The Long and Winding Road
Although prospects for a $2 trillion federal infrastructure package remain slim, there is a positive development regarding the reauthorization of the nation's surface transportation law known as the Fixing America's Surface Transportation Act (FAST Act). Earlier this week, the Senate Committee on Environment and Public Works (EPW) unanimously approved S.2302, America's Transportation Infrastructure Act (ATIA) authorizing $287 billion over five years for programs to build and revitalize America's highways and bridges. This legislation boosts spending by 27 percent over current law while streamlining project delivery, addressing resiliency and improving safety.
Let's take a look at the biggest challenge facing the transportation reauthorization bill - funding.
Funding has always been the Achilles heel of achieving a robustly funded federal transportation bill. And the ATIA is just the most recent example. For decades, America's roads and bridges were paid for by the users of the transportation system through modest gas taxes. The system worked well for years, but as vehicles have become more fuel efficient and those that use little or no gas at all have become more prevalent, less revenue from this user fee has flowed into the Highway Trust Fund (HTF). Consequently, the HTF has been teetering on bankruptcy off and on since 2008 when expenditures first exceeded revenues.
To keep the HTF solvent, Congress has provided over $140 billion in non-user generated revenue since 2008. And the situation will only grow more dire as the Congressional Budget Office has projected that to keep the HTF solvent over the next ten years, an additional $171 billion in revenue must be generated. Keep in mind that this projection assumes FY19 funding levels which are significantly lower than the increases contemplated in ATIA.
In a nod to a future that will increasingly include more hybrids, electric vehicles and other alternatively fueled vehicles, the ATIA provides $1 billion through a competitive grant program to build the corresponding infrastructure. This is very positive - but it does not address the fact that these drivers are paying little or nothing to the upkeep of our roads.
Not surprisingly, when it comes to addressing user fees on hybrid and electric vehicles, states have been leading the way as they struggle to meet their own transportation funding challenges. Although they contribute to the wear and tear on the roads, these vehicles have not paid their fair share for the use of the roads. But this has been gradually changing as 27 states have enacted legislation to impose an annual fee on electric vehicles and 14 of them also have imposed an annual fee on hybrids.
To be fair, the Senate's EPW Committee does not have jurisdiction over how to pay for the ATIA - that task falls to the Senate Finance Committee. It is imperative that the next surface transportation bill include a long-term and sustainable solution for the HTF. To keep the user pays concept moving forward, the Finance Committee should consider a myriad of options including a boost in the gas tax (which has not been increased since 1993), a fee on those vehicles that use little or no gas, and a closer examination of mileage-based user fees.
The ATIA represents just one component of a comprehensive surface transportation bill as it only addresses highway and bridge programs. The Senate Banking Committee must still draft the transit title and the Senate Commerce Committee must draft the safety title. The same goes for the House Transportation and Infrastructure Committee which has yet to produce its own bill.
While this week's action is a positive development, it's best to keep in mind that this bill represents only the first mile of a very long and winding road to Congressional approval of a long-term transportation bill.