Surface Transportation Reauthorization: Selected Highway and Transit Issues in Brief

Order Code RL34675

Surface Transportation Reauthorization:

Selected Highway and Transit Issues in Brief

September 18, 2008

Robert S. Kirk

Specialist in Transportation Policy

Resources, Science, and Industry Division

Surface Transportation Reauthorization:

Selected Highway and Transit Issues in Brief

Summary

SAFETEA-LU, the Safe, Accountable, Flexible, Efficient Transportation Equity

Act: a Legacy for Users (P.L. 109-59; 119 Stat 1144) authorization of federal

highway and transit programs expires at the close of FY2009. Consequently, the

111th Congress is expected to take up surface transportation legislation during the

first session of the new Congress.

Both highway (Title 23 U.S.C.) and mass transportation (Title 49 U.S.C.

Chapter 53) programs are financed by revenues drawn from the Highway Trust Fund

(HTF). Roughly 20% of the transit program is also funded from the U.S. Treasury’s

general fund. The authorization of expenditures from the HTF also ends on

September 30, 2009. The Highway Account of the HTF, however, was rapidly

approaching insolvency in September 2008, more than a year before the end of the

SAFETEA-LU authorization. Congress responded quickly and passed P.L. 110-318,

providing an $8.017 billion transfer from the Treasury’s general fund to the Highway

Account to continue federal highway programs and activities.

This infusion of funds highlights the seriousness of the problems of the trust

fund financing mechanism, which has supported much of the nation’s surface

transportation spending for more than five decades. The sufficiency problem has

called into question the assumption of ever-growing spending in surface

transportation authorization bills, as well as the reliability of fuel tax-dependent

funding. Given this, finding an answer to the funding dilemma is a central issue that

Congress faces. Suggestions for treating the HTF shortfall include increasing existing

taxes, implementing a new vehicle miles traveled (VMT) tax, reducing the highway

program’s size, emphasizing private sector initiatives, and devolving most of the

federal-aid highway program’s responsibilities to the states. The outcome of many

other authorization issues will be influenced by how the long-term trust fund

sufficiency issue is dealt with.

Within the context of the federal highway program there are a number of issues

likely to be addressed by Congress, including the recurring debate on the appropriate

state rate-of-return on each state’s highway users transportation tax payments to the

HTF (commonly referred to as the donor-donee state issue); proposed changes in

highway programs, their funding formulas, and project eligibility requirements; the

degree of flexibility to be given states to move federal funds among programs;

proposed increases in highway bridge funding and inspection; the role of project

earmarking; and the consideration of some new programs, such as for freight

corridors.

Issues of federal aid to mass transit include the appropriate overall level of

funding both within the context of needs and in comparison with federal spending on

highways; the degree of support for transit from Treasury general fund revenues;

private participation in transit; the use of federal funds for operating costs; and the

issue of modifying existing programs or creating new programs to serve currently

unserved or under-served areas or populations.

CRS Highway, Highway Safety, and Transit Policy Staff

Area of Expertise

Name

CRS

Division Telephone

Highway Program Issues

John Fischer

Bob Kirk

RSI

RSI

7-7766

7-7769

Trust Fund Issues

John Fischer

Bob Kirk

RSI

RSI

7-7766

7-7769

Donor/Donee & Formula Issues

Bob Kirk

John Fischer

RSI

RSI

7-7769

7-7766

Transit Program Issues

Will Mallett

RSI

7-2216

Transportation Infrastructure Policy

John Fischer

Bob Kirk

Will Mallett

RSI

RSI

RSI

7-7766

7-7769

7-2216

Highway, Railroad, & Truck Safety

Randy Peterman

RSI

7-3267

Auto and Traffic Safety (including

NHTSA)

Randy Peterman

RSI

7-3267

Intelligent Transportation Systems (ITS)

Randy Peterman

RSI

7-3267

Transportation Enhancements & Planning

(MPOs)

Will Mallett

RSI

7-2216

Intermodal/Freight Issues

John Frittelli

RSI

7-7033

CMAQ

Linda Luther

RSI

7-6852

Environmental Issues, including

streamlining, stormwater, and section 4f.

