AASHTO Journal, 9 May 2014
Few debated the need for transportation infrastructure investments during a Senate Finance Committee hearing this week, but that did not mean there was any agreement on where to find the funds to pay for it.
The Senate Finance Committee hearing, “New Routes for Funding and Financing Highways and Transit,” featured testimony from Senate Environment and Public Works Chairman Barbara Boxer (D-CA) and Virginia Commonwealth Secretary of Transportation Aubrey Layne. Additional testimony was provided by Joseph Kile of the Congressional Budget Office, Jayan Dhru of Standard & Poor’s, Samara Barend of AECOM Capital, and Chris Edwards of the Cato Institute.
Chairman Ron Wyden (D-OR) kicked off the hearing by identifying two committee priorities – addressing federal Highway Trust Fund revenue shortfalls and creating incentives to inject private investment in infrastructure.
“My bottom line is that you can’t have a big-league quality of life or big-league economic growth with little-league infrastructure,” Wyden said. “The status of our roads and highways affects all Americans, from commuters to exporters to folks in rural areas who drive long distances for just about everything.”
While Wyden said the committee would consider new revenue proposals – including tolling and mileage-based user fees – he also suggested that programs like Build America Bonds, part of the 2009 American Recovery and Reinvestment Act, could stimulate private investments in transportation.
“The lesson is clear: there are hundreds of billions of dollars in private capital sitting on the American sidelines,” said Wyden. “Surely some of that can be invested in American infrastructure. I’d like to aim higher and do everything possible to build a bipartisan coalition for policies that generate $1 trillion in American infrastructure.”
But Ranking Member Orrin Hatch (R-UT) instead suggested that the committee not only consider Highway Trust Fund revenue options, but also reforms to address outlays.
“Since its inception in the 1950s, the Highway Trust Fund has been called upon to fund an increasingly broad scope of activities, such as bike paths and other so-called ‘enhancements,'” said Hatch. “Additionally, there are many requirements and regulations that increase the costs of federal highway projects. So, if we’re going to talk about revenues, we should talk about reforms that will address costs and outlays as well.”
Boxer said the current surface transportation bill, MAP-21, included several reforms aimed at streamlining and reducing costs, and that the new Senate EPW bill being developed would include additional reforms.
“We have got to examine everything and we’ve got to do it in a bipartisan way,” said Boxer, who stressed that the Highway Trust Fund insolvency was the immediate crisis facing transportation. She added that the pending EPW bill would require an additional $18 billion in investments to the Highway Trust Fund over six years to maintain current MAP-21 funding levels plus inflation. That bill will be unveiled on Monday, May 12 (see related AASHTO Journal story here).
Secretary Layne, who explained Virginia’s recent transportation funding bill that eliminated the state gas tax in favor of a mix of fees and a sales tax on wholesale fuel sales, said that the most important issue facing states was the Highway Trust Fund.
“Our state has relied on those obligations, so to let that [Trust Fund] go insolvent would be a significant impact for the state,” Layne said.
Layne also shared some numbers to reflect the consequences in Virginia if the Highway Trust Fund became insolvent. According to Layne, 149 bridge replacements would not happen; 44 smaller transit systems (mostly in rural Virginia) would run out of funding to operate; more than 350 projects would be halted; and 175 transit vehicles would not be replaced. These things would have an impact on 43,000 jobs, Layne said.
Additional information on the hearing, including all written testimony, is available here.