BACKGROUND:

President Bush signed SAFETEA-LU (P.L. 109-53), a five-year surface transportation reauthorization bill that guaranteed at least $286.5 billion in spending obligations over the six-year period from FY 2004 - FY 2009, in 2005 after 12 extensions and two years. The law guarantees $244.15 billion in the five years actually covered by the bill (FY 2005 - FY 2009), plus $42.3 billion in obligations that actually took place in FY 2004 and slipped away during a series of short- term extensions while Congress was debating the reauthorization bill. This represented a 31.4 percent increase over TEA 21. The funding amount for highways was $189.484 billion; the total for transit was $45.3 billion. The greatest controversy was caused by the 6,372 earmarked projects contained in the bill costing at least $24.27 billion.

SAFETEA-LU provided for the establishment of two commissions to review the current system and make recommendations for reform: the Surface Transportation Policy and Revenue Study Commission (the “Commission”) and the National Surface Transportation Infrastructure Financing Commission (the “Financing Commission”). The Commission held field hearings around the country in 2007 to receive testimony from interested stakeholders and issued its report in January 2008. The report highlighted the increasing needs of the system and the imperative of increased investment to meet those needs. The report found that we must invest at least $225 billion annually from all sources for the next 50 years to upgrade our existing surface transportation network to a state of good repair and create a more advanced system to sustain and ensure strong economic growth for our families.

The Financing Commission is looking at the system’s financing and possible new methods to increase investment into the system. Due to a late start, the Financing Commission’s final recommendations are not expected until the end of 2008 or early 2009.

The Commission report contained numerous recommendations for reform of the program. Some of the report’s key recommendations are: develop a comprehensive, performance-based approach; reform program and project development processes to reduce the excessive time required to move projects from initiation to completion; improve overall project decisions, reducing project and overall program costs, and realizing project benefits sooner; concentrate investment in 10 program areas – Rebuilding America, Freight Transportation, Congestion Relief, Saving Lives, Connecting America, Intercity Passenger Rail, Environmental Stewardship, Energy Security, Federal Lands, and Research Development & Technology, Harnessing the Technical Strengths of USDOT and the Surface Transportation Industry; develop a national strategic plan to guide public sector investment in these programs that will serve a growing and vibrant population and economy; and establish an independent and permanent National Surface Transportation Commission (or NASTRAC) that would use the national strategic plan to recommend appropriate authorization and revenue levels to Congress.

In 2006, NSSGA created a Reauthorization Task Force to begin discussions on the next surface transportation authorization and to develop NSSGA’s recommendations for the surface transportation network for the 21st Century. The task force met with the Commission vice chairman and received a briefing on the highway program from the Commission’s executive director. NSSGA’s Reauthorization Task Force Chairman testified at a Chicago Commission field hearing focusing on the importance of factoring in access to the aggregates that will be necessary for the additional surface transportation capacity that will be required to realize a new vision of transportation.

The task force issued NSSGA’s principles for reauthorization in fall 2007 in a booklet entitled, NSSGA Recommendations For The Future Of America’s Surface Transportation Network. The task force highlighted eight key principles for the next reauthorization:

1. Create a new long-term vision for our nation’s surface transportation infrastructure based on the requirements of an expanding population, growing congestion, increasing freight traffic and to assure Americans the freedom of mobility they demand.
2. Increase investment in surface transportation infrastructure essential to meet the projected funding shortfall and grow the multi-year program to meet the requirements of the system into the future.
3. Assure the integrity of the program and resist earmarks that have been harmful to public support.
4. Preserve and maintain the Highway Trust Fund firewalls and funding guarantees that segregate highway user fees from general revenues.
5. Create flexibility in the program to allow innovative funding mechanisms to enhance the user-fee based program.
6. Support construction materials research essential to development of the most technically advanced, economic and long-lasting pavements.
7. Advocate a multi-year program (six-year minimum) with transportation financing to government and business planning.
8. Support a unified coalition reauthorization effort.

NSSGA endorsed no one financing mechanism to meet the needs of the system. Rather the association said, “Multiple financial options – traditional and innovative – are available to transportation and policy makers which should be evaluated and, as appropriate, employed to increase revenues to pay for the modernization and maintenance of our national transportation system into the future.” The association recommended considering: an increase in the user fee on gasoline; indexing motor fuel taxes to reflect inflation; instituting a federal vehicle miles traveled (VMT) user fee; instituting a value-added vehicle fee, based upon the value or weight of the vehicles; recapturing interest on HTF cash balances so that the HTF can reap the full benefit of the revenue paid into the fund by users; dedicating a portion of U.S. Customs import revenues to the HTF; stemming further fuel tax evasion; providing more revenue and investment options to state and local governments; and stimulating greater use of innovative finance tools so that states can make transformative investments into their transportation infrastructure.

Both the chairman of the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee plan to begin developing reauthorization bills in 2008 with the intention of completing work on legislation prior to the expiration of SAFETEA-LU on Sept. 30, 2009.

In the interim, Congress must ensure the solvency of the HTF which early in the year was projected to run a deficit of around $3.4 billion at the expiration of SAFETEA-LU. A steep reduction in vehicle miles traveled resulted in declining revenues into the HTF, accelerated and increased the projected HTF deficit. NSSGA and its coalition partners supported and advocated a House-passed bill, H.R. 6532, to recapture $8 billion in HTF revenues transferred into the General Fund when TEA 21 passed in 1998.

