Congress passes highway bill, diverts more money from roads

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Congress passes highway bill, continues to divert money away from roads
By Terri Hall
December 5, 2015

Thursday marked the first time since 2005 that the U.S. Congress passed a long-term federal highway bill. The FAST Act, Fixing America’s Surface Transportation, is a 5-year re-authorization of the surface transportation program. Criticized for patching the program with short-term fixes for the last decade, the $305 billion bill was supported overwhelmingly by Congress, passing the House of Representatives by a vote of 359-65 and the Senate by a vote of 83-16. President Barack Obama signed it into law late Friday, mere hours before the federal highway program was set to expire.

The bill also authorizes the controversial Export-Import Bank and allows the IRS to use private debt collectors and deny Americans passports if they’re delinquent on their federal taxes. The Ex-Im Bank is the poster child for corporate welfare and congressional giveaways to special interests that conservatives defeated this summer. The short-lived victory could play an important role in the upcoming presidential election as candidates either try to justify the re-authorization of the bank or decry it.

Conservatives have long been calling for sweeping reforms to the federal transportation program, primarily calling for fiscal solvency, ending non-road diversions of the federal gasoline tax, and leaving the bulk of the responsibility for the federal highway system to the states. For nearly a decade, the federal government has not collected enough in gasoline taxes to pay for the level of spending Congress approves.

The FAST Act is no different spending $70 billion more than federal gasoline taxes can cover. Congress pays for the excessive spending with budget gimmicks like raiding the Strategic Petroleum Reserve, accessing dividends from the Federal Reserve Bank, and changes to customs fees.

After an organized effort by Alliance for Toll-free Interstates, the final bill did not adopt the senate’s language that would have expanded the pilot program to allow some states to impose tolls on existing toll-free interstates. However, the act does allow other states the opportunity to toll existing highways if the current three states approved do not exercise their authority within three years.

Diversions to transit, rail continue
The FAST Act doesn’t enact any of the key needed reforms and, in fact, it makes many of them worse. The favorite diversions of highway funding continue to go to transit, rail, and bicycle lanes. The vast majority of the shortfall is due to such transit diversions with $205 billion slated to go to highways and $48 billion scheduled to fund transit projects. It will send over $4 billion to bike lanes and pedestrian paths and it gives an 89% increase to fund local buses, neither of which has a federal role.

Lobbying begets goodies
As has been the case in the past, states with strong members of Congress and an organized lobbying effort saw a big boost in funding. One of the standouts is Alaska whose nearly 11 percent bump in funding largely goes to non-road purposes like railroad and transit programs, including an additional $3 million for its railroad system, $400,000 more per year for the ferry system, and $13 million more to pay for the Tribal Transit program.

The bill extends $8 billion in subsidies for Amtrak, averaging over 5 percent annual increases. This benefits states like Mississippi who want the funds to reopen service from New Orleans to Mobile. The Magnolia state, along with the other states, will also have access to the Nationally Significant Freight and Highway Projects (NSFHP) fund, a $4.5 billion discretionary grant program for ‘nationally significant projects.’ Thanks to the FAST Act, Mississippi will enjoy an over $2 billion jump in overall funding.

But state Departments of Transportation and industry advocates frown on the lack of identifying a long-term source of funding. Gone is the ‘user pays’ model for highways when Congress continues to tap other areas of the federal budget to offset the shortfalls from the gasoline tax. The hesitation to raise the gas tax is the primary reason Congress has kicked the can down the road passing 36 short-term extensions of the Highway Trust Fund (HTF) until this week’s FAST Act.

The HTF is supposed to be a dedicated fund to highways only, but with the continued diversion of road funds for non-road purposes and Congress’ penchant for raiding other parts of the federal budget to shore-up the trust fund, even passage of this 5-year bill leaves little to celebrate for either taxpayers or transportation special interests.

With so many goodies and discretionary programs, it was hard for members of Congress to resist approving the bill, despite the lack of sustainable funding or the albatross of the Ex-Im Bank. But Republicans in particular face a backlash for support of the bill after failing to live up to its promises for reform and ending the crony capitalist stronghold on Washington D.C.