Linda Luther

RSI

7-6852

Conformity with the Clean Air Act

Jim McCarthy

RSI

7-7225

Recreational Trails

Sandy Johnson

RSI

7-7214

Surface Transportation Security

John Frittelli

RSI

7-7033

Highway and Transit Program Data

Vanessa Cieslak

Carol Glover

John Williamson

KSG

KSG

KSG

7-8978

7-7353

7-7725

Selected Legal Issues

Todd Tatelman

ALD

7-4697

Division abbreviations: RSI = Resources, Science, and Industry Division; KSG = Knowledge Services

Group; ALD = American Law Division.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Major Highway Reauthorization Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Treatment of the Highway Account Shortfall . . . . . . . . . . . . . . . . . . . . . . . . 2

Rate-of-Return Issues (the Donor-Donee State Debate) . . . . . . . . . . . . . . . . 4

State Maintenance of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Devolution to the States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Programmatic Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Bridge Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Trucking Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Earmarking Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Major Transit Reauthorization Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Transit Funding Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Program Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Surface Transportation Reauthorization:

Selected Highway and Transit Issues

in Brief

Introduction

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy

for Users (P.L. 109-59; 119 Stat 1144) authorization of federal highway and transit

programs ends at the close of FY2009. Both highway (Title 23 U.S.C.) and transit

(Title 49 U.S.C.) programs are financed by revenues drawn from the Highway Trust

Fund (HTF). Roughly 20% of the transit program is also funded from the U.S.

Treasury’s general fund. The authorization of expenditures from the HTF also ends

on September 30, 2009.1

This CRS report provides a brief overview of selected major issues that are

expected to be debated during the upcoming reauthorization of the federal

government’s highway and transit programs and activities.2 Following some

introductory remarks, the report is divided into two parts: a section on highway issues

followed by a section on transit issues.

Although the federal-aid highway program provides federal money for highways

and highway bridges, the money itself is normally under the control of the states.

The state departments of transportation (state DOTs), within the federal

1

In the House of Representatives, programmatic and funding distribution issues are under

the jurisdiction of the Committee on Transportation and Infrastructure, but tax and HTF

issues are under the jurisdiction of the Committee on Ways and Means. In the Senate, most

programmatic and funding distribution issues are under the jurisdiction of the Committee

on Environment and Public Works for highways and other aspects of Title 23, but are under

the Committee on Banking, Housing, and Urban Affairs for transit. Tax and HTF issues,

in the Senate, are under the jurisdiction of the Committee on Finance. In the Senate, most

safety issues are under the jurisdiction of either the Committee on Environment and Public

Works or the Committee on Commerce, Science, and Transportation.

2

Much of this discussion has been drawn from the following sources. Refocus. Reform.

Renew. A New Transportation Approach for America, Department of Transportation

(Washington, 2008), 73 p. Financing Transportation in the 21st Century: a Report of the

Intergovernmental Forum on Transportation Finance, the National Academy of Public

Administration (Washington, 2008), 95 p. Transportation for Tomorrow: Report of the

National Surface Transportation Policy and Revenue Study Commission, (Washington, the

Commission, 2008), 68p. The Transportation Challenge: Moving the U.S. Economy,

(Washington, National Chamber Foundation, 2008), 116 p. ARTBA Recommendations for

SAFETEA-LU Reauthorization (Washington, American Road & Transportation Builders

Association, 2007), 72 p.

