As the clock ticks down on the Highway Trust Fund’s (HTF) solvency and the threat that the US Department of Transportation will slow down and lower reimbursements to state departments of transportation hangs in the air, the National Economic Council and the President’s Council of Economic Advisers have released a new report showing just how [...]
In March, MTR reported that the Highway Trust Fund (HTF), which is supported by the federal gas tax and which pays for almost all transportation projects across the U.S., is anticipated to run dry by the end of the month.
Unfortunately, with less than a month to go, the situation has changed little since March. In a recent letter to heads of state DOTs, Transportation Secretary Anthony Foxx termed it “dire”, and many local electeds would agree that that is the case.
Though an agreement has not been reached on how to fund the HTF, it is not for lack of proposals from our leaders:
Corporate Tax Reform
President Obama’s GROW AMERICA Act– the Administration’s surface transportation reauthorization proposal—calls for “pro-growth business tax reform” to fund transportation infrastructure. According to the Administration, this will generate $150 billion. Streetsblog has called thisa “progressive and thoughtful” proposal “dead on arrival, even though it had support from the Republican chair of the Ways and Means Committee, Dave Camp.”
Corporate Tax Holiday
Senate Majority Leader Harry Reid (D-NV) proposed a corporate tax holiday to fund the HTF. As The New York Times describes the plan, “American multinationals would escape taxes on 85 percent of their profits currently held in tax-deferred foreign accounts, provided they bring the money to the United States in the next year.”
The Times notes that after creating $20-$30 billion in two years, a corporate tax holiday would “lose money — by one government estimate, a simple tax holiday would lose $96 billion over 10 years — because the low tax rate would be applied to profits that would have been brought home over time anyway.” Senator Reid’s proposal is a bit more complicated than “a simple corporate tax holiday” – his office claims that the proposal is structured to earn $3 billion over 10 years. However, as The Times points out, these kinds of policies encourage “the hoarding of profits in tax-deferred foreign accounts in anticipation of future tax holidays.” The Obama administration has made it clear that it does not support Senator Reid’s plan.
A weekly roundup of good deeds, missteps, heroic feats and epic failures in the tri-state region and beyond.
New York State Governor Andrew Cuomo – This morning Governor Cuomo signed into law a piece of legislation that authorizes the expansion of speed camera use on Long Island, saying that “By empowering Nassau and Suffolk Counties to install dozens of speed cameras in school zones, we are helping to protect our students and ultimately save lives. This should send a message to all drivers – slow down and obey the speed limit, especially when passing by a school.”
Hopewell Township, NJ – The township became the 100th municipality in the Garden State to embrace Complete Streets and the first municipality to do so by way of a Complete Streets ordinance. According to the Township Administrator/Engineer Paul Pogorzelski, “we decided that this policy should be in the form of an ordinance and have the weight of law rather than simply be part of a resolution which does not transcend governing body changes. “
Amtrak - Amtrak announced that they have begun testing new bike-friendly baggage cars to alleviate passengers of the hassle of boxing and checking their bikes as luggage. These baggage cars, which are manufactured in New York state, are expected to be put into service on all 15 long-distance routes by the end of this year.
New Jersey Transit – The agency has unofficially launched its first-ever one seat ride summer shore rail service from Penn Station to Bay Head using new energy-efficient dual-powered locomotives. Riders will save 25 minutes by not having to change trains at Long Branch, which will likely boost ridership to the shore and alleviate summer parking in shore towns. » Continue reading…
The current federal transportation bill, MAP-21, is expiring soon, and our leaders in Washington have come up with two new bills to potentially replace it. Earlier last month, the Senate Environment and Public Works Committee released its MAP-21 Reauthorization proposal, which was unanimously approved within just a few days. The other proposal is the GROW AMERICA Act, which the White House released in late April. As MAP-21 nears expiration, it’s important to understand some key differences between the two options currently on the table and what they would both mean for investments for sustainable transportation:
That’s what Senator Chris Murphy (D-Conn.) told a crowd in New Haven on Friday, where he called on Congress to “enact a sensible, modest increase” in the federal gas tax to pay for badly-needed road, rail and bridge maintenance.
The federal gas tax, now 18.4 cents per gallon, hasn’t seen an increase since 1993. Murphy’s proposal calls for 6-cent per gallon increases in 2015 and 2016, which would bring the tax up to where inflation would have taken it over the last two decades.
Senator Murphy’s message was well-received by an audience which included not only transportation advocates and labor unions, but also members of local chambers of commerce. Senator Murphy noted that raising the gas tax has support from a broad constituency, including two groups that don’t tend to find much common ground.
