Transportation

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Panel Explores Methods of Infrastructure Finance

June 17, 2008 -- On June 10, the House Transportation and Infrastructure Committee held a hearing to analyze various methods for financing infrastructure, including roads, bridges, public transportation, aviation, ports, waterways and wastewater treatment infrastructure.

Hearing witnesses analyzed the viability of creating a national infrastructure investment bank as a way of prioritizing and financing transportation and other infrastructure projects. Recently, several pieces of legislation have been introduced to create various forms of infrastructure banks to increase investment, including:

  • National Infrastructure Development Act of 2007 (HR 3896) – establishes the National Infrastructure Development Corporation (NIDC) as a wholly-owned government corporation and eventually transitioning to a self-sustaining private government-sponsored entity similar to Fannie Mae. It would establish, with initial capitalization from the U.S. Department of Transportation, a nationwide revolving loan fund for infrastructure projects. NIDC would also be authorized to issue and sell debt and equity securities to finance projects.
  • National Infrastructure Bank Act of 2007 (S 1926 & HR 3401) – establishes a National Infrastructure Bank as a governmental entity to package financing (any combination of grants, direct loans, loan guarantees or bonds) for infrastructure projects. Infrastructure projects with a potential federal investment of at least $75 million would request funding through a public sponsor. The bank would be authorized to issue up to $60 billion in bonds to finance infrastructure projects.
  • Build America Bonds Act of 2007 (S 2021) – establishes the creation of a Transportation Finance Corporation (TFC) that would be authorized to issue up to $50 billion in “Build America Bonds” to fund infrastructure projects, which would be exempt from federal, state and local taxes. The TFC would create a trust account to house proceeds from the sale of bonds, an appropriation of funds equal to the lesser of $50 billion of the amount of revenues resulting from the extension of Customs user fees beyond September 31, 2007, and investment earnings. Funds in the trust fund would be used to finance projects, redeem Build America Bonds and fund operations of the TFC.
  • RIDE 21 (HR 6004) – authorizes states or interstate compacts to issue bonds to finance high-speed passenger rail infrastructure improvements. Specifically, it will allow the issuance of $12 billion in federal tax-credit bonds and $12 billion in federal tax-exempt private-activity bonds over ten years.
  • ON TIME Act of 2007 (HR 5102) – establishes new freight-related user fees and a dedicated freight trust fund to assist trade gateway communities address freight-related infrastructure needs. It will assess a new trade gateway corridor fee on each article imported in and exported from the U.S. Fees collected would be deposited into a National Trade Gateway Corridor Fund and then apportioned to states to fund projects.

To view the hearing testimony, visit http://transportation.house.gov/hearings/hearingDetail.aspx?NewsID=663.

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States Facing Transportation Funding Shortfalls

June 17, 2008 -- On June 5, before a hearing of the House Transportation and Infrastructure Subcommittee on Highways and Transit, representatives from state departments of transportation testified that funding shortfalls are already causing their states to put off new construction in favor of maintaining and improving the condition of existing infrastructure.

The Highway Trust Fund is expected to experience a deficit in FY2009 of roughly $3.4 billion and, according to the American Association of State Highway and Transportation Officials (AASHTO), cause the termination or delay of nearly $13.5 billion in projects.

Citing a study by the U.S. Chamber of Commerce, AASHTO President and Missouri State Department of Transportation Director Pete Rahn testified that the country needs to invest an additional $50 billion annually to maintain the current performance of transportation systems. He also indicated that some of the 108 federal transportation programs do not allow resources to be expended on preventative maintenance and requested that new policy be developed to allow such expenditures.

Pennsylvania Department of Transportation Secretary Allen Biehler testified that increasing construction costs of 63 percent over the past five years, which surpassed the rate of inflation, has hurt states’ abilities to maintain the current system. Rahn added that increased freight trucking has been a contributing factor in the deterioration of U.S. roads. The amount of traffic is expected to rise from 10,500 freight trucks daily on U.S. interstates to 22,700 by 2035.