CRS-2

programmatic framework, determine, for the most part, which projects and activities

are funded with the federal funds. Most of the federal-aid highway program money

provided to the state DOTs is apportioned to them through several large “core”

formula-driven programs. There are also a number of much smaller discretionary

programs, but their funding has often been earmarked in recent years. Unlike the

federal-aid highway programs, Federal Transit Administration (FTA) funding for

major transit systems does not pass through the states, but is apportioned to the local

transit authority or other controlling local entity. Reauthorization bills generally

build off the existing programmatic structure. There is a point of view that sees the

division of federal transportation efforts into programs that pursue national goals or

are mode specific as creating a programmatic structure that constrains the ability of

states and metropolitan areas to adopt innovative policies to solve transportation

problems such as traffic congestion.

Major Highway Reauthorization Issues

The Department of Transportation has estimated that the average annual

investment on bridges and highways by all levels of government, needs to increase

12.2% or more annually over 2004-2024, to maintain existing highways and bridges

at their current condition and level of performance.3 Under current revenue sources,

the Highway Account of the HTF is projected to have insufficient resources to fund

even the current authorized levels, let alone an expanded highway program.4 Because

of an unexpected decline in gas tax revenues and an increase in outlays during the

summer of 2008, the Highway Account was expected to approach insolvency in

September 2008. The Secretary of Transportation on September 5, 2008 announced

a mechanism to restrict Highway Account outlays to prevent the near-term

insolvency and also called on Congress to pass pending legislation to transfer roughly

$8 billion from the Treasury general fund to the Highway Account. Congress quickly

passed P.L. 110-318 to provide the requested funds. This transfer is intended to keep

the Highway Account solvent through the end of FY2009, when the current

authorization expires. The outcome of virtually all of the reauthorization issues,

discussed below, will depend on how the long-term trust fund sufficiency issue is

dealt with.

Treatment of the Highway Account Shortfall

There are a variety of approaches that may be considered during the

reauthorization debate to assure the sustainability of the Highway Account.

3

U.S. Dept. of Transportation, 2006 Status of the Nation’s Highways, Bridges, and Transit:

Conditions and Performance, Report to Congress, (Washington, Dept. of Transportation),

2006. See highlights at [http://wwwcf.fhwa.dot.gov/policy/2006cpr/hilights.htm].

4

The HTF is composed of two accounts, the Highway Account, which funds the programs

and activities of the Federal Highway Administration and the Mass Transit Account, which

funds most of the programs and activities of the Federal Transit Administration.

CRS-3

!

Raise the rates of existing taxes that support the trust fund (fuel

taxes provide about 90% of the revenues and were last raised in

1993). Raising the gas tax is seen as difficult and probably unlikely

in the current economic and political environment.

!

Increase the use of tolling and public-private partnerships (PPPs) to

decrease reliance on the Highway Account for the funding of

highway projects. Most observers in the transportation community,

however, think that tolling and PPPs can only provide from 5% to

10% of estimated system needs. Also, most PPP proposals rely, in

part, on federal funds and tax-exempt financing, both of which

impose a cost on the federal budget. Allowing widespread tolling of

the heretofore mostly “free” federal Interstate Highway System

could also become a major issue.

!

Replace or supplement the existing federal highway tax and fee

structure with a more direct user fee such as a vehicle miles traveled

tax (VMT). This tax would, through the use of global positioning

system technology, charge road users for each mile they drive. Most

see this as not being a near-term solution due to organizational,

privacy, and fee evasion issues. VMT may also be viewed by some

citizens as a national toll on any vehicle movement on any road.

!

Establish freight related taxes or fees such as a freight waybill tax,

container fee, or terminal facility charge. These revenues could be

used to address freight bottlenecks.

!

Reduce the highway program’s size, restricting it to programs that

fulfill clear national needs, such as the Interstate Maintenance

program or the Federal Lands Highways program, and devolve any

other highway program responsibilities to the states.

!

Increase the funding that supports innovative financing such as State

Infrastructure Bank (SIB) programs or establish a national

infrastructure bank program to leverage federal grant funds. Some

have also proposed the use of tax credit bonds to fund infrastructure

projects. However, others argue that such mechanisms are

ultimately more expensive than direct spending.