The administration endorsed the House bill after new projections on the declining health of the HTF found that the trust fund would have a zero balance by the end of FY ’08 on September 30. It is important to note that the $8 billion transfer is a transfer of gas user fees that originally were collected for transportation uses contrary to what opponents of the transfer have said. Because it would be an intergovernmental transfer of funds, an offset is not required.

NSSGA and its Transportation Construction Coalition (TCC) partners, as well as the Americans For Transportation Mobility (ATM), of which NSSGA is a management committee member, worked collaboratively for passage of a HTF fix. Congress passed H.R. 6532 on Sept. 11, 2008, and the President signed the bill into law on Sept. 14. The coalitions then turned to development of the next surface transportation reauthorization.

TALKING POINTS:

• NSSGA supported expeditious passage of a fix to the HTF that ensures solvency of the fund until the expiration of SAFETEA-LU while a new vision of transportation for the 21st Century is developed. Of particular importance to NSSGA is passage of a multi-year reauthorization bill at the highest funding level possible. It is estimated that at least $225 billion needs to be invested annually from all sources for the next 50 years to upgrade our existing system to a state of good repair and create a more advanced surface transportation system to sustain and ensure strong economic growth for our families. We are spending less than 40 percent of this amount today.
• We must preserve the legislative firewalls between gas user fee-supported programs and other domestic spending and maintain the Revenue Aligned Budget Authority (RABA) mechanism while mitigating its potential negative impacts.
• NSSGA makes the following recommendations for the transportation network of the future:
  • Development of bold, new, long-term, multi-modal vision for our national transportation system that reflects societal changes, economic imperatives, technological advances, environmental concerns and national security needs in order to ensure the continued prosperity and security of the United States.
  • The firewalls and funding guarantees that segregate user fees dedicated to the HTF from general revenues should be maintained, and congressionally-imposed earmarks should be resisted in order to preserve the integrity of the federal highway and transit programs.
  • To operate effectively, the federal highway program should be a multi-year program (six-year minimum) with transition financing provided to prevent systematic disruptions between reauthorization cycles.
    
  • The nation must increase transportation-related revenues in order to eliminate the projected funding shortfall in the HTF and increase investment in the overall transportation system to meet current and future requirements.
  • The federal transportation program should be reformed to create the flexibility that will allow federal, state and local governments to establish innovative funding solutions, which, in addition to the current user fee-based program, will enable them to meet the nation’s transportation priorities.
  • Multiple financial options – traditional and innovative – are available to transportation planners and policy makers which should be evaluated and, as appropriate, employed to increase revenues to pay for the modernization and maintenance of our national transportation system into the future.
  • Policy makers at all levels of government need to ensure access to ample, affordable supplies of aggregates, the primary component of transportation infrastructure, and support research essential to development of next-generation construction materials.
  • Federal, state and local leaders in recognition of the public health and economic consequences caused by highway deaths and serious injuries must join together to reduce highway fatalities by 50 percent by 2030 toward an ultimate goal of zero deaths.
    
  • The federal government must take a strong leadership role in resolving the financing dilemma facing our national transportation system and in planning for its future.
  • Governments at all levels and stakeholders must work together to develop, advocate and implement a consensus vision for the future of our national transportation system and its financing.
  • The American public needs to be educated about the importance of the national transportation system to their quality of life and convinced of the value of supporting the development, implementation and financing of a new vision for its future.

TALKING POINTS ON THE IMPORTANCE OF
OUR NATION’S HIGHWAY PROGRAM:

• Highways are vital to our quality of life, the commerce and defense of our nation and the safety of motorists and passengers. According to the U.S. Department of Transportation, one-third (over 13,000 annually) of all fatal highway accidents is due to unsafe road and bridge conditions.
• According to a study conducted by the Federal Highway Administration, $100 million spent on highway safety improvements will save 145 lives over a 10-year period.
• Vehicle travel on America’s highways increased by 41 percent from 1990 to 2006, while new road mileage increased by only four percent. The nation’s population grew by 20 percent from 1990 to 2006.
  
• Traffic congestion costs American motorists $78.2 billion a year in wasted time and fuel costs. Americans spending 4.2 billion hours a year stuck in traffic.
• Highways are crucial to the U.S. economy. For each $1 billion spent for highway construction, more than 30,000 jobs are generated annually.
• In the U.S., the federal highway programs, including state matching funds, support approximately one million jobs.
• Every dollar invested in the highway system yields $5.40 in economic benefits to the nation because of reduced delays, improved safety and reduced vehicle operating costs.
• Driving on roads in need of repair costs American motorists $67 billion a year in extra vehicle repairs and operating costs – $333 per motorist. Highway repair, maintenance and improvement are 33 percent of the construction aggregate market nationwide.
• Air quality is improving at the same time highway travel is increasing. The significant air quality improvements have taken place at the same time that highway travel in the U.S. has jumped 72 percent.
  

SOURCE:

“Key Facts About America’s Roads and Bridge Conditions and Federal Funding”, The Road Information Program, Updated August 2008.

Updated: November 2008