Reason Foundation’s Baruch Feigenbaum, who was a speaker at the CIRT’s spring conference last year, provided an detailed analysis of House Democrat and Republican proposals to replace the FAST Act law, which will expire on September 30th.
[NOTE: The Senate Environment and Public Works (EPW) Committee agreed on the highway portion of a proposed bill (see, related CIRT story). But there has been limited work on the transit, freight and funding components by the relevant Senate committees. The House has taken a different tack. Instead of writing a bill, the Democratic majority recently released a set of principles and ideas titled the Moving Forward Framework. Due, in part, to differences over environmental and funding policy, the Republican minority released a separate set of principles].
Feigenbaum points out, that the next surface transportation reauthorization bill needs to answer one major question. What is the role of the federal surface transportation program? The federal program and gas tax were created in 1956 to fund the Interstate highway system. The 1991 Intermodal Surface Transportation Equity Act (ISTEA) declared the era of Interstate construction over, but it never clarified a vision for ongoing surface transportation funding. Most free-market experts agree that the federal role is to promote Interstate commerce, which is one of the few mentions of transportation in the Constitution. That could include a major highway network, aviation, freight rail and passenger rail where it makes sense. And funding should follow the users-pay/users-benefit approach.
Under the “principles” framework, there are major problems with the Democratic approach and smaller problems with the Republican approach.
Funding: Both want sustainable sources. The Democratic proposal suggests increasing the gas tax while the Republican principles propose replacing the gas tax with a federal mileage-based user fee (MBUF). The Democratic proposal would spend $760 billion over five years (although it includes water, waste-site remediation, and telecommunications). The Republican principles are limited to surface transportation at $285 billion over five years. The Democratic proposal is not friendly to tolling, seeking to restrict where tolling and congestion pricing can be implemented. But it does increase the private activity bond (PAB) cap to $21 billion, a much-needed increase for public-private partnership (P3) projects. The Republican principles are silent on tolling and financing.
Policy Aspects: Parts of the Democratic proposal read like a wish-list for environmentalists and public employee unions. The environmental components include things like “set a path for zero-carbon pollution from the transportation sector, ensure a green transportation system, and help combat climate change by creating jobs in green energy.” The “strong-union” proposals strengthen Davis-Bacon protections and other “worker” protections and ensure that U.S. products are used in construction by increasing Buy-America protections. [Unfortunately, this would drive up construction costs, reducing the number of projects]. The Democratic proposal would also expand and empower local agencies. It allows local agencies that cannot currently receive federal funds to be direct beneficiaries.
The Republican principles allow some flexibility, but less direct funding for local governments. They also refocus attention on core national highway programs.
Non-Surface Transportation Programs: The Democratic proposal would expand the number of federal programs while the Republican proposal keeps programs the same or consolidates them. For example, the Democratic proposal expands non-roadway transportation funding and scope. It would spend $105 billion on transit, mostly on new rail transit capacity. It also reforms bus policy and funds mobility-on-demand projects. It would spend $10 billion on safety, particularly enforcement. And it calls for $55 billion for railroad improvements, particularly Amtrak in the Northeast Corridor. The Republican proposal focuses on streamlining project delivery, something that has been a priority of both the Obama and Trump administrations, along with addressing rural community needs.
Impacts: The Democratic approach would likely increase the cost of infrastructure significantly. The more projects cost, the less infrastructure we can build and maintain. Some of the end-goals should be viewed differently. For example, enacting mileage-based user fees and congestion pricing would ultimately reduce greenhouse gas emissions more effectively than subsidizing jobs in green energy. Likewise, reducing project costs would do more to increase employment than mandating Buy America provisions. The Democratic approach expands federal funding to more local projects and allows small cities to become direct funding recipients. But most smaller cities don’t need direct federal funding. In rural areas, the state DOT typically administers funding and in metro regions the MPO administers funding. If that approach is not working well, we need to reform it. Creating a whole new level of bureaucracy is not necessary. The Democratic approach also increases funding for heavy and light-rail projects. Local rail projects are by definition “local” and should not receive federal funding. Passenger rail operated by an entity with a sound business plan could be interstate in mission. But Amtrak is not that entity.
The Republican approach focuses on investment in rural parts of the country, ignoring suburban and urban needs. Both a rural Interstate in Forsyth, GA, and a suburban Interstate in Sandy Springs, GA, have major needs, for example. Congress should not be the entity to prioritize one geographic region over another. But, the Republican proposals are short on some needed details.
These Congressional proposals are a long way from becoming law. [For a more detailed analysis and discussion; see, Reason Foundation: Surface Transportation Newsletter #196].