Friday, February 28, 2014

President Proposes Reauthorization Bill

It’s great to see the President making a serious Reauthorization proposal, following up on the State of the Union address.  Although we don’t have all the details (White House factsheet here), the proposed program is pretty robust, with especially strong TIGER and transit components and an emphasis on system preservation.
The weakest part of the proposal is the financing side.  The bill would be funded by $150 billion in “one­time transition revenue from pro­growth business tax reform.”   As I said in my remarks on the State of the Union, there are a couple of serious problems with using “tax reform” money.  First, use of non-user-fee funds commingles transportation budgets and general budgets in a way that is dangerous to stable funding for transportation.  Second, and perhaps more germane, I don’t think that the “tax reform” bird will fly.  The President may see tax reform as a way to raise revenue.  House Republicans see tax reform as a way to lower tax rates in the upper brackets.
Ironically, the President’s remarks in St. Paul launching this initiative were made on the same day as the fifth anniversary of the transmittal of the report of the national commission set up by Congress to recommend how to fund transportation.  Does anyone remember “Paying Our Way: A New Framework for Transportation Finance,” published by the National Surface Transportation Infrastructure Financing Commission?
A super-executive summary of the commission’s findings and recommendations: The nation is facing a “large and widening gap between federal revenue and investment needs” for transportation.  The commission made a detailed examination of alternatives and recommended (1) that Congress look toward a mileage tax as a long-term revenue source and (2) because the needs are urgent and getting to a mileage tax will take a while, Congress should enact a significant bump in the gas tax now.
How did that work out?  Not well.  Here we are five years later talking about more one-time fixes.
Although conventional wisdom in Washington holds that gas tax increases, let alone mileage taxes, are in the realm of fantasy, the good news is that things are changing at the state level.  In the past year or so, several states have enacted gas tax increases for transportation.  In Pennsylvania and Virginia, these increases have been proposed by Republican governors and have received significant Republican votes in the legislature.
The important point for now is that the President has made a serious Reauthorization proposal with real (or at least potentially real) money behind it.  So I agree with AASHTO that it is “good news” that the President is “looking seriously” at surface transportation finance and with T4America, who are “encouraged to see the threat to our nation’s transportation network begin to get the attention it deserves.”

Now if we could just recirculate that Finance Commission report (yes, it is still available online here)…………..

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