2014 Election Results Bring More Questions than Answers about the Future of the Federal Transit Program

Dec. 19, 2014

The results of the 2014 election are in. While Republicans are rejoicing at taking control of the Senate, widening their House majority and picking up several new governorships, Democrats are licking their wounds, wondering where it all went wrong. In the meantime, public transportation professionals and advocates are wondering whether Republican control of both chambers of Congress will spell doom and gloom for the federal transit program, or if a unified Congress, working together with President Barack Obama, will present opportunities to stabilize the highway trust fund and bring about a long awaited multi-year surface transportation authorization bill, perhaps with robust increases in federal dollars for public transportation.

While it is impossible to predict how the incoming Congress will deal with the federal transit program in the coming term, two facts are certain. First, a new Republican majority in the Senate, along with some key retirements and defeats, will bring new leadership to many of the committees with jurisdiction over the federal transit program. Second, the latest extension of surface transportation legislation that authorizes and funds the federal transit program, Moving Ahead for Progress in the 21st Century ACT (MAP-21) is set to expire at the end of May. In addition, latest U.S. Department of Transportation estimates project the highway trust fund will once again run out of funds by July. This means that finding additional resources to continue to fund our nation’s surface transportation infrastructure, including the federal transit program, will be one of the first issues that the new Congressional leadership must face.

With the stage set, these are the major transit related questions and issues the new Congress and the Obama Administration must confront in the coming months.

Will the new Congress be able to work with the Obama Administration to find a long-term funding solution?

During his press conference the day after the 2014 mid-term elections, Obama mentioned several times that working together with the new Republican Congress to finance our nation’s surface transportation system will be one of his top priorities. At least a short-term solution will be needed by the end of May to keep the federal transit program funded at current levels. Although a permanent solution to this issue is unlikely in the coming months, how the Congress handles this crisis will give us some insight on the direction of the federal program into the future.

The key question facing the future of the federal transportation infrastructure program is where Congress will find the resources needed to continue to fund the surface transportation program — including the transit program — at current levels?  Republican control of both the Senate and House of Representatives means that an increase in the gas tax or other similar revenue raising measures perceived as new taxes are likely off the table. However, these solutions were not gaining momentum prior to the elections, which led to a series of short-term funding extensions with money found under the federal budget couch cushions being transferred into the highway trust fund. These transfers have become increasingly unpopular among more conservative forces within Congress and Republican control over the Senate will make passage of these temporary funding patches even more difficult. With a permanent solution to the transportation funding problem highly unlikely in the next few months, the Republican Congress will soon be faced with the critical decision of whether to allow another short term funding transfer to keep the highway and transit trust fund afloat, or to allow the extension to expire without action, which could result in large scale reductions in federal transportation spending. 

And what about a long-term solution to infrastructure financing? The answer may lie within the tax reform debate. During his press conference, Obama mentioned using proceeds from corporate tax reform to fund infrastructure programs may provide some common ground for him and the new Republican Congress to work together to make America stronger. Indeed, this solution was championed by both the president and the outgoing Republican Chairman of the House Ways & Means Committee, Dave Camp (R-Mich.), last year. With new incoming leadership of both tax-writing committees in the House and the Senate, it is unlikely there will be time to put together a large scale tax reform bill prior to the expiration of the MAP-21 extension in May. However, with the Republicans now controlling both chambers of Congress, there is an increased likelihood that a major tax reform package may become reality over the next year or two. 

Will the Republicans really be willing to work with a lame duck Democratic president to pass major tax reform, or will they wait to see if they can get a better deal by taking the chance that a Republican will elected to the White House in 2016? Even if tax reform does become a reality, will significant resources be generated and will the Republican Congress be willing to dedicate those funds to transportation infrastructure – or will they be more likely to focus on debt reduction or personal income or corporate tax savings? Only time will tell. It must be noted, as most transit advocates will point out, even if tax reform does generate some revenue for infrastructure, this really only brings about a longer temporary solution to the future of infrastructure finance. Funds generated through tax reform may provide an influx of resources for one additional authorization cycle, but after that, without a more permanent financing solution will still be necessary.

What impact will changes in committee leadership have on the federal transit program? 

As mentioned above, a new Congress means new committee leadership, and we will see some new faces leading the committees that oversee the federal transit program. While committee leadership positions will not be formally announced until the new Congress reorganizes in January, we do know a few things. In the House of Representatives, Bill Shuster (R-Penn.) will remain the chairman of the Transportation & Infrastructure Committee. This is good news for the federal transit program, as Chairman Shuster has a long record of supporting public transportation and brings stability into the surface transportation authorization debate. On the Democratic side, the defeat of Nick Rahall (D-W.V.) means the new top ranking Democrat will likely be Peter DeFazio (D-Ore.). DeFazio is a stalwart transit supporter and during the last Congress, made headlines by proposing legislation to replace the federal gas tax with a “per-barrel” tax on oil companies. Congressman DeFazio is being challenged for the top Democratic slot by Congressman John Garamendi (D-Calif.), who lacks seniority, but alleges a strong working relationship with Chairman Shuster.

The Senate Banking Committee, which has jurisdiction over the federal transit program, will have a new Republican chairman.  Multiple sources indicate that Richard Shelby (R-Ala.) is expected to take the gavel, which he held previously from 2003 to 2007. Senator Shelby has not shown a strong interest in public transportation in the past, but brings a wealth of experience and has not been an opponent of transit interests. The former chairman of the Banking Committee, Tim Johnson, has retired, and his replacement as the top Democrat on the committee could be transit champions Charles Schumer (D-N.Y.), Bob Menendez (D-N.J.) or Sherwood Brown (D-OH). 

