Federal Transpo Policy Entering New Era, Say NYC Officials. Now What?

The shift in driving habits has exposed the inadequacy of the federal gas tax to fund national transportation programs, and the need to shift away from road building. Graph adapted from the FHWA

It’s a new era for federal transportation policy, say the top New York City Department of Transportation officials tracking action on Capitol Hill. We just don’t know what kind of era it’s going to be.

“If this was 1996 or 1985 it would be pretty clear where we would go with federal transportation policy, with a few tweaks,” said DOT Director of Policy Jon Orcutt during a presentation at NYU’s Wagner School last night. “That’s not true today.”

Two changes are forcing a shift in transportation politics and policy at the federal level. The amount Americans drive has started to stall out. And earmarks have been transformed from political windfalls for powerful Congressmen to untouchable liabilities.

Linda Bailey, the federal programs advisor for NYC DOT, said that working for New York City has given her a new appreciation for the policy drawbacks of transportation earmarks for the localities receiving them. “You typically get $1 million for a $10 million project,” she said. “Somehow now you’re supposed to come up with $9 million to fund the rest of the project.” The city still has earmarked money from the last transportation bill, passed in 2005, sitting on the table, Bailey said.

But at the same time, the lack of a new transportation bill — Congress recently passed its ninth extension of that 2005 law, which expired in 2009 — is in part due to Congress members’ newfound opposition to directing federal dollars back to their districts.

“It’s thrown the whole formula out of the window, in terms of what you do politically,” said Orcutt. In particular, the end of earmarks has forced federal transportation policy to become more sharply ideological, whereas horse trading could paper over divides in the past. This year, for example, suburban Republicans helped kill the House of Representatives’ radical transportation bill, which would have eliminated dedicated funding for transit entirely. With earmarks, argued Orcutt, those same representatives might have been able to bring big projects to their districts even while cutting transit in the rest of their regions, and safely voted yes on the overall bill.

One in ten dollars in the last transportation bill was earmarked for specific projects, said Bailey. No earmarks at all were included in either the House or Senate proposals from this year.

Even as the elimination of earmarks complicates the path to passing a transportation bill, changes to the way Americans get around are challenging the very structure of federal transportation policy. Though federal transportation spending remains heavily focused on building highways, the growth in driving slowed considerably over the last decade, and actually declined in 2008 and 2009.

Adjusted for population growth, the trend is even more striking. According to a report from U.S.PIRG released today, the average American drove six percent less in 2011 than in 2004.

“Transportation is changing in this country,” said Orcutt. “Driving is leveling off. The federal program is really obsolete, in a way.”

The shift away from driving threatens the financial footing of the transportation system. The gas tax hasn’t been raised since 1993, but for many of those years, the continued rise in mileage masked the erosion of the gas tax by inflation. Without that growth, the plummeting value of the gas tax — in constant dollars, the gas tax has fallen from 18.4 cents a gallon to only 11 cents – can’t fund what it used to.

That, the DOT officials argued, is why no one in Washington seems able to pass a significant new transportation bill. The House Republicans, led by Transportation Committee Chair John Mica, tried to cope with declining revenues by ending the funding of transit out of gas tax receipts, as well as trimming road spending by a smaller amount. That plan has gone nowhere in the House; Bailey said she’d heard that the Republicans only managed to find 180 out of the 218 votes they needed for Mica’s bill.

The Senate’s bipartisan transportation bill, which passed 74-22, cobbled together enough unrelated revenues to keep funding levels exactly where they were under the previous law. Those funds were only enough to last 18 months; a more fundamental rewrite of the law would be necessary almost immediately.

Though the Senate bill consolidates a number of federal programs, the DOT officials said the only truly significant change in it is the expansion of TIFIA, a federal loan program. TIFIA loans have been used to great effect in cities like Los Angeles, which are looking to stretch local revenues further, said Orcutt, but financing isn’t a replacement for funding. “At some point, you have to decide to spend more,” said Bailey. Similarly, Orcutt argued that public-private partnerships, sometimes touted as a new paradigm for transportation funding, “don’t really do anything if there’s not real money attached.”

Unfortunately, the political will to raise the gas tax is scarce. Bailey said she doesn’t see the current House Republicans approving an increase in the near future. The Obama administration, added Orcutt, hasn’t been any more receptive to increasing the gas tax, arguing in bad times that it would harm the economy and during the recovery that oil prices are rising too quickly.

In fact, both the Senate and House bills would mark the end of the transportation funding paradigm that has prevailed ever since the interstate system was created. Neither relied exclusively on the gas tax, meaning both abandoned the traditional “user-pays” philosophy that has guided federal transportation spending. It’s clear that the current era of federal transportation policy is coming to a close, but the next era can’t emerge until Washington is willing to find the money for the level of spending it demands.