes in the 11 legislative days available in September before lawmakers head back again to their districts. They spoke with reporters on a conference call from Louisville, Ky., where AASHTO held a meeting for representatives from southern states.

Mica

   States won't be able to advertise projects for bid and projects already under construction will have to be halted without the extensions and knowledge that funding is available, said Susan Martinovich, director of Nevada's Department of Transportation and president of AASHTO. States may also be subject to penalty provisions in contracts for not making payments on time.
   'We urgently need for Congress to pass a reauthorization bill — one that sustains funding at current levels and adjusts revenues for inflation,” Kentucky Transportation Secretary Mike Hancock said in a statement. “States need certainty. Effective planning is impossible otherwise. Without reauthorization, projects will have to be dramatically slowed, with a moratorium on new projects, because the state cannot carry federal-aid projects on its own.”
   Kentucky alone has $450 million in federal aid with which it plans to award construction contracts through the end of the year, he told reporters. The first tranche of contracts is to be let on Sept. 23.
   Projects to widen highways, build interchanges, replace bridges, resurface state routes and rehabilitate a portion of Interstate 470 are all in jeopardy 'because we have no assurance that federal funding will be in place when those bills come due,' he told reporters.
      Federal aid comes in the form of a reimbursement from the Federal Highway Administration after states pay contractors out of their pocket. Kentucky has 2,200 federal-aid projects underway and will bill the FHWA $186 million for the last three months of the year.

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   'Our company's ability to succeed is dependent on a robust network of transportation infrastructure. It's how we get our products to market,' Jim Hutchison, vice president of supply chain for Brown-Forman Corp. in Louisville, said on the press call. He stressed the need for Congress to pass a transportation bill to enhance mobility and safety on the nation's roadways.
   Brown-Forman is a wine and spirits maker with major brands such as Jack Daniels and Southern Comfort. The distiller moves about 20,000 truckloads of product per year.
   It is the first time in recent memory that the expiration of the revenue collection and operating authorities have coincided because the legislation's revenue collection provision usually comes up for continuation two years after the spending authorization, but since the spending authorization ended two years ago the revenue mechanism has not been updated, AASHTO Executive Director John Horsley said.
   The funding crisis also parallels what happened a few weeks ago when Congress couldn't agree on an extension for the Federal Aviation Administration reauthorization bill and the department had to shut down non-essential functions. The FAA furloughed about 4,000 employees and halted work in airport improvement projects and other contracts until Congress agreed on a six-week stopgap measure.
   In that situation, however, there was a disagreement on extraneous amendments that prevented a passage of an extension. Similar partisan gamesmanship has not been taken place with the surface transportation bill.
   The federal government charges 18.4 cents per gallon for gasoline and 24.4 cents for diesel fuel at the pump.
   Many Capitol Hill observers are skeptical that Congress will pass a surface transportation reauthorization bill anytime soon. The sides are far apart on funding and Congress will be preoccupied with appropriations bills and reducing the federal debt this fall. By next year, the presidential and congressional election season will be in full swing, making a deal that involves tax increases even less likely.
   Mica has proposed a six-year, $230 billion bill that averages $38.3 billion per year, equivalent to how much revenue budget analysts expect to be available in the highway and transit accounts. Boxer's bill would extend the reauthorization bill for two years at $54.5 billion per year. Extra money would come from drawing down the entire unspent balance in the Highway Trust Fund, but there would still be a $12 billion shortfall. Senators so far have not come up with acceptable offsets to keep pledges not to increase the deficit.
   Martinovich said that scaling back a long-term transportation bill as Republicans in the House have proposed would result in losses of up to 500,000 road construction jobs, cutbacks in maintenance, and reductions in bus and transit service. AASHTO is encouraging lawmakers to pass a bill that at least covers issues that enjoy more consensus, such as speeding up project review time and leveraging public dollars with private money, she said.
   Officials said they are communicating with their congressional delegations about the consequences of a funding cut off. ' Eric Kulisch