On March 12, 1998 the Senate passed a six-year bill dubbed "ISTEA II" (S. 1173) that authorizes $173 billion over the six years for federal highways, and $41 billion for mass transit. The bill's total authorization level of $214.3 billion approaches the $218.3 billion authorized in the draft House bill, BESTEA, dubbed the "Mother of all Highway Bills" by House Transportation and Infrastructure Committee Chairman Bud Shuster (R-Pa.). 

The Senate's ISTEA II authorizes 45 percent more for highways than did the expired Intermodal Surface Transportation Efficiency Act of 1991, and 20 percent more than it did when first passed by the Senate Environment and Public Works Committee. 

However, these are funding authorizations, which are subject to budget constraints each fiscal year. Congress and the administration historically fund yearly programs at less than they are authorized by law. And while all but one member of the Senate Budget Committee -- including its chairman, Sen. Pete Domenici (R-N.M.) -- voted for ISTEA II, the Budget Committee will have to choose to fund boosts in surface transportation by reducing general outlays and direct spending programs like VA benefits and social service programs. 

Almost a dream come true for the highway and mass transit industries, it appears that senators overcame objections of donor states and modal interests (see below) by providing high enough funding authorization levels to keep nearly everyone happy. 

The bill was approved on Thursday, March 12, but only because the day before a donor/donee issue was resolved that distributes an additional $70 million to seven donor states that did not receive extra funding under other programs of the act. That $70 million came out of research funds, which fell from $100 million to $30 million. 

The bill was passed 96-4, with only two states -- Pennsylvania and Wisconsin -- withholding suppport, because they felt their states didn't fare well in the funding game, reported the American Road & Transportation Builders Association. 

But while S.1173 increases highway funding substantially, it also expands the number of non-highway projects to which those funds can be diverted, a national highway advocacy group states. "For the first time ever, states can divert highway use taxes to even greater Amtrak subsidies or to magnetic levitation systems," said Bill Fay, president and CEO of the American Highway Users Alliance in Washington. 

Now attention shifts to the House of Representatives, whose BESTEA (H.R. 2400) appears to include a major and probably contentious issue in removing the Highway Trust Fund off-budget in the year 2001. In mid-March the American Association of State Highway & Transportation Officials reported agreement had been reached on increased funding for BESTEA. House Speaker Newt Gingrich (R-Ga.) wants the bill to be considered before May 1, as the existing six-month extension of ISTEA expires April 30, and states will not be able to obligate federal funds for highway work after that point. 

At writing in mid-March not much time would remain for Shuster's bill to be introduced, then passed by the House and turned over to a House/Senate conference committee in which differences between the two bills could be ironed out. 

Furthermore, in remarks March 17 to the Transportation Construction Coalition (TCC, see below) at ARTBA headquarters, U.S. Transportation Secrtary Rodney Slater said the Clinton administration  -- while firmly behind the higher funding levels -- was firmly opposed to taking the Highway Trust Fund off budget. He did state that he felt alternatives that would make sure highways were permanently funded at higher levels could be worked out. 

Check this web site often this spring for updates on the exciting reauthorization process. 
 
 

(This continuing article was posted earlier this year) 

Surface Transportation Bill 
Passage Is Not Guaranteed 

"It ain't over 'till it's over." 

Despite the assurances of "Inside the Beltway" lobbyists and legislators, even after the Senate passed its bill, there was no "guarantee" that urgently needed federal highway and surface transportation program reauthorization would be passed this year. 

"Will we ultimately get a bill out?," asked American Association of State Highway & Transportation Officials (AASHTO) executive director Frank Francois last year. "I don't know. I don't think anyone does right now. It's a very uncertain situation that we're facing." And while surface transportation legislation is one of those types of bills that people say "have to pass", Congress has a pretty bad record of passing such legislation on time, especially one as contentious as surface transportation legislation. 

Stop-gap legislation 

The existing authorizing legislation -- the Intermodal Surface Transportation Efficiency Act of 1991, ISTEA -- expired Sept. 30, 1997. Stung by the multimodal and environmental aspects of ISTEA, the highway lobby started early to impact ISTEA's replacement legislation. 

But despite nearly two years of active lobbying and consensus-building for maximizing funding and the role of highways in the new legislation, the Senate, House and Clinton administration were unable to agree on a bill. And ISTEA became history. 

In the meantime, fuel excise taxes continued to pile up in the Highway Trust Fund, but couldn't be spent. But after nearly six weeks of life with no federal highway program, and with the Thanksgiving recess looming, our legislative bodies agreed to extend ISTEA in essence for another six months. 

