TX: Congressional Gridlock on Transportation Money a Disaster? Not Quite

"The End of the Road?" is the title of a 12-page Transportation for America report published last month. "The Looming Fiscal Disaster for Transportation" is the subtitle.

And then, just in case we haven't yet grasped the point, the cover shows a yellow, diamond-shaped highway sign with the message: "Be prepared to stop."

The report was written by a staff member with the advocacy group named Sarah Kline, according to the April 30 document. But my guess is that one of the contributors might have been a Washington transportation consultant named C. Little. You may know him by his full name, Chicken Little.

The subject is congressional and presidential flailing on replacement legislation for the current federal transportation reauthorization bill, which will expire Sept. 30. Failure by our foundering fathers and mothers to agree on a new bill by then, the report says, could mean the loss of almost $47 billion in road and transit funding for state and local governments.

While the sky wouldn't necessarily fall if this were to happen, it would at least get pretty stormy.

As for Texas, the report says the state could lose as much as $3.8 billion in federal transportation funding in the 2014-15 fiscal year. The Austin area would be out $57 million, it says.

Transportation for America — made up of civic, business and government leaders pushing for more transportation funding — isn't the only wringer of hands. I've read national coverage for months about how the federal highway trust fund would go "bankrupt," or "become insolvent" or "run out of money" in August (even before the transportation legislation expires) if Congress and the president don't act.

So I called James Bass, the Texas Department of Transportation's longtime chief financial officer. I assumed I would find Bass in a thick-walled TxDOT cash vault deep beneath the agency's Greer Building headquarters near the Capitol, lying in a fetal position and surrounded by tear-stained, crumbled ledger sheets.

No. Turns out he's fine. And the big blue above us is not about to collapse upon Texas roads and transit systems.

"We think that all active projects are going to be undisturbed," Bass told me. "We are going to get reimbursed. It's just a question of when."

As for starting projects in the next fiscal year, yes, he said, some of those will move forward, even if Congress does nothing more than authorize spending only at the level covered by the current federal gas tax, which is considered the worst that could happen.

This is the point in the column when I could attempt to explain to you at length how federal transportation funding works. But in the interest of retaining readers and subscriptions, I won't.

But know at least this much: You pay 38.4 cents a gallon in gasoline tax — 18.4 cents to the federal government and 20 cents to the state. A nickel of that state tax goes to public schools, but almost all of the rest goes to highway repairs and new construction. We also pay other fees that go into that pot.

But as for that federal 18.4 cents, basically states are promised a yearly amount from Uncle Sam, they pay contractors to do projects, and then states "bill" the feds to reimburse them that money.

The problem is that the federal gas tax hasn't been raised since 1993 (Texas' levy hasn't changed since 1991). Because cars get better mileage than they used to and highway construction costs keep going up, the federal gas tax isn't raising enough to fully cover those federal promises for reimbursement.

So since 2008, Congress has been throwing in some extra money from general government revenue. By "some" I mean $54 billion, cumulatively. And the annual gap is getting worse, meaning that Congress has to increase the gas tax, find another way to raise revenue for transportation (corporate tax reform has been floated), keep transferring in an ever-increasing amount of general revenue or — and this is where the doomsday scenario comes in — authorize less transportation spending.

None of those options has gained any traction, nor has the president's startling suggestion last month to authorize tolling existing lanes on interstate highways. So, with about 100 days left until the current transportation law dies, and a congressional election about a month after that, gridlock abides.

That doesn't mean, however, that we have a bankrupt federal highway trust fund. Remember, it is fed by gas tax revenue, which rolls in every day. So even if it were to hit zero in August, which isn't really the case, one second later it would no longer be at zero. The federal gas tax generates about $3 billion a month, or about $70,000 a minute.

As Bass explained it, the real effect would be that reimbursements to states would simply slow down, coming in initially at a percentage of the total and then hitting 100 percent not long after. TxDOT, for example, might have to do some short-term borrowing, incurring some smallish interest costs. And in the end, the start of some projects might be moved back, although the likely infusion of $1.4 billion a year from the state's rainy day fund (if voters approve Proposition 1 in November) probably would mean Texas could keep rolling along more or less undisturbed.

None of which is to say transportation has all the money it needs. Not in boom-booming Texas, for sure.

The most likely scenario is that Congress, as it did 10 times over three years before approving the last transportation bill in 2012, in September will pass what is called a continuing resolution to keep money flowing to states at the same rate. And then, at some point when the politics are right, they'll pass some clever and impossible-for-you-and-me-to-understand way of kicking the can down the road further with a partial solution.

Transportation will be funded, more or less, because everyone likes roads or transit, or both. The stratosphere will remain in place.


Copyright 2014 - Austin American-Statesman

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