Editor’s note: The following commentary appeared on CenterMaryland.org on August 7.
By Donald C. Fry
Everyone complains generally about “gridlock” in Congress, but if you’re seeking a specific example of how that gridlock affects our daily lives, you need look no further than transportation funding and its impact on our national mobility.
American infrastructure has deteriorated through neglect, underfunding and an absence of leadership and vision to improve our nation’s system of highways, bridges, transit, among other infrastructure systems.
Since 2005, when our nation’s last long-term transportation funding authorization expired, our country’s roads, bridges and transit have subsisted to this day through a series of short-term extensions enacted by Congress.
Since then, two interstate bridges have collapsed – one in Minneapolis in 2007 and another in Washington state last year – serving to remind us of how little our country is spending on infrastructure and of our nation’s continuing decline in infrastructure stability.
In July 2012, Congress passed and President Obama signed a two-year, $105 billion piece of legislation ironically titled the “Moving Ahead for Progress in the 21st Century Act,” known as “MAP-21.”
Two years. By the transportation funding standards of the last decade, that’s the closest we have come to a “long-term” strategy. MAP-21 expires next month, just about the time that our nation’s Highway Trust Fund was scheduled to go bankrupt.
So now what did a gridlocked Congress do about long-term transportation funding? It opted for a 10-month extension – a $10.8 billion supplement to the Highway Trust Fund – the source of federal funding for highway and transit projects across the U.S. This will keep the fund solvent until May 2015, when members of a new Congress will presumably tackle that pesky issue of how to ensure long-term funding for our nation’s mobility.
Transportation advocates on Capitol Hill are pressing for a six-year re-authorization funded at $54 billion per year plus inflation, which essentially reflects the current spending level, Ken Orski, a widely-acknowledged national transportation expert, reported in his May 27th newsletter.
A multi-year bill is essential for states to implement large-scale multi-year projects. But a six-year reauthorization funding package that relies solely on existing funding sources – primarily the federal gas tax of 18.4 cents per gallon – to replenish the Highway Trust Fund would leave a funding gap of at least $96 billion over the six years at current transportation funding levels, Orski notes.
Clearly, placing the Highway Trust Fund on sound footing will require some kind of transportation revenue increase at the federal level. However Congress, and transportation advocates on Capitol Hill as well, are far from reaching a consensus on how to generate that revenue increase. Potential options cited by Orksi and others include:
- Increasing and indexing the federal gas tax. This is the most direct option, but has virtually no traction either in Congress, the White House or among U.S. taxpayers, according to recent polls.
- Using general funds to fill Highway Trust Fund deficits. This option, which Congress is already reluctantly implementing, does not have support as a long-term strategy.
- Generating revenue from repatriating overseas corporate profits. Several proposals are before Congress that would derive revenue for transportation infrastructure from repatriating corporate profits now overseas. Proposals issued in April by the Obama administration and U.S. Department of Transportation would yield more than $100 billion for infrastructure from repatriation provisions in corporate tax reforms, but such reforms have no chance of passage, according to Capitol Hill observers.
Meanwhile Maryland Congressman John Delaney and 70 co-sponsors in the House have introduced bi-partisan legislation to create a $50 billion infrastructure fund from bond sales to corporations that, in turn, would be entitled to repatriate overseas profits tax-free based on the amount of bonds they purchase. But this legislation is unlikely to pass in this Congress.
Then there’s “pension smoothing,” letting companies defer required contributions to their pension plans, thus increasing the taxes those companies pay. More than half the $10.8 billion in the current Highway Trust Fund supplement is to be derived from pension smoothing, according to experts.
No one sees this stop-gap practice as a viable long-term option, but how long lawmakers will continue to turn to this and other such fiscal tactics-of-the-moment remains to be seen.
Figuring out how to accomplish a sound, long-term strategy for federal transportation funding remains an open and troubling challenge not only in Washington, but in the states that rely on federal funds to help them address critical highway and transit infrastructure challenges.
In Maryland, the Greater Baltimore Committee has made the federal funding challenge the focus of its 2014 Transportation Summit on September 25, where a panel of experts will discuss and debate potential solutions to the long-term transportation funding question.
Our lawmakers need to collectively recognize that mobility is a fundamental prerequisite to economic competitiveness and prosperity. They must recognize that a succession of year-to-year band-aid fiscal patches to federal transportation funding is bad public policy that stymies long-term planning at the state levels, where our nation’s infrastructure either improves, or it doesn’t.
Congress has, in effect, kicked the federal funding can down the road for almost 10 years. It’s well past time for our nation’s gridlocked leaders to get serious about crafting and enacting good public policy when it comes to our vital transportation infrastructure.
Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.