That Surface Transportation Extension Act of 1997 (S. 1519) cleared the Senate and House of Representatives by Nov. 12, and was promptly signed by the president. On the highway side, the interim bill provides $5.5 billion in new contract authority. In total, spending is limited to $9.7 billion for six months, including the new spending and unspent state ISTEA balances. States may move these funds from any program category to another program. But S. 1519 is not a freebie. The new contract authority is an advance against the FY 1998 authorization that presumably will be provided in a multi-year reauthorization bill that has yet to pass. 

Devolution by default? 

It gets worse. The extension was to expire April 30, and before then Congress was grappling with the same questions that stymied it last year, that is, how will the immense "pie" of surface transportation dollars be carved up among recipients who have very different needs and clout on Capitol Hill? 

As many as seven different configurations of ISTEA reauthorization were rolled out last year. Last spring, speaking of the Senate, Francois asked presciently, "How do you find 51 votes in the middle of all this? If you can't find them, then what?" 

Thus the inability of legislators to come together among the widely differing proposals resulted in a lapse in the federal program, a kind of "devolution" by default. 

The basic fight is twofold: "Donor" states want more money returned to them than under ISTEA, and all states want more of their gas tax money returned to them than either the administration, or balanced-budget hawks, are willing to appropriate. 

Donor states -- states whose drivers pay more money into the federal program than they get back -- are demanding a boost in their return ("minimum allocation") from Washington. At the extreme, some donor states -- like Ohio and Florida -- would all but dismantle ("devolve") the federal program and leave it up to the states to raise their own gas taxes to make up the difference. Legislation supporting two schemes of devolution was reintroduced in November. "If no bill emerges, anything can happen," Francois said. 

Boosting highways 

Other states and lobbyists want to retain a "strong federal role", so the phrase goes, but without what they consider the revolting environmental and planning baggage that ISTEA brought. 

Among them is a major industry alliance -- the Transportation Construction Coalition (TCC) -- which comprises a broad spectrum of construction-related national associations. While stymied in getting a highway bill in 1997, the TCC did obtain a major goal, that of having revenue from the 1993 4.3 cents-per-gallon federal gas tax increase for the U.S. General Fund shifted to the Highway Trust Fund. However, existing balanced budget legislation does not permit this money to be spent, even as the balance in the "trust fund" accumulates. 

The National Governors' Association in April 1997 launched a new coalition of business, labor and other groups to urge federal funding increases for transportation. Called the Coalition for TRUST (Transportation Revenues Used Solely for Transportation), the coalition of 750 organizations staged a press conference in Washington, D.C. to encourage budgetmakers to increase transportation budget levels, and conducted other activities throughout the year. State transportation officials from 45 states wrote to President Clinton and to Congress in July 1997 urging prompt enactment of a multi-year reauthorization bill. In August, AASHTO reported the findings of its Survey on the Impacts of Failing to Renew ISTEA Before October, 1997, predicting construction delays, significant job losses, and adverse impacts on safety programs and transit operations. 

Use or lose the 4.3 cents 

A major issue is whether the 4.3 cents federal gasoline tax -- enacted for the general fund and deficit reduction, but shifted to the Highway Trust Fund as part of the balanced budget agreement -- will survive. 

The transfer began as of Oct. 1, 1997, which was the start of the federal government's fiscal year 1998. Every year this 4.3 cents per gallon is predicted to generate $6.4 billion in much-needed additional funds to the Highway Trust Fund. But the existing budget resolution -- meant to control spending and balance the budget -- doesn't permit the money to be spent. 

The higher funding levels of the House reauthorization bill (up to $25.5 billion annually for highways) require that additional 4.3 cents per gallon be spent. The Senate's highway bill doesn't support such high spending levels, but the Sens. Byrd-Gramm-Warner-Baucus amendment to that bill increases highway funding by authorizing the use of the 4.3-cent gas tax. 

However, because this flies in the face of the budget agreement, budgetmeister Sen. Pete Domenici (R-N.M.) vowed he'd fight the amendment. Sources say he'd probably win. If whatever reauthorizing legislation that passes doesn't include the 4.3 cents, other legislators have vowed they will repeal the 4.3 cents in an effort to reduce taxes. 

"Don't count on the 4.3 yet," AASHTO's Francois warned the American Concrete Pavement Association at its annual meeting in December. This would be a disaster for increasing surface transportation funding, because any other gasoline tax increase in this supercharged anti-tax climate would be next to impossible. Essentially, the industry will have to spend the money to keep it flowing, a "use it or lose it" proposition. 

