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Congress is another week closer to the May deadline for re-authorizing highway and mass transit spending.
What that means: if lawmakers don’t pass an authorization bill before May ends, then the Highway Trust Fund would be paying out money to the states at a much slower pace than normal, which would hinder or halt projects during the spring and summer construction season.
This week most of the Obama administration’s transportation officials will be testifying on Capitol Hill at appropriations hearings.
Tuesday the Senate Commerce, Science and Transportation Subcommittee on Aviation Operations, Safety and Security hears from Melvin Carraway, acting administrator of the Transportation Security Administration about the Obama administration’s Fiscal Year 2016 TSA budget request and issues such as the effectiveness of the TSA’s Pre-Check program for trusted travelers.
The chairwoman of the panel is Sen. Kelly Ayotte, R- N.H., who is up for re-election in 2016.
Meanwhile the Federal Aviation Administration chief Michael Huerta will testify to the House appropriations subcommittee on Commerce, Justice, Science, and Related Agencies.
Also Tuesday, the House Transportation and Infrastructure Committee gets the state and local perspective from North Carolina Gov. Pat McCrory, Salt Lake City Mayor Ralph Becker, and Wyoming Department of Transportation director John Cox.
On Wednesday, Transportation Secretary Anthony Foxx testifies before the Senate Appropriations Subcommittee on Transportation.
Finally on Thursday, the House Appropriations Subcommittee on Transportation hears from Gregory Nadeau, acting head of the Federal Highway Administration, Therese McMillan, acting head of the Federal Transit Administration, National Highway Traffic Safety Administration chief Mark Rosekind, and Maritime Administration chief Paul Jaenichen.
The administration witnesses are sure to make the case for budget certainty and for a long-term infrastructure funding solution. The latter is looking less and less likely in 2015.
This week the 29 West Coast ports began their recovery from a damaging nine-month labor dispute that led to work slowdowns. Container ships lined up off shore as they waited to dock and unload their containers.
We looked at the need for the ports to regain the trust – and patronage—of shippers, some of whom have diverted ships to East Coast, Mexican, and Canadian ports.
The theme of protectionism ran through a couple of stories this week, with our look at the Buy America requirement for infrastructure projects – even for components as small of four-inch steel valves on a the Kosciuszko Bridge project in New York City.
(Kosciuszko, by the way, was a Polish military officer and engineer who designed fortifications along the Hudson River and helped the colonies win their independence.)
The shift from the gasoline tax to mileage-based user fees which Oregon is launching this year, which California will be testing in 2017, and which other states may follow isn’t just a way for states to pay for transportation infrastructure, it’s a business opportunity for vendors such as Verizon Telematics and Sanef.
Telematics, data collection, and information technology companies envision a world in which, if drivers agree to turn over their driving data to the vendor, they get the benefits of:
Oregon’s pilot program involves only 5,000 vehicles and has three vendors running it. The state now is subsidizing those vendors.
Here’s one recent and relatively small illustration of how far-reaching are the Buy America rules that have governed transportation infrastructure projects since 1978.
The state of New York is about to replace the Kosciuszko Bridge, built in 1940, which spans the Newtown Creek between the New York City boroughs of Brooklyn and Queens.
The bridge carries more than 160,000 vehicles a day and is a chokepoint on the Brooklyn-Queens Expressway, part of Interstate 278.
The conservative Heritage Foundation and its political arm Heritage Action want Congress to spend the money in the Highway Trust Fund on highways and not on subways, commuter trains, and other forms of mass transit.
Heritage transportation analyst Emily Goff said that current policy directs up to 20 percent of the money in the Highway Trust Fund to mass transit even though only 5 percent of commuters use mass transit. Most of the money that goes into the trust fund comes from gasoline and diesel taxes.
“How does the transit ride of someone in New York benefit someone who is a farmer in Montana who is using the roads?” she asked Wednesday at a Heritage briefing.
The think tank would like to devolve the federal transportation programs to the states. Goff said “letting the states who want to pursue transit do so” would result in better transit systems since states would design them to fit their needs and fund them themselves.
At the height of the Cold War, defense analyst Herman Kahn wrote Thinking About the Unthinkable, a book which tried to inform readers about what would happen in a nuclear conflict.
When it comes to mass transit funding, “thinking about the unthinkable” is the idea that Congress might someday cut off money from the Highway Trust Fund (HTF) which has been spent on subways, bus systems, and other forms of mass transit since the 1980s.
Approximately 80 percent of HTF money is spent on highways and 20 percent on mass transit.
Most of the roughly $40 billion a year that goes into the trust fund comes from taxes on gasoline and diesel fuel paid by people who drive cars and trucks.
At a hearing Wednesday of the House Transportation and Infrastructure Committee, some Republican members skeptically quizzed Transportation Secretary Anthony Foxx about why HTF money must go to mass transit, and whether the funds would be better spent on highways.
On Thursday, American Public Transportation Association President Michael Melaniphy fired back.
“There has been bipartisan support for federal investment in public transportation through the federal gas tax since 1983 when, under President Reagan, fuels tax revenues were dedicated to public transportation through the Mass Transit Account of the surface transportation legislation,” he said.
Here are more excerpts from our interview with Harvard Business School finance professor Mihir Desai on the movement toward using revenues from taxing overseas profits to fun infrastructure.
It sounds like you would agree with part of what Rep. Delaney is proposing. Tax past earnings, but not future earnings?