In his opening statement, House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) indicated that between 1990 and 2005 there was a 52.4 percent increase in freight-ton miles.

To access the hearing testimony or to view a video of the hearing, visit http://transportation.house.gov/hearings/hearingDetail.aspx?NewsID=659

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House Approves Technical Corrections Bill

May 20, 2008 -- On April 30, the House approved legislation (HR 1195) making technical corrections to the SAFETEA-LU authorization bill. The measure now heads to the White House where it will await the President’s signature.

The measure provides an additional $37 million for highway research-related programs that were under funded in the original bill. In addition, the bill funds a number of individual projects and increases the minimum state share of total highway safety formula grants from 0.5 percent to 0.75 percent.

For more information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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Senate Pulls FAA, Trust Fund Fix Measure from Floor Consideration

May 20, 2008 -- On May 6, Senate Majority Leader Harry Reid (D-NV) pulled from floor consideration a measure (HR 2881) reauthorizing the Federal Aviation Administration (FAA) as well as providing a short-term fix for the soon-to-be depleted Highway Trust Fund (HTF). The measure was pulled after it failed to receive the 60 votes necessary to invoke cloture. Only 49 Senators voted in favor of limiting debate and moving toward passage of the bill. It is unclear if the measure will be reconsidered later this year.

Inclusion of $5 billion in tax provisions to sustain the HTF through FY2009, when it is predicted to experience a $3.4 billion deficit, drew significant opposition from GOP Senators.

The bill would have provided nearly $3.4 billion from the Treasury to reimburse the HTF for expenses made in association with emergencies and natural disasters, which should have been covered by the General Fund. The bill temporarily discontinued transfers from the HTF to the General Fund for “amounts paid with regard to gasoline used on farms, used for some non-highway purposes or by local transit systems, relating to fuels not used for taxable purposes, and income tax credits for certain uses of fuels.” The provision would have saved $745 million. In addition, the bill contained a provision designed to improve tax law compliance, which was expected to generate $900 million in new revenue.

For more information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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Senate Passes SAFETEA-LU Technical Corrections Bill

April 17, 2008 -- On April 17, the Senate adopted legislation (HR 1195) making technical corrections to the SAFETEA-LU surface transportation authorization bill. The measure now awaits final consideration from the full House. In a Statement of Administration Policy (SAP), the White House indicated that it “strongly opposes” the bill.

The measure provides $21 million for highway research programs that were underfunded in the original bill. In addition, the bill funds a number of individual projects and increases the minimum state share of total highway safety formula grants from 0.5 percent to 0.75 percent.

For more information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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Budget Proposal Continues Funding Decreases for DOT

February 12, 2008 -- The budget provides total funding of $57.1 billion for the Department of Transportation, roughly 10 percent under the current level.

The budget proposal now estimates that the Highway Account of the Highway Trust Fund will face a deficit of $3.3 billion by the end of FY2009. The estimate is down from the $4.3 billion estimate of August 2007. According to the American Association of State Highway and Transportation Officials (AASHTO), the shortfall would represent a potential program reduction of $12 billion, unless action is taken to shore up the trust fund.

As a result of the projected deficit in the Highway Trust Fund, Federal Highway Administration (FHWA) funding is reduced below the levels established in SAFETEA-LU. Federal-Aid Highways are provided $39.4 billion, roughly $1.8 billion under the authorized obligation limit. The reduction comes from a projected negative Revenue Aligned Budget Authority (RABA) of $1 billion – which allows for reductions in funding based on diminished gas tax receipts – and $800 million in rescissions from unobligated project balances.

In addition, the administration allows the Secretary of Treasury to transfer funds from the Mass Transit Account of the Highway Trust Fund to cover shortfalls in the Highway Account. The transfers would be considered no-interest loans.