!

Authorize an annual general fund contribution for highway

programs, thereby reducing their dependence on the Highway

Account. Some express concern that this would weaken the historic

link between the revenue derived from taxes and fees paid by

highway users and spending on the nation’s highways and bridges.

!

Some argue that Customs duties, which are deposited in the general

fund, should be made available for port-of-entry infrastructure.

CRS-4

Rate-of-Return Issues (the Donor-Donee State Debate)

States seek a high rate-of-return on their highway users’ tax and fee

contributions to the Highway Account.5 Since the 1980s, guaranteeing a minimum

rate-of-return has been a major point of debate during each reauthorization cycle.

The current program is the Equity Bonus program (EB), and is designed to even out

the rate-of-return on program spending across all states to more equitably reflect each

state’s highway users’ transportation tax contributions to the Highway Account. For

FY2009, all states are guaranteed a 92% return on payments to the Highway Account

for programs listed in the EB program. The provisions also included a guaranteed

overall increase for all states over the previous reauthorization bill and a number of

“hold-harmless” provisions that were intended to mitigate the impact on certain

donee states of the shift in funding to the donor states under the bill. Fulfilling all of

these requirements is done by providing a spending overlay across all of the programs

listed in the EB program in a way that gives spending increases to all states but larger

increases to the donor states. This is very expensive. The EB program is the largest

formula program in SAFETEA-LU ($41 billion over five years). A number of policy

issues are expected to surface.

!

Although the Equity Bonus mechanism could be retained, other

means of assuring an equitable distribution could be considered and

devised.

!

An increase in the guaranteed rate-of-return percentage above the

92% level could be considered.

!

Expanding the scope of the equity provisions to include all federalaid highway programs could be proposed.

!

The “hold harmless” provisions that protect certain donee states

from losing share could be retained, modified, or eliminated.

!

To reduce the cost of the Equity Bonus apportionments needed to

bring all donor states up to the minimum rate-of-return, the core

program formulas could be modified to be more heavily weighted by

a state’s share of the total tax and fee contributions to the Highway

Account.

!

The reauthorization bill could forgo an equity provision altogether

and allow the program formulas to determine the distribution of

highway funds to the states.

State Maintenance of Effort

Historically, federal funding was provided to supplement state spending on

highways, not to substitute for it. A Government Accountability Office (GAO) study

5

States that receive more than they contribute to the Highway Account are referred to as

donee states. States that receive less than they contribute are referred to as donor states.

CRS-5

found evidence that since the mid-1990s, states, as a whole, have failed to maintain

a financial level of effort proportional to federal spending increases.6 Some in the

transportation community believe that reauthorization should include a provision that

would make any authorized increase in a state’s federal highway spending contingent

on the state demonstrating that it is maintaining its capital investment spending on

highways and is not substituting federal for state funding.

Devolution to the States

As far back as the 1980s, there have been some that have argued that the federal

program could be greatly reduced in size, and most of the current federal

responsibilities could be “returned” to the states. In tandem with this reduction of the

federal program would be a reduction in the federal gas tax. The states would

accordingly be free to raise their state gas taxes or find some other means to make up

for the federal reduction.

The combination of the current constrained budget environment, the pervasive

use of funding flexibility among highway programs, and the demands for a higher

minimum guarantee under the Equity Bonus program, in the view of some observers,

makes the federal-aid highway program little more than a passthrough of funding

from highway users through the federal treasury to the states. In the view of these

observers, this significantly weakens the argument for a federal highway program and

strengthens the arguments for devolution.

Programmatic Structure

The federal-aid highway program has always been a partnership with the State

DOTs. States have a great deal of control over the selection, planning, construction,

and oversight of federally funded highway projects. Within this context, a number

of programmatic issues could arise.

6

!

Program scope and intent, as well as the make-up of program

funding formulas, may be reexamined. Some programs could be

consolidated, modified, or eliminated.

