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Lots at Stake in Transportation Reauthorization

In the annals of Rose Garden speeches, the brief remarks by President Obama yesterday about extending the nation’s surface transportation law were, for the most part, unremarkable. He called on Congress to not let the current highway and transit authorization expire and then pressed for reforms in how we invest in transportation projects. America’s infrastructure used to be world class, he said, but today we’re falling badly behind.

This is not a new message, but in the context of American jobs--the topic of the president’s next big speech--and the fiscal health of our states and municipalities, it matters tremendously.

The nation is still stinging from the recent impasse over the failure to reauthorize the nation’s aviation law. That two-week delay furloughed 4,000 federal employees and idled another 75,000 or so private-sector workers because of disagreements about subsidies to rural airports. While we believe that program to be outdated and in need of reform, shutting everything down and taking away Americans’ paychecks during this time of economic hardship was harsh and unnecessary.

We’re headed for a similar standoff on the highway and transit side, too. That’s why the main and most forceful message from the president’s speech was not about high speed rail, or transformative investments, or repairing bridges, or a number of other national priorities. It was to call on Congress to simply extend the current transportation authorizations before they expire this September.

These extensions are generally routine and almost always “clean” in that they contain no substantive changes to the existing law. The length of the extension varies based on an assortment of factors such as the annual budget cycle and other matters related to the debate (or lack thereof) in Congress. The previous transportation law (TEA-21) was extended 12 times over a period of 680 days in lengths that ranged from just a few days to eight months. The current law (SAFETEA‐LU) was slated to expire on September 30, 2009 and has, so far, been extended seven times for a cumulative total extension of 729 days.

However, what was once routine is no longer so, as the aviation battle illustrates.

The problem is that when it comes to the surface transportation program, there is much less slack in the system than on the aviation side. Since 1995, 11 states got more road construction and repair money from the federal government than they raised from their own state or local sources. In states like North Dakota, Wyoming, Alaska, Montana, South Dakota, and Alabama the federal share constitutes over half of the funds they use for roads. In only five others (Pennsylvania, New York, Virginia, Massachusetts, Delaware, and New Jersey) is the share of federal funds less than 25 percent of total roadway expenditures.

Transportation is also a relatively significant portion of most state budgets. At 7.9 percent of general state expenditures, “transportation” generally ranks third among state spending categories after only “education” and “public welfare.”

So as the president cautioned, even a temporary shutdown of the program could have a calamitous effect.

Ok, since a shutdown of the transportation program benefits no one the extension is pro forma, right? Probably. But as recently as last year it was halted, albeit temporarily, due to the shenanigans of just one man--Sen. Bunning--because he objected to the extension of certain unemployment benefits tied to the extension at the time. Let’s also not forget that, due to a unique wrinkle in the calendar, the federal gasoline tax also needs to be reauthorized by the end of September. That 18-cent tax provides the bulk of revenues for the transportation program, and although groups like Americans for Tax Reform have said they won’t oppose the extension of the tax, the fact that it is being discussed is more than a little disconcerting.

It’s no wonder that the president is concerned about Congress acting in a timely way by the end of September. Given these realities, the suboptimal, but necessary, schedule would look something like this:

First is to simply pass a clean extension of the current law that runs through the end of January 2012. No monkeying around.

That should provide enough time to work on a two-year authorization that fixes the way we invest so that the transportation program creates and retains jobs, and supports and strengthens the economy. Under a deficit-neutral approach, Congress should take up Sen. Barbara Boxer’s call to reauthorize (not simply extend) the existing program for two full years at its current funding level. This would provide stability that states, localities, and metropolitan areas need to plan projects--including hiring workers--rather than following the current course of uneven and unpredictable continuing resolutions.

It should keep in place the basic framework of the existing program and also be the vehicle for helping states and metropolitan areas invest in new ways to support the assets that drive the next economy. Obama hinted at some of key reforms that, frankly, are broadly shared, such as reducing bureaucracy and accelerating project delivery, applying performance criteria to move away from political logrolling, and getting the private sector more involved. These and other ideas are discussed here.

During that time Congress should continue to develop plans for a truly transformative six-year bill in 2013. Those plans should be informed by the key reforms that are part of the two-year law but, just as importantly, must also seriously tackle the 800 pound gorilla: how to pay for the program the nation truly needs in order to both fix what we have and build the kind of infrastructure necessary to deliver the next American economy.

That’s a sharp contrast to today’s sad state of affairs when the major infrastructure message from the president to the Congress is not “make no small plans” but, rather, “do no harm.” No doubt, we’re in for a bumpy ride.