Funding System Needs Refinements

Posted July 15, 2007 at 11:00pm

The House Transportation and Infrastructure Committee already has begun to lay the groundwork for the 2009 reauthorization of the nation’s highway, highway safety and public transportation programs. The committee has begun to evaluate the conditions and performance of our federal highways and public transportation systems and to examine the long-term adequacy of the existing funding mechanisms for highway and transit programs.

Investment in our transportation infrastructure has not kept up with growing demands on the system. A significant gap exists between

our surface transportation investment needs and the resources available. Generating enough revenue to finance critical infrastructure investments will be a central element of our committee’s efforts over the next two years.

Some have argued that our current financing system is fatally flawed and cannot generate enough revenue to keep pace with rapidly growing travel demands. I disagree; the Highway Trust Fund is not dead. It needs some adjustments and refinements, but it will continue to be the mainstay in financing our surface transportation programs.

Nonetheless, over the past decade, the current gas tax has lost more than one-quarter of its purchasing power. This eats into the real value of Highway Trust Fund revenues.

The Bush administration’s response to the daunting challenges facing our surface transportation infrastructure focuses entirely on public-private partnerships. Several states, faced with the dwindling value of federal support, are studying this concept.

The committee is very concerned about this trend. While PPPs, under the right circumstances, could be explored as one minor avenue for infrastructure investment, PPPs alone cannot provide the resources necessary to tackle our transportation problems. Encouraging states to privatize their assets will barely begin to address our needs, now or well into the future. These issues must be addressed at the federal level.

Beyond the adequacy of PPPs to relieve revenue pressures, there is a broader concern with such agreements. When a government agency considers contracting with a private company to renovate, construct, operate, maintain, manage or finance a facility or system, there are many issues that must be examined.

Paramount among these must be preserving the integrity of our integrated national surface transportation system and protecting the public interest.

The Subcommittee on Highways and Transit has held three hearings on the PPP issue so far this year. In May, subcommittee Chairman Peter DeFazio (D-Ore.) and I wrote a letter to the governors, top transportation officials and key legislative leaders of all 50 states, the District of Columbia and Puerto Rico advising them to be cautious when considering such a move. Although we invite all financing options to be on the table as we evaluate opportunities to increase investment in our nation’s infrastructure, we warned them against rushing into PPPs that do not fully protect the public interest or the integrity of the national system and that do not constitute a sustainable national system of transportation financing.

Our concern initially stemmed from noncompete clauses that make it extremely difficult — if not impossible — for public transportation agencies to address safety and congestion problems on highways and streets adjacent to private toll roads.

More recently, we have become increasingly concerned with a new type of PPP agreement that was approved for projects in Chicago and Indiana. These agreements raise revenues for public entities by engaging in long-term leases of existing toll facilities with private companies.

These deals make good business sense to the companies that are investing in the projects, but we have serious concerns about whether these transactions offer a net balance of benefits for the American public.

As we move toward the next authorization, we must look beyond funding. We must look at the structural challenges facing the system. Transportation infrastructure provides the backbone of our economy by moving people and goods. The failure to address the programmatic and the resource needs of the surface transportation network has led to the system being overwhelmed by increasing freight and passenger traffic.

Highway and transit travel in the United States has been surging, placing ever greater demand on an already overstretched transportation system. As our country’s population and economy continue to grow, the disparity is going to get even larger. The resulting congestion is taking its toll on our economy. The cost of congestion, which has quadrupled in the past 20 years, represents 3.7 billion hours of wasted time and 2.3 billion gallons of wasted fuel per year due to traffic delays. Unless we take a serious look at the structural and policy needs of our surface transportation system across the country, these trends will continue and our economic growth and competitiveness will suffer.

As we move toward the next reauthorization of our nation’s surface transportation programs, the Transportation and Infrastructure Committee looks forward to working with the administration, the states, local governments and all interested stakeholders in shaping legislation that will make a significant investment in our transportation infrastructure, protect the public interest and provide America with a safe, integrated transportation system to meet its needs in the 21st century.

Rep. James Oberstar (D-Minn.) is chairman of the Transportation and Infrastructure Committee.