President Obama visited New York this week to call on Congress to act on his five year transportation funding plan, which would increase federal spending beyond current levels by $23 billion per year — a 44 percent increase. As the Highway Trust Fund plunges towards insolvency and with Congress expected to drag its collective feet, the President’s push is great news.
As MTR highlighted in an earlier post, federal transportation investments see the greatest economic benefit if they are directed to metropolitan areas. President Obama’s visit presented an opportunity to highlight the infrastructure needs of a region in need of serious transportation upgrades.
Investing in the infrastructure of the tri-state region provides incredible bang for the nation’s buck. New York is by far the largest generator of gross domestic product in the country. Its GDP of $1.335 trillion in 2012 nearly equals the nation’s second and third largest metro areas (Los Angeles and Chicago) combined, and, if it were an independent nation, it would be the world’s 13th largest economy.
As we hear more and more about the nation’s vast infrastructure needs, the Highway Trust Fund‘s impending bankruptcy and MAP-21’s looming expiration, you’d be forgiven for thinking that we’re facing a national “transpo-mageddon.” Adding to this view is the Pew Charitable Trusts’ new analysis, “Funding Challenges in Transportation Infrastructure,” which takes a close look at national, state and local funding for transportation projects. The report, released on May 5, paints a stark picture of the current nationwide transportation funding crisis, with three particularly salient points for the region and nationwide:
1) States rely on a combination of funding sources for transportation projects. According to Pew’s analysis, the federal share of state highway and transit funding for New York and New Jersey is less than 25 percent; the federal share for Connecticut is 30-34.9 percent. Though considerably less explicit than T4’s recent findings, the point remains the same: all states depend on the federal government to help pay for transportation projects.
2) State and local governments are spending less money on highway and transit projects. Although the Pew report doesn’t provide an analysis for each individual state, it does show that from 2003 to 2011, state investment on highway and transportation projects decreased by 25 percent. In 2003, states spent $105.9 billion (in 2011 dollars); in 2011, this dropped to $79.8 billion. Local funding also dropped, from $78.5 billion in 2003 to $73 billion in 2011. Federal funding increased only slightly during this period, from $56.6 to 57 billion.
State departments of transportation are growing concerned about the Highway Trust Fund’s pending insolvency. So what does this mean for communities across Connecticut, New Jersey and downstate New York?
According to Transportation for America’s (T4) recent report, The End of the Road? The Looming Fiscal Disaster for Transportation, New York, New Jersey and Connecticut collectively stand to lose over $5 billion in federal highway and transit funding in fiscal year 2015 if Congress doesn’t act to add new revenue to the Highway Trust Fund’s highway and mass transit accounts. Of this amount, the downstate region’s urbanized areas – the corridor stretching from eastern Connecticut to southern New Jersey stands to lose over $2 billion.
T4’s calculations (broken out by state and by urbanized areas with populations over 200,000) assume that federal funding levels in fiscal year 2015 would remain the same as fiscal year 2014. In fiscal year 2014, communities across the country received almost $47 billion in federal funding for highway and transit projects. However, with gas tax receipts only able to cover already-promised commitments, this means that in fiscal year 2015, states, regions and transit agencies would find themselves short nearly $47 billion for new transportation projects. States sometimes supplement federal funds with state, local or private dollars for transportation projects, but the analysis makes clear that, historically,“federal funds account for the lion’s share of almost any major project in the country.” From 2001-2012, T4 found that federal dollars comprised 71.3 percent of Connecticut’s state capital transportation budgets, 44.1 percent of New York’s and 35 percent of New Jersey’s.
As the Federal Highway Trust Fund inches closer to bankruptcy and the Obama Administration’s transportation funding plan remains a work in progress with MAP-21 expiring at the end of FY 2014, the reality remains that the nation’s infrastructure is in pretty bad shape.
With money tight and needs large, prioritization is key. But, unfortunately, that’s not how things get done in Washington. Once the gas tax and other funds are collected by the federal government, they are deposited in the Highway Trust Fund. The Fund is then split into the Highway Account and Mass Transit Account.
This funding breakdown highlights that only a small percentage of the two largest transportation funding pots go to mass transit funding, a key component of mobility in large metro areas. Even less goes toward infrastructure for walking and biking — the kind of infrastructure that’s integral for creating livable cities where people want to live – even though recent data show that these transportation modes are gaining users while vehicle miles traveled declines or is steady. Once the funds are generated, they are then seemingly arbitrarily distributed throughout the country, with distribution breakdowns based on apparent but not actual need based criteria.