The budget proposes $175 million for the National Strategy to Reduce Congestion, a new initiative of the administration to reduce traffic and commute times across the nation. Of the funds provided, $100 million is for metropolitan area congestion reduction demonstration initiatives and $75 million is to support the Corridors of the Future program. Funds for the program are redirected from unobligated project balances authorized in the 1991 ISTEA and 1998 TEA-21 laws.

The budget cancels a total of $3.15 billion in unobligated balances of apportioned contract authority and an additional $735 million from unobligated High Priority Project balances.

The budget also proposes that 75 percent of funds for discretionary programs be reserved to support critical congestion relief projects. Projects that combine road pricing, transit and technology solutions would be given priority consideration by the department.

Within the Federal Aviation Administration (FAA), the budget provides $2.75 billion for the Airport Improvement Program (AIP), a cut of $750 million.

The Essential Air Service (EAS) program is provided $50 million, a reduction of $75 million. The budget again proposes a local cost share requirement for communities receiving EAS support. Congress has blocked all previous administration attempts to require communities to provide a local match. Funding for the Small Community Air Service Development program, currently at $10 million, is eliminated. Funding for the Federal Transit Administration (FTA) Formula and Bus Grant is increased $1.8 billion to $8.67 billion and Non-urbanized Area Formula funding increases from $506.5 million to $538.1 million. This includes $9.3 million for the Rural Transit Assistance Program (RTAP), $8.8 million for the Over-the-Road Bus Accessibility program and $51.5 million for the Clean Fuels Grant program.

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Senate Committee Tackles Highway Trust Fund Deficit

September 25, 2007 -- On September 18, during mark up of the revenue title of the Federal Aviation Administration Reauthorization bill (S 1300), the Senate Finance Committee approved provisions that would restore solvency in the Highway Trust Fund through 2009.

According to projections from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), the Highway Trust Fund is expected to experience a deficit of over $4 billion in FY 2009.

Provisions adopted by the committee are expected to raise roughly $5 billion in revenue to offset the deficit in the trust fund in 2009. Specific measures adopted include:

  • Replenishing Emergency Spending from the Highway Trust Fund: Since 1998, in excess of $3.3 billion has been spent from the trust fund to respond to emergencies, such as hurricanes and other disasters. The measure would replenish the Highway Trust Fund with $3.4 billion from the General Fund.
  • Suspension of Transfers from the Highway Trust for Certain Repayments and Credits: The provision will temporarily suspend payments made from the Highway Trust Fund to the General Fund for fuel taxes paid on gasoline used on farms, used by local transit systems and income tax credits for certain uses of fuel. The change is expected to generate $745 million over a six-month period
  • Fuel Fraud Provisions: Increased revenue from enactment of new tax compliance provisions, which is expected to generate $844 million

The full Senate is expected to take up its version of the bill in the coming weeks. The provisions are expected to be considered during conference when the House and Senate negotiate the differences between the competing versions of the FAA reauthorization measure.

For additional information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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Administration Revises Highway Trust Fund Estimates

July 16, 2007 -- On July 11, the Office of Management and Budget (OMB) announced that the Highway Trust Fund (HTF), which is financed by gas tax receipts and funds federal surface transportation programs, is expected to reach a deficit of nearly $4 billion in FY2009. Earlier estimates pegged the FY2009 shortfall at $700 million. OMB also estimates that the deficit will reach $9 billion in 2010 and $15 billion in 2011.

Upon release of the updated figures, American Association of State Highway and Transportation Officials (AASHTO) Executive Director John Horsley stated that if the "massive deficit were to be offset by obligation limit reductions, it would require reducing the distribution of federal funding to the states by as much as $16.5 billion in FY 2009. It takes four dollars in obligation reductions to save one dollar in spending.”

