A budget-busting bill of $500,000,000,000 alters Federal funding of transportation, increasing it 40%.

Minnesota Democrat James Oberstar has introduced a bill that calls for sweeping changes in U.S. transportation policy, as well as how taxes and fees are assessed to keep the now bankrupt Highway Trust Fund solvent. It’s a half a trillion dollar program.

He also wants to restore rail freight service, institute high-speed train travel between major cities, and increase funding for mass transit by establishing higher fees on highway users.

His “Surface Transportation Authorization Act Of 2009” introduced late last month in the House of Representatives claims to be a “blueprint for investment and reform,” and directly challenges the Obama Administration. It has cleared a sub-committee, and markups are proceeding. [See Oberstar here]

Secretary of Transportation Ray LaHood wants to defer the larger discussion of transportation policy that is being prompted by the impending bankruptcy of the Highway Trust Fund. It runs out of money this month.  And the current transportation bill expires this October 1, when the new fiscal year begins. The new bill has good bipartisan support in the House.

LaHood is kicking the core issue down the road.

LaHood proposes maintaining the status quo for 18 months by injecting, oh, $10 to $20 billions of dollars into the existing system to keep the money flowing to the states, which then can divert up to 50% of the money for other purposes. Oberstar wants accountability and coherence to the unsupervised spending. LaHood ducks this core issue by saying he thinks that it will take 18 months for Congress to “think creatively as we search for sustainable funding mechanisms.”

Translation: your taxes are going up

Gas Tax Free!

The Obama Administration doesn’t want to deal with this right now, although it’s tough for me to foresee just when increased taxes will become more popular. And what about Obama’s claim that it is time to stop kicking tough problems “down the road” — I guess that doesn’t apply to our actual roads. 

Congressman Oberstar, chairman of the House Transportation and Infrastructure Committee, has countered with a budget-busting transportation bill of $500,000,000,000, which would be spent over six years. It would fundamentally alter the Federal funding of transportation and increase it by almost 40%.

The need is there, claims Oberstar

Our transportation system is deteriorating, with almost 61,000 miles (37%) of all lane miles on the National Highway System (NHS) in poor or fair condition; more than 152,000 bridges — one of every four bridges in the United States — are structurally deficient or functionally obsolete; and more than 32,500 public transit buses and vans have exceeded their useful life. The nation’s largest public transit agencies face an $80 billion maintenance backlog to bring their rail systems to a state of good repair and, within the next six years, almost every transit vehicle (55,000 vehicles) in rural America will need to be replaced, according to Oberstar. He charges that the U.S. Department of Transportation (DOT) “has not lived up to its original purpose of integrating and implementing transportation policy.”

Who pays?

Perhaps the most controversial part of the bill calls for an increase in user fees that feed the Trust Fund. Most of it now comes from an 18.4-cent-per-gallon gasoline tax, which hasn’t been increased since 1993. If the bill is going to pay for itself, gasoline taxes would have to increase drastically. Under existing formulas, the current gas tax generates about $35 annually billion in funds or $210 billion over six years. That’s only 42% of the cost of the new bill. Worse, gas tax revenue is dropping as vehicle fuel efficiency increases. Worse still, as the Great Recession drags on and oil prices rise, miles travelled continue to drop.

So if you want to cover the $500 billion in costs of the proposed programs, the gas tax would have to more than double to, oh, 40 cents/gallon, maybe more. And this assumes fuel efficiency doesn’t increase further, which of course ignores the drastic efficiency increases called for under the President’s National Fuel Efficiency Policy, which purports to save about 85 billion gallons of fuel use during the next five years. You do the math, no wonder the Administration wants to defer the discussion. How this all works out, and who pays how much, will be the subject of much backroom maneuvering and political finagling of numbers either this summer or at some point in  the future. Not surprisingly, the fee part the bill is vague.

Another fee, based on vehicle miles traveled or VMT is also under consideration. The claimed advantage here is it charges drivers for their actual use of roads. It also addresses what some say is the current inequity between rural and urban areas. About 15% of the nation’s lane miles of highway are in urban areas, where 50% of traffic flows. In Oberstar’s view, rural motorists pay a 35% premium to pay for urban roads they do not use. A VMT would allow for a lower rate to be paid in less-congested areas where less maintenance is needed. Adjustments could be made for weight, allowing drivers of lighter, more economical vehicles to pay less.

Reform is needed

Oberstar has at least one significant — and badly overdue — reform in mind: Current Federal transportation programs have no performance goals and there is no requirement for states, cities, and public transit agencies to develop transportation plans with specific objectives.   

His new bill calls for a complete redefinition of the Federal role in transportation that dates to “The Federal-Aid Highway Act of 1956,” and consolidates or eliminates more than 75 existing programs. By combining most highway funding in four, core formula categories, Oberstar claims that highways and bridges would be returned to a state of good repair, while improving safety. The bill would also develop new and improved transportation capacity, thereby reducing congestion and greenhouse gas emissions and improving air quality.

Start messing with this much pork, though, and the lobbyists and the politicians they influence are bound to take notice. So it likely will be long, pot-hole filed ride for the bill, which even it survives in some recognizable form in the House, will face stiff opposition in the Senate.

“Delay is unacceptable,” said Oberstar. “Delay casts uncertainty on the program.  If we delay the new authorization, states will hold back on new projects, and that will cost jobs. “We are not in the business of delay. It is time to move ahead.”