!

Historically, the states have argued for increased flexibility for using

federal funds by transferring funds across the federal highway

programs. However, some in the transportation community argue

that there is too much flexibility and the spending of federal funds

is often on projects that have no evident national purpose. In

addition, some highway supporters advocate the elimination of

Government Accountability Office, Federal-Aid Highways: Trends, Effect on State

Spending, and Options for Future Program Design (August 2004), available at

[http://www.gao.gov/new.items/d04802.pdf]. Looking farther back, the report found that

“states used roughly half of the increases in federal highway grants since 1982 to substitute

for state and local highway funding, and that the rate of substitution increased during the

1990s.”

CRS-6

flexibility that allows funds transfers between the highway and mass

transit programs.

!

Project eligibility changes may be considered. For example, some

construction interests are arguing for a broadening of project

eligibility, under the Congestion Mitigation and Air Quality

Improvement Act (CMAQ), that would allow more projects

designed to increase road capacity to improve traffic flow in

congested areas.

!

Much of the federal program could be replaced by a block grant

program providing block grants to the states. Some argue that if

given increased flexibility, states and metropolitan areas, could be

allowed to spend transportation funds as they wish and simply be

held to certain performance standards.

!

Congress is likely to consider some new programs or realignment of

existing programs. Some, for example, have pressed for programs

to improve major freight corridors and address bottlenecks. To what

extent freight-specific programs might include rail facilities, which

are mostly privately financed, could be an issue.

Bridge Policy

In 2007, roughly 72,000 bridges were designated by FHWA as “structurally

deficient.” Although there were discussions of major infrastructure spending

increases following the collapse of the I-35W bridge7 in Minneapolis, with the

exception of Emergency Relief funding, no legislation has made it through both

houses of Congress, other than an extra $1 billion appropriation, from the Treasury’s

general fund, for the federal Highway Bridge Program (HBP) that was included in

the FY2008 THUD appropriations bill.8 Issues that may arise include the following:

!

Programmatic changes to the HBP as well as proposals increasing

bridge spending could be incorporated in reauthorization legislation.

!

The rate of repair and replacement of deficient bridges and the

funding needed to support any proposed acceleration of the rate

could be an issue.

!

Changes in bridge inspection and inventory are likely to be

proposed.

!

The flexing of HBP funds to other highway programs for non bridge

uses may be an issue.

7

The National Transportation Safety Board has yet to complete its final report on the cause

of the bridge collapse.

8

See CRS Report RL34127, Highway Bridges: Conditions and the Federal/State Role, by

Robert S. Kirk and William J. Mallett.

CRS-7

!

The eligibility of HBP funds for spending on non federal-aid

highway system bridges could be an issue.

!

A recent GAO report found that the HBP lacks focus, performance

measures and sustainability.9 These findings could be considered

during reauthorization.

Trucking Issues

Truck size and weight limits on the Interstate Highway System could be an

issue. Some trucking interests, in a time of higher fuel prices and increasing

congestion, argue that increasing allowable truck size and weight would increase

productivity and efficiency. Rail interests oppose increases in truck size and weight,

and argue that rail is the more efficient mode of transportation for heavy freight.

Safety advocates also have concerns about allowing bigger and heavier trucks on the

roads.

Earmarking Issues

Over the 50-year life of the HTF-supported federal-aid highway program, the

congressional designation of numerous specific projects in highway authorization

bills is a relatively recent phenomenon. Until the late 1980s, earmarks amounted to

only about 1% of authorized federal-aid highway spending.10 In SAFETEA-LU,

almost $22 billion or roughly 11% of the $199.5 billion total contract authority in

Title I (the highway construction title) of the bill was earmarked.