The HTF forecast was released as part of OMB’s mid-session review of the budget. To access the review, visit www.whitehouse.gov/omb/budget/fy2008/pdf/08msr.pdf. For more information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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House and Senate Finalize FAA Reauthorization Measures

June 28, 2007 -- On June 28, the House Transportation and Infrastructure Committee approved legislation (HR 2881) reauthorizing programs of the Federal Aviation Administration (FAA). The measure provides $66 billion from FY2008 through FY2011, which is comparable to the amounts provided by legislation (S 1300) adopted by the Senate Commerce, Science and Transportation Committee on May 15. The existing authorization (Vision 100/PL 108-176) is set to expire in September. Both measures now await floor action.

Both House and Senate bills would authorize a total of $16 billion over four years for the Airport Improvement Program (AIP). The measures would authorize $3.8 billion beginning in FY2008 and rise to $4.1 billion by FY2011. The program is currently funded at $2.75 billion.

Both measures reauthorize the Essential Air Service program (EAS) program at $133 million annually, an increase of $6 million and eliminate existing provisions that have never been implemented, requiring EAS communities to provide local matching funds. In addition, the measure would provide the Department of Transportation (DOT) with flexibility to encourage better service by incorporating financial incentives into EAS contracts, or signing longer term contracts. The bills also extend the Small Community Air Service program through 2011.

For additional information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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Transportation Committee Releases Public-Private Partnerships Guidance

June 15, 2007 -- House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) has unveiled a position paper detailing guidelines that states should use when evaluating public-private partnerships (PPPs). The paper is a follow-up to a letter from Reps. Oberstar and Peter DeFazio (D-OR) to states urging caution when entering into PPPs.

The paper details considerations such as advancing public objectives, assuring the use of proceeds for transportation purposes, calling for state transportation departments to develop resources to evaluate proposed PPPs and preserving the planning process.

To view the guidelines, visit http://transportation.house.gov/media/file/press/%20guidelines%20veritas.pdf.

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Committee Democrats Urge Caution in Public-Private Partnerships

May 25, 2007 -- On May 10, House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) and Highways and Transit Subcommittee Chairman Peter DeFazio (D-OR) issued a letter to governors, state legislators and state transportation officials urging caution when entering into public-private partnerships (PPPs) that involve highways.

The letter states that "although we invite all financing options to be on the table as we evaluate opportunities to increase investment in our nation's infrastructure, we strongly caution you against rushing into PPPs that do not fully protect the public interest, the integrity of the national system, and which do not constitute a sustainable national system of transportation financing."

The administration supports the concept of PPPs and has developed model legislation allowing for their development. The letter mentions that the committee will develop a discussion paper to present its concerns on PPPs. In addition, the letter indicates that the committee could act against some PPPs in the upcoming SAFETEA-LU reauthorization measure. To access the letter, visit http://transportation.house.gov/news/PRArticle.aspx?NewsID=202.

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GAO Releases Small and Rural Air Service Analysis

April 25, 2007 -- On April 25, the Government Accountability Office (GAO) released a study of the Federal Aviation Administration's (FAA) Essential Air Service (EAS) program and the Small Community Air Service Development Program (SCASDP). The report found that many communities receiving EAS support would most likely not have service if the program were discontinued. However, the number of air carriers flying aircraft suitable for communities receiving EAS assistance may decrease, which raises questions regarding the availability of the aircraft necessary to provide future small community air service. In addition, the report analyzes how SCASDP grants have been used to improve air service. To access the report, visit www.gao.gov/new.items/d07793t.pdf.

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DOT Unveils Model Legislation for Private Transportation Projects

January 16, 2007 -- On January 8, the U.S. Department of Transportation (DOT) unveiled model legislation that would provide states with flexibility to contract with private sector entities for investment in and management of transportation projects. According to DOT, the legislation is a starting point for states that need statutory authority to enter into public-private agreements and provide a sample of what a private-public partnership agreement looks like. Issues addressed by the draft legislation include which modes of transportation would be eligible for private investment, whether or when tolls may be collected, innovative procurement methods and upkeep requirements for leased roads. To access the model statutes, visit www.fhwa.dot.gov/ppp/legislation.htm.

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