What’s really important to me is that we get the corporate tax on a good footing, and it’s in a very bad place… We have the highest statutory rate… we’re not raising much money, and our international provisions are extremely complex and raise very little money.
And our system is very distinct from the rest of the world which makes [the United States] an inhospitable place for our companies to be incorporated, as we’ve seen via the inversion wave.
My primary concern is not about the stock of previous earnings. My primary concern is: how do we use this as an opportunity to get the corporate tax on a good footing?
Last year President Obama said in his budget proposal that he wanted to use revenue raised from overhauling taxes on corporations to pay for infrastructure.
This year’s budget proposal will fill in the details of how Obama proposes to do that.
Essentially, according to administration officials, he seeks to impose a tax on foreign earnings that U.S. companies have earnings stashed overseas, ending the deferral that they now use to postpone paying taxes on that money.
We won’t know for months what, if anything, of this proposal will emerge from Congress. But momentum does seem to be growing to use overseas profits to help pay for highways and other infrastructure.
President Obama presents his Fiscal Year 2016 budget proposal on Monday.
You’d probably not be off course if you were to read his transportation proposals from last year, almost none of which has yet been enacted, to get an inkling of what initiatives he’s going to offer.
The FY16 blueprint seems likely to be a revival of much of last year’s agenda.
The inescapable topic, of course, is a new source of revenue to pay for highways, bridges, and mass transit systems.
There’s momentum building for some method of taxing U.S. corporations’ overseas profits to pay for infrastructure.
In his Fiscal Year 2015 budget last March, President Obama said he wanted to use “one-time transition revenue resulting from business tax reform” to pay for highways, roads and transit systems.
Now Rep. John Delaney, D- Md., has introduced a bill that fills in details of a concept about which Obama, House Speaker John Boehner, and several others have been thinking aloud: pay for infrastructure with tax revenue from repatriated profits of U.S. corporations.
But Delaney said his bill is “much more comprehensive” than what Obama sketched out last March.
Delaney’s measure would impose an 8.75 percent tax on overseas profits and would, he said, raise $170 billion, more than enough to both fill the shortfall in the Highway Trust Fund for six years and to create a new $50 billion infrastructure funding entity.
It would also give Congress what he called “a nice long runway” for lawmakers to devise ways to cope with the anticipated decline in revenues from taxes on gasoline and diesel fuel.
When a politician’s theme of the day is “aging infrastructure,” the default backdrop for the photo op is often the obsolete and overcrowded Brent Spence Bridge which connects Covington, Ky. and Cincinnati, Ohio.
On Wednesday Gov. Steve Beshear of Kentucky, a Democrat, and Gov. John Kasich of Ohio, a Republican, offered a plan to revamp the existing bridge, build a new bridge, and improve interstate approaches to the spans which cross the Ohio River.
The plan calls for:
According to governors’ statement, inflation is driving up the project’s cost (currently $2.6 billion) by $7 million every month.
The Senate went on record Wednesday as disagreeing with the idea that “more frequent and intense extreme weather events” are damaging the nation’s roads, bridges, railroads, and ports.
This was despite the billions of dollars in damage to the subways, highways, and other infrastructure in New York and New Jersey by Super Storm Sandy in 2012, to cite just one case.
By a vote of 47 to 51, with 60 votes needed for passage, the Senate rejected a sense of the Senate amendment to the Keystone XL pipeline bill offered by Sen. Chris Coons, D- Del., which wouldn’t have directly affected funding or regulation, but which included the perhaps fatal words “climate change.”
Coons tried to assuage opposition by noting “this amendment does not speak to the human role in climate change or emissions; it simply acknowledges that climate change is having an impact on our infrastructure.”
Two sharply contrasting views of transportation policy were on display in Washington Tuesday.
Sen. Bernard Sanders, I- Vt., announced his Rebuild America Act, a $1 trillion, five-year plan to repair and build transit systems, bridges, highways, railroads, ports, the national electric power grid, and national parks.
He did not include financing proposals in the bill.
“What I wanted to do was focus on the need to build the infrastructure and not start the debate right away on how we fund it. There are many ways to fund it and honest people can have honest differences of opinion,” Sanders told reporters.
Sanders serves on the Environment and Public Works Committee which will be working on a highway reauthorization bill this year. He was skeptical about proposals to use repatriated profits of U.S. corporations now held overseas to pay for infrastructure.
He also said Sen. Barbara Mikulski, D- Md., the ranking member of the Appropriations Committee, is a co-sponsor of his bill.
Meanwhile, the limited-government, free-enterprise think tank, the Competitive Enterprise Institute, issued its 2015 legislative agenda.
In its annual budget and economic forecast Monday the Congressional Budget Office reminded members of Congress of some of the basics that set the bounds of the infrastructure debate:
A massive nor’easter was hitting New York, New Jersey, and New England Monday night and Tuesday. That means that mass transit and the highways, at least in the New York City area, were closed, as of 11pm Monday.
In a press briefing late Monday afternoon, New York Gov. Andrew Cuomo, a Democrat just elected to his second term, said he’d ordered commuter railroad and subway service to stop at 11pm Monday to allow train cars to be moved to safe storage locations “so that when the weather does leave we’re in a position for the system to start back up.”
He said the city and state had learned from Superstorm Sandy in 2012 that it was far better to protect subway and commuter trains so that service could be resumed as quickly as possible.
He also ordered a travel ban on highways and roads in a 13-county area, including the five boroughs of New York City, except for emergency vehicles.
“If you violate this state order it’s a possible misdemeanor; it’s fines up to $300,” he told a press conference.