The debate over highway project earmarking at times reflects the broader pro

and con arguments that apply to the discussion of the appropriateness of

congressional earmarking in general. Supporters of earmarking often argue that the

framers of the constitution believed that Congress, not the President (i.e., the

Executive Branch), should allocate funding for the functions of the federal

government and ending congressional earmarking authority would be a major transfer

of power to the executive branch. Supporters also argue that Members of Congress

have a better sense of their constituents’ needs than Executive Branch bureaucrats.

Opponents of earmarking make a number of general arguments, including that

congressional earmarking undermines the intent of the programs and activities that

Congress itself has authorized; many earmarks are designated for political reasons

rather than for demonstrated needs; earmarking may foster corruption; many

earmarks are inherently local and short-change projects of national interest; and

9

Government Accountability Office, Highway Bridge Program: Clearer Goals and

Performance Measures Needed for a More Focused and Sustainable Program (Washington,

GAO) “GAO-08-1043.” Available at [http://www.gao.gov/new.items/d081043.pdf].

10

“In-Depth Analysis: Earmarked Highway Projects: Their History, Their Nature and Their

Role in Highway Legislation,” Transportation Weekly, April 10, 2002, 3. See also A Primer

on Lobbyists, Earmarks, and Congressional Reform, By Ronald D. Utt, (Washington:

Heritage Foundation), Backgrounder no. 1924, 2006, 21 p. For a discussion of spending

earmark definition see CRS Report RL34462, Earmark Reform: Comparison of New House

and Senate Procedural Rules, by Sandy Streeter.

CRS-8

earmarks unduly enhance the role of lobbying firms in the spending process. Issues

more specific to the federal-aid highway program include the following.

11

!

Earmarking distorts the operation of the federal-aid highway

program, according to a DOT report.11 Among the report’s findings

are the following: that the earmarking can reduce the states’ core

transportation programs; many low priority, earmarked projects are

being funded over higher priority, non-earmarked projects; and

projects that do not meet eligibility requirements are sometimes

funded.

!

If a significant number of earmarks are allowed, one issue that will

be considered is how the earmarks will interact with the EB

distribution. The High Priority Project (HPP) earmarks in

SAFETEA-LU were within the scope of the Equity Bonus and,

because of this, these earmarks merely displaced formula program

funds. This meant that states receiving HPP earmarks not only

received no net increase in funding as a result of their HPP

earmarks, but also experienced a reduction in the formula program

funds that they rely on to implement their state transportation

improvement plans. The issue is whether earmarking should be

inside or outside the scope of the EB program. Keeping the

earmarks outside the EB program, however, would dilute the impact

of a rate-of-return guarantee.

!

If Congress, chooses to include earmarks in the upcoming

reauthorization legislation, it could require that all earmarks meet the

federal-aid highway program eligibility requirements.

!

Despite the growth in the number and amount of funding dedicated

to highway earmarks there is no certainty that the same levels of

earmarking will be allowed in the upcoming reauthorization bills.

Although local officials, businesses, and interest groups who benefit

directly from particular earmarks are pleased when a Member is

successful in obtaining a congressional designation, and sometime

even pursue such earmarks by hiring lobbyists, it does not

necessarily follow that the public in general supports earmarking.

The SAFETEA-LU earmarks for the so called “bridges to nowhere”

received a great deal of attention in the press and were widely

ridiculed.

Department of Transportation, Review of Congressional Earmarks Within Department of

Transportation Programs, “Report no. AV-2007-066,” 2007, 1-31.

CRS-9

Major Transit Reauthorization Issues

The Department of Transportation estimates that spending from all sources on

mass transit needs to increase by about 25% annually over the next 20 years just to

maintain existing transit systems at their current condition and level of

performance.12 The Mass Transit Account of the HTF is in somewhat better financial

shape than the Highway Account but is also projected to go into deficit within a few

years. The Federal Transit Administration (FTA) is funded 80% from the Mass

Transit Account and 20% from the Treasury general fund. Historically, when the fuel

tax rates have been raised, 20% of the increase has been dedicated to the Mass

Transit Account of the HTF. The reauthorization outcome of the trust fund

sustainability debate, discussed in the prior section, is therefore also pertinent to FTA

programs and activities. Within this context, there are both funding and

programmatic issues that could arise during reauthorization.13

Transit Funding Issues

Some of the following issues are predicated on funding availability, and others

are predicated on expectation of a constrained budgetary environment.