As previously mentioned, changes are coming in both tax-writing committees as well. In the Senate, the finance committee gavel is expected to pass to Senator Orin Hatch (R-UT), who is a pragmatic legislator with a history of strong support for transit projects in Salt Lake City. Senator Ron Wyden (D-Ore.), the former chairman and transit proponent, will likely move to top ranking Democratic member slot.

In the house, the Ways & Means chairmanship is expected to pass to former vice presidential candidate and Budget Committee Chairman Paul Ryan (R-Wis.).  The expected Ryan chairmanship is the real wildcard. Although not overtly hostile to transit interests — Amtrak aside — the fiscally conservative Ryan has historically, as chairman of the House Budget Committee, presented budget proposals to Congress that would make deep cuts to the federal transportation program. His primary motive has been to preserve the user-fee nature of the transportation program and avoid general fund transfers into the highway trust fund. To accomplish this, spending must be scaled back to match the level of revenues generated annually from the gas tax. While this may represent solid accounting principles, as most transit professionals know, federal spending has long outpaced diminishing gas tax receipts. Ryan’s solution - to cut spending – could have long lasting negative impacts on the program. However, Chairman Ryan is someone who has a keen recognition that there is a funding crisis and he may very well be the catalyst for a long-term financing solution. The hope is that the long term solution does not include drastic measures such as devolving the federal program to the States, or eliminating the mass transit account from the highway trust fund.

Other committee and subcommittee changes will certainly have an impact on the transit program in the upcoming Congress – particularly within the Appropriations Committee, which sets annual spending rates, and the Senate Environment & Public Works Committee, which takes the lead in developing the surface transportation authorization bill in the Senate. The bottom line is that transit advocates must waste no time in getting to know the new committee leadership and their staff and making a continued case for the growth and preservation of the federal transit program.

Will the new Republican Congress give momentum to the devolution movement or to eliminate the mass transit account from the highway trust fund?

The devolution movement – the notion of eliminating most or all of the federal surface transportation program and returning most of the gas tax receipts to the states to let them take care of their own transportation needs – has been slowly gaining supporters among the most conservative members of Congress. Indeed, even incoming Ways & Means Chairman Ryan has been at least open to considering such a move. I will the leave the philosophical and constitutional debates on the federal government’s appropriate role in supporting our nation’s surface transportation infrastructure to the intellectuals. However, most transportation and transit advocates agree this could have disastrous consequences for transportation investment levels and any hopes of developing a strong, multi-modal national transportation system. The real question is that now that the Congress is more firmly in Republican control, will the devolution movement gain steam? To those who take a “sky is falling” approach toward this issue, I would say that this worst case scenario is still highly unlikely. While the movement may gain more support, there are still too many Democrats, suburban Republicans, and more importantly, “donee states” States — those that receive more federal gas tax dollars than they receive under the current federal formulas — to allow this idea to take a foothold.

A more worrisome scenario is the potential elimination of the mass transit portion of the highway trust fund. As many transit professionals will remember, this very real scenario was pushed by a number of House Republicans during the debate over MAP-21.  For a bit of background, 2.86 cents of every gallon of gas purchased goes into the mass transit account of the highway trust fund, which in turn funds about 80 percent of the federal transit program. This all but guaranteed stream of funding has for decades stabilized federal transit funding levels and until recently allowed steady growth. In 2012, as a proposed solution to stabilize the highway trust fund, House Republicans introduced a transportation bill that would have eliminated the mass transit account and returned those revenues back to the highway program. This would have put the federal transit program in great jeopardy, subjecting it to the ups and downs of the annual appropriations process. Fortunately, the proposal was defeated, thanks in large part to the opposition of suburban Republicans. With a more conservative Congress, I would not be at all surprised if this idea surfaces again. While I believe there are still enough Democrats and transit-friendly Republicans in Congress to defeat such a proposal, transit proponents should be on the lookout.

Will the new Republican Congress allow the Return of Earmarks?

At first glance, considering it was the Republicans who eliminated earmarks — or Congressionally directed funding for local projects — in the first place, this question may seem to be coming from left field. However, there has been a steadily growing undercurrent from some within the Republican caucus that this may have been a mistake. In recent months, several Republicans have noted that Congress has the constitutional “power of the purse,” and have questioned the wisdom of ceding all of the financial decision-making power to the administration. Another often cited argument for the return of earmarks has been their historical role in securing sufficient votes to allow the passage of major legislation – particularly in transportation. One only needs to look at the last two major, long term transportation bills for an example - TEA-21 in 1998, and SAFETEA-LU in 2005. Both of these major bills were passed with Republicans in control of both the House and Senate and many credit the ability of Congressional leaders to win votes by providing substantial earmarks for individual member districts as the key to success. Although I do not expect earmarks to return in January, don’t be surprised if the earmark debate resurfaces in the near future.

Over the course of the next few months, as the new Congressional leadership makes its priorities known, there is no doubt that more questions will emerge on the impact this election cycle will have on the future of public transportation. At the end of the day, the major question is will this new Congress be one of action, or will we see the same old gridlock of the past several years. The deciding factor will be whether the new Republican majority will be willing to avoid internal divisions and unite to work together with the President to pass meaningful transportation legislation.  For the sake of the future of our nation’s infrastructure, let’s hope so.

Paul J. Dean is the Director of Dean & Dean Consulting, LLC, and is a government affairs consultant specializing in public transportation issues.  He is a former Director of Government Affairs of the American Public Transportation Association and Mass Transit Magazine Top 40 Under 40.