Competing bills for 1998 

Devolution efforts aside, the "Big Three" surface transportation reauthorization schemes for 1998 differed widely in the amount of funding that they would provide highways. 

In September the House Surface Transportation Subcommittee reported H.R. 2400, a three-year $103.2 billion highway, safety and transit reauthorization bill, called BESTEA. This bill provides a whopping $25.5 billion annually for highways, which would begin to meet minimum established needs. 

The other two approaches don't meet those needs. 

The Senate transportation committee rolled out a six-year, $145 billion reauthorization bill (S. 1173) called ISTEA II, on Oct. 1. This bill provides about $22 billion per year in highway authorizations. Also, transit advocates proposed a transit title to the bill which would allow a yearly average of $6.2 billion in federal funding over six years. 

And the administration's NEXTEA bill proposes about $20 billion yearly for highways. Because ISTEA offered about $17.2 billion per year for highways, all the bills provide substantially more money than highways have been getting. But getting the money authorized is one thing; getting it appropriated, through the budget process and committees, is another. 

That's because budget hawks have worked hard to set us on a path to balancing the budget in the very near future and don't want to compromise their efforts for any program. Fortunately, transportation programs are very popular in Congress because they enable legislators to bring federal funds home to their districts. 

Essentially, the Senate wants to stick with the 1997 budget resolution, in which transportation spending stays flat until 2002. Always concerned with cash flow, the administration appears to be siding with the Senate. Opponents' pitches will be based on the fact that money is continually piling up in the trust fund, and can be spent -- to the benefit of the economy -- without increasing the deficit. 

As the reauthorization process continues, there still some major issues which will have to be worked out: funding levels, formula levels, "environmental streamlining", the disadvantaged business enterprise (DBE) program, the Congestion Mitigation and Air Quality (CMAQ) Program, and the planning process involving metropolitan planning organizations (MPOs). 

A number of possible amendments have been discussed under the topic of "environmental streamlining". Their stated reason is to be able to more quickly move projects through the planning process. Environmentalists and enemies of highways don't like this streamlining because they feel such amendments weaken environmental protections and the National Environmental Policy Act (NEPA). 

The formula fight -- dictating how the money will be spent -- also looms. The northeastern (ISTEA II) states, midwestern/southeastern (STEP 21) states, and the western (STARS 2000) states all have differing demands, although the latter two groups have more in common than not. 

Major program "details" fights will rage over whether most of the funds should be spent on new construction (opposed by environmentalists), or maintenance or capacity improvements. Even though much of that spending under ISTEA was to be decided by the states and MPOs, top-down command-and-control hawks like environmentalists like to impose restrictions at the federal level which can impact how the money will be spent locally. 

An 'uphill battle' 

While Congress was in recess through Jan. 27, lobbyists were preparing for what the Associated General Contractors (AGC) of America called "the uphill battle" to enact multi-year highway reauthorization. 

AGC itself is asking for a multi-year bill that provides approximately $32 billion in annual funding, which is the maximum the Highway Trust Fund can support annually. AGC is working with its partners -- the TCC and the Keep America Moving (KAM) coalition, spearheaded by the American Highway Users Association, AHUA -- to leverage their efforts. 

The TCC, which is co-chaired by AGC and the American Road & Transportation Builders Association (ARTBA), held a retreat on Dec. 11 to plan strategy for the upcoming reauthorization struggle. Plans were already underway with KAM and the National Governors Association's TRUST coalition to organize a press conference and other early 1998 activities to highlight the importance of increased transportation investment in this year's budget. 

In 1998 highway lobbyists will put pressure on the Clinton administration -- including new Federal Highway Administrator Kenneth Wykle, to support increased transportation funding in the president's fiscal year 1999 budget that was to be presented at the end of January 1998. 

In mid-January 1998 The Wall Street Journal reported that Clinton's FY 1999 budget would adhere to the levels outlined in the 1997 budget agreement. In other words, Clinton's budget would provide inadequate funding for the highway program, some $22 billion. 

According to AASHTO, 1999 administration proposals for highway levels are reportedly $21.5 billion for core programs, and $1.5 billion for exempt programs. 

In 1998, highway lobbyists will contact members of the House and Senate Budget Committees to get higher funding levels in the Congressional budget resolution, used as a guide for all funding decisions made by Congress in 1998. They'll contact senators seeking support for the Byrd-Gramm-Warner-Baucus amendment, which increases highway funding by authorizing the use of the 4.3-cent gas tax recently transferred to the Highway Trust Fund. And they'll contact members of the House to garner support for the funding levels included in Shuster's bill.