12

13

!

How much to spend overall on transit is the main issue in the

upcoming reauthorization. Transportation, construction, business,

and public transit interest groups argue that there needs to be a

significant increase in federal investment in transit infrastructure.

Others dispute this and argue that current spending trends, if

continued, are sufficient. Still others argue that the federal

government spends too much on transit relative to highways, given

that transit receives about 16% of federal funding but only 2% of

trips are made by this mode.

!

The lowering of the maximum federal matching share below the

current 80% is seen by some as a means of spreading constrained

federal funds across more transit projects. They also contend that a

larger local match would help ensure that only the most important

projects are supported by state and local officials. Opponents of

lowering the federal maximum share dispute this contention.

!

Encouraging private participation through private development or

public-private partnerships is seen by some as a way to support

transit improvements with less federal financial involvement while

still creating many indirect community benefits. Others, however,

DOT, 2006 Conditions and Performance Report.

See CRS Report RL34127, Public Transit Program Issues in Surface Transportation

Reauthorization, and CRS Report RL34171, Public Transit Program Issues in Surface

Transportation Reauthorization, both by William J. Mallett.

CRS-10

see the private sector as able to finance only a relatively small

number of projects relative to total needs.14

!

Encouraging more use of innovative financing is likely to be

considered. As with highways, innovative finance for transit

generally involves leveraging federal funds to provide for funding

through lending rather than grants. State infrastructure banks and

grant anticipation notes (GANs) are examples of innovative finance

mechanisms.

!

Given that trust fund balances in the Mass Transit Account are

trending downward, some may suggest expanding the general fund

portion of the FTA budget above the historical 20% as a means of

increasing the available funds for transit. Another possibility is to

cut program funding to lower the demands on the Mass Transit

Account and thereby extend its sustainability.

!

Broadening the eligibility of federal funds for transit operating costs

could become an issue.

Program Structure

The budgetary environment is expected to have an impact on the scope of

programmatic change. Should there be a major increase in funding, the existing

structure may remain essentially the same. A funding decline or even a no-growth

budget scenario could increase the likelihood of program modification. Under such

a scenario, a number of changes could be considered.

14

!

Congress could consider an across-the-board cut of all FTA

programs and activities.

!

Program restructuring could narrow the focus of the programs to

concentrate federal efforts on the rehabilitation and expansion of

transit service in densely populated areas and the most congested

cities (i.e., the areas that would most efficiently utilize transit).

!

On the other hand, the restructuring could simply refocus

policymakers on maintaining and rehabilitating the existing systems

and services. This would mean possibly reducing the role of the

New Starts program.

!

Congress could simply replace the program with a block grant

mechanism based on transit ridership or population.

General Accounting Office (now the Government Accountability Office), Highways and

Transit: Private Sector Sponsorship of and Investment in Major Projects Has Been Limited,

GAO-04-419, (Washington, DC, 2004), 52-53.

CRS-11

15

!

Congress could also add new programs to serve currently unserved

or under-served populations or areas. This would be more likely if

new revenue sources are found to support the Mass Transit Account.

!

Congress could also consider proposals similar to the Metro

Mobility Program proposed by DOT Secretary, Mary Peters. The

program would provide “performance-based” transportation funding

directly to metropolitan areas. Recipients would be allowed broad

multi-modal flexibility in the choice of projects.15

U.S. Dept. of Transportation, Refocus. Reform. Renew, p. 24-28. Transportation for

Tomorrow, the report of the National Surface Transportation Policy and Revenue Study

Commission also argued for a more multi-modal approach coupled with performance

requirements.