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Consequences of Underfunding Transportation

September 19, 2012

What was billed as the release of a new report exploring the expected consequences of a 35 percent cut in federal funding of transportation programs quickly turned from a Washington, D.C. wonk-fest into far more interesting speculation about how Congress will expand revenue streams for the Highway Trust Fund.

The setting was the joint release by the Bipartisan Policy Center and Eno Center for Transportation of their latest research on transportation.  The Consequences of Reduced Federal Transportation Investment emphasizes the need to institute a sustainable flow of transportation revenues and investment resources to achieve national prosperity goals. The report trumpets the adoption of Moving Ahead for Progress in the 21st Century (MAP-21), the newest transportation authorization measure, but acknowledges that the long-term funding issues surrounding the federal programs are still unresolved.

From that point of departure, a panel of transportation stakeholders spoke in optimistic terms about the likelihood of expanded revenues for transportation. In this regard the only relevant bone of contention was whether the new revenues would be part of a future surface transportation bill or a future tax reform bill.

What is clear is that the highway trust fund does not generate enough revenue to fund even the most necessary infrastructure investments. The 18.4 cents per gallon tax on gasoline and the 24.4 cents tax on diesel remains unaltered since 1993.  Moreover, ongoing efforts to improve the fuel efficiency standards in cars and trucks are expected to reduce fuel consumption, shrinking the trust fund still further.

In practice, Congress has been willing to dip into general revenues to fund infrastructure rather than raise the fuel tax or restrict spending to the available revenue dedicated for such purposes in the highway trust fund. Such action seems to suggest, assuming Congress is disposed to act at all, that the advantages of economic competitiveness that makes infrastructure investment so necessary trumps the fears about both deficit reduction and pledges against new taxes.

User fees and other forms of directed funding, as well as public-private partnerships, have proven to be politically palatable at the local and state levels (Measure R in Los Angeles, for example) and may indeed prove useful for the Feds. However, collecting fees on vehicles miles traveled rather than on toll roads or at the gas pump still presents implementation challenges, even when including the pilot program in Oregon. For the moment, technology alone may not be able to solve this problem.

Although the decisions about significant future revenues remain in the hands of Congress, some important decisions continue to rest with state and local government leaders.  (For a thoughtful discussion see the NLC publication, Understanding Urban Transportation Systems: An Action Guide for City Leaders.)  Metropolitan-wide mobility planning that includes multi-modal options offers local decision makers the opportunity to highlight innovative approaches with strong performance measures that support national priorities.

The long and drawn-out debate that finally resulted in MAP-21 ought to serve as a reminder to state and local leaders that even if Congress acts to establish an enhanced highway trust fund, the long-term vision and the implementation of that vision will rest at the local level. Solutions to unique and complex transportation needs will need to be found in each community regardless of the whims of Congress.

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