After a flurry of Congressional activity in July, the stage is set for a fall showdown that could result in the passage of a long anticipated multi-year transportation authorization bill. During the latest rounds of debate, the fact that most Congressional leaders in both the Senate and House of Representatives seem committed to passing a long-term bill has given reason for optimism. However, several hurdles must be cleared to gain final passage, as the clock continues to wind down on the latest extension. In particular, disagreements over how to finance the bill must be resolved, and the House and Senate must come to a consensus on policy reforms proposed in their respective versions of the bill.
How the Stage Was Set
Prior to its annual August recess, Congress came as close as it has in several years to enacting a long-term bill with substantial policy reforms and modest funding increases. On July 30, the Senate passed its version of a 6-year bill, the Developing a Reliable and Innovative Vision for the Economy Act (DRIVE Act) with a final vote of 65 to 34. Unfortunately, the House refused to take up the Senate bill prior to recess, and the expiration of the latest extension of MAP-21, forcing the passage of yet another short term extension, through Oct. 29. Two major factors led to the temporary demise of the DRIVE Act – the House of Representatives did not want to be rushed into accepting legislation that they had little input into crafting, and several House leaders objected to some of the budget offsets proposed to finance the bill.
Despite the failure of the temporary failure of the legislation, many transportation stakeholders remain optimistic that Congress can reach an agreement on a long-term bill. First, the short term nature of the new extension puts pressure on Congress to take up the debate immediately upon their return in the fall. Although the House of Representatives has yet (at the time of this writing) to introduce their version of a long term bill, inside sources have indicated that the Transportation & Infrastructure Committee has been working hard to prepare the bill, which should be introduced imminently. Second, although funding levels in the Senate passed bill fall short of recommendations by national groups such as APTA, the DRIVE Act contains significant increases for public transportation programs and several policy changes advanced by the transit industry. The legislation would increase funding for transit programs by more than 25 percent over the 6 year life of the bill (as opposed to just a 19 percent increase for the highway program). It contains significant increases for popular programs such as the Capital Investment Grants Program (New Starts), the Bus and Bus Facilities Grant Program and Positive Train Control Implementation. The bill restores a discretionary component to the Bus and Bus Facilities program and contains new incentives and grants for the adoption of alternative fueled vehicles such as electric buses.
Unfortunately, while the funding authorizations and policy changes contained in the Senate DRIVE Act are positive, a major problem remains – the bill does not contain enough actual dollars to pay for the authorized amounts for more than two or three years. Rather than finding a solution to fix the highway trust fund, the Senate attempts to supplement existing tax revenue with a series of budgetary “offsets” – by finding savings elsewhere in the federal budget and transferring them into the Highway and Transit Accounts of the Highway Trust Fund. Several of these offsets have proven unpopular, and some were even stripped from the bill during debate on the Senate floor, further eroding the available dollars to fund the bill. Without a long term financing solution, the Congress will be forced to find new resources in two years-time, and the bill would not provide the long term stability needed by states and transit systems.
Major Hurdles Ahead
Financing
Lack of readily available resources to finance a long term authorization bill still remains the largest obstacle. As we have seen, the Senate’s solution falls woefully short, providing enough funding through offsets to fund as little as two years of the authorized amounts. Even worse, it provides no permanent solution. House Republican leadership has all but dismissed the Senate financing solution. House Ways & Means Committee Chairman Paul Ryan is sticking to his plan to use gains made from comprehensive tax reform to finance a long term transportation bill. However, we have yet to see much progress on tax reform efforts, and its highly unlikely there is time left in this Congressional session to pass both tax reform and an authorization bill. Other financing proposals such as “repatriation” of offshore funds or per-barrel oil tax seem to be losing steam. A simple increase in the gas tax to generate new revenue still has its proponents, but not among the Congressional leadership or the White House. Unless there is a major breakthrough in finance negotiations this fall, chances for a long-term, fully funded authorization bill are dead in the water.
One scenario to look for - if a financing scheme does not emerge early this fall, the House may be forced into accepting the Senate’s proposal to pay for a bill using a series of offsets to transfer a large sum of money into the trust fund to pay for the first two or three years of the bill. Congressional leaders could claim victory by pointing to the passage of a long-term transportation authorization bill with policy reforms, while hoping that somewhere down the line (certainly after the Presidential elections) a permanent financing solution emerges. If this sounds familiar, a very similar scenario played out with the passage of the last authorization bill, Moving Ahead for Progress in the 21st Century (MAP-21). This legislation was touted as a “six year policy bill” but contained only two years of actual funding. In fact, the U.S. Department of Transportation is still working to promulgate regulations to implement all of the policy changes contained in MAP-21. Unfortunately, this “kick-the-can down the road” approach will not satisfy transit operators, who need the guarantee of a long term stream of federal funds to engage in major capital infrastructure projects.
House – Senate Agreement on Policy
Another major question facing the passage of a long term bill this year is will the Senate and the House have the ability, or the time, to agree to a compromise version of the legislation for final passage? With passage of the DRIVE Act, the Senate has taken the lead in the process. However, as noted, the House refused to accept that bill without the opportunity to craft and debate their own version of the authorization legislation. The House bill is expected to be introduced any day now (if not already), and while Hill sources indicate that much of the policy reforms will be similar, there is certain to be fundamental differences. As previously discussed, without a long term financing source in place, its unlikely the House will introduce the same level of funding growth contained in the Senate bill. I would also expect to see fundamental differences in the division of funds between modal administrations and specific programs within each agency. Disagreements over issues such as positive train control implementation, truck weights and Buy America could provide additional stumbling points. Under regular order, the House must introduce a bill, mark-it up in Committee, pass it on the House floor, and then meet in conference with the Senate to develop a compromise version for final passage. While not impossible, there is precious little time to complete all of these steps. There are procedural short cuts available to “fast track” popular or critical legislation to meet certain deadlines prior to adjournment or expiration of existing authorization. However, these short cuts are typically only available for non- controversial bills.
Only time will tell whether the Congress can have a major breakthrough and pass a long-term, fully funded authorization bill this year. In July, Congress was tantalizingly close to achieving this successful outcome, only to be thwarted by the same old issues. In passing only a short term extension of MAP-21 through the end of October, Congressional leaders have signaled their true desire to overcome the obstacles that lay in their path. But without solving the fundamental issues outlined above, we will continue to be stuck in this endless cycle of short term solutions.
*This was published on 8/27/15 so note that some things may have changed.
Paul Dean is the director of Dean & Dean Consulting LLC.
