Former U.S. DOT Chief on the Worst-Case Scenario: 4 Years of Extensions

To a certain extent, hope springs eternal in federal transportation circles. Even as state DOTs and metropolitan planning organizations operate under the latest in a series of extensions of the 2005 law that governs road, transit, and bike-ped spending, few are willing to envision a future in which new legislation doesn’t pass by next year.

4f6109eb_a6dd_5098_8aad_e76fc2cb6270.preview_300.jpgAnti-tax protesters. (Photo: Tribune)

After all, even the Obama administration — which last spring called for an 18-month delay in taking up House transport committee chairman Jim Oberstar’s (D-MN) infrastructure measure — has signaled a willingness to begin talks on broader policy changes by next spring.

But that outcome assumes that Congress and the White House can reach an agreement by early 2011 on how to find as much as $200 billion to pay for a significant six-year investment in infrastructure.

Right now there remains only two practical options on the table: paying for a new transport bill with general Treasury money, which would amount to deficit spending at a time when White House aides profess mounting concerns about the nation’s red ink; and raising the federal gas tax, which the president has flatly ruled out.

What would the worst-case scenario look like? It is rarely mentioned on the record by Washington infrastructure watchers, but former Transportation Secretary James Burnley IV outlined it neatly in an interview this week with D.C. Velocity:

I started saying a year ago that we were facing four years of
short-term extensions of existing [federal transport funding] programs, and I’m sorry to say this
is a prediction that I believe will come true. It will be especially
difficult for the Obama administration and Congress to agree on a
solution to the [highway] trust fund crisis if the political environment holds in
November and we have more Republicans occupying both Houses who are
skeptical of higher taxes of any kind.

What worries me is that the whole concept of the trust fund is
breaking down. You can’t make the argument with a straight face that
the trust fund should be spent just on transportation programs and that
it should be walled off from the appropriations process while at the
same time getting huge sums of money from general revenues. That is a
corrosive process. By 2013, we could find the whole notion of the trust
fund obsolete.

What Burnley does not mention is that extending the 2005 transportation law past the current fiscal year would require continued transfers from the Treasury (what he calls "general revenues") to the highway trust fund, which belies its name by providing a regular source of funding for transit as well as roads.

The jobs bill that President Obama signed last month shifts $19.5 billion into the trust fund, a sum expected to keep it solvent until the end of fiscal year 2010, but preserving even the inadequate existing levels of maintenance for roads and rails would require extra money this fall unless Congress passes a new transportation bill.

Still, Burnley’s assessment of the political reality rings true. With the rise of the anti-tax Tea Party movement drawing media and public attention to the prospect of future tax hikes to help shrink the deficit, Democrats are already taking great care to reinforce the president’s campaign pledge not to raise taxes for households earning less than $250,000 a year. Anyone predicting a more hospitable environment on the Hill next year for raising gas taxes to pay for infrastructure would be safely accused of wishful thinking.

And the more that Democrats shrink from the T-word, the stronger the likelihood that the 2005 transport law would be extended until after the 2012 presidential race — barring a breakthrough on new financing tactics, that is.

3 thoughts on Former U.S. DOT Chief on the Worst-Case Scenario: 4 Years of Extensions

  1. Four years of extensions is not the worst case scenario. Unfortunately, the current stalemate could continue indefinitely with the focus of transportation policy making shifting to the annual appropriations process.

  2. Those in New York/New Jersey know there is certainly a much worse scenario.

    Money could be borrowed against FUTURE gas tax revenues and spent up front on things other than infrastructure, such as tax cuts, pensions and health care for TODAY’s senior citizens.

    To the point that within a few years, the majority of the gas tax revenues go for interest, not transportation of any kind.

    That’s EXACTLY the situation right now in New York and New Jersey, and completely indicative of the values of the generations in charge.

  3. This boils down to one very simple principle….people want better transportation, but they don’t want to pay for it. If they did, there wouldn’t be such opposition to higher tolls or gas taxes or transit fares (recent WMATA surveys notwithstanding), and the politicians wouldn’t consider it political suicide to raise them.

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