TRANSPORTATION: Congress looks to infrastructure funding for economic boost (05/06/2008)
Josh Voorhees, E&E Daily reporter
Amid growing concerns over a slowing economy, lawmakers are turning their attention to the nation’s infrastructure as one way to provide an economic boost.
The case for infrastructure investment made by many legislators, and heartily echoed by the transportation industry, is that federal funding translates directly into the creation of much-needed American jobs.
A second economic stimulus package, complete with transportation and infrastructure incentives, remains high on many lawmakers wish lists, but lawmakers are also working to inject money into infrastructure development through other legislative vehicles.
Last month, Congress passed a highway corrections bill that is expected to unleash up to $1 billion for infrastructure projects, and the Federal Aviation Administration reauthorization bill (H.R. 2881) on the Senate floor would inject $5 billion into the highway trust fund, which provides the bulk of federal funding for roadway construction and maintenance.
Finance Chairman Max Baucus (D-Mont.) estimated that 34,000 new jobs are created for every $1 billion of federal investment. “So this $5 billion would create 170,000 good-paying jobs,” Baucus said.
The provision from Baucus and Sen. Charles Grassley (R-Iowa) in the FAA bill is the latest proposal to temporarily avoid the looming shortfall facing the federal highway account. The Treasury Department projects the account will finish fiscal 2009 with a deficit of more than $3 billion. Such a shortfall could slow or even stop transportation projects across the country because states would grow uneasy about funding construction if federal reimbursement is in doubt, federal officials say.
Not surprisingly, industry groups are vocal supporters of the $5 billion injection into the highway account, just as they were of the highway corrections bill.
“With our nation’s economy limping along, this is precisely the time that we need to be investing in our transportation infrastructure,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials, an organization representing the transportation departments from all 50 states.
While additional funds for roadway construction and maintenance would mean more jobs, the potential shortfall would be devastating for states who rely on the federal funding to finance infrastructure work, said Horsley. “Unless we fill the $3.3 billion hole in the highway trust fund, the federal-aid highway funds going to the states will be dramatically reduced by $13.5 billion by the end of September 2009,” he said.
Steve Sandherr, executive director of the Associated General Contractors of America, said contractors are likely to grow conservative if they fear fewer government contracts are on the horizon. “If contractors don’t see a steady flow of funding, they won’t purchase new equipment or software,” let alone hire new employees, he said.
Industry officials predict that if uncorrected, the highway shortfall could lead to the loss of 400,000 jobs.
“The pro side of [infrastructure investment] is so strong, that it is hard to find any objection to it,” said Bruce Agnew, policy director at the Cascadia Project, a Seattle-based transportation think tank.
He said that in addition to the direct benefit of job creation, transportation projects also provide a host of secondary economical advantages such as easier shipping routes and reduced travel times that can help companies’ bottom lines.
Despite bipartisan support for the Baucus-Grassley proposal, the Bush administration has already expressed opposition to the plan.
The White House instead is pushing a controversial proposal to keep the highway account solvent by borrowing the necessary funding from the mass transit account, which currently has a substantial surplus. That plan has drawn heavy fire from lawmakers who call it a short-term fix that risks jeopardizing both the highway and transit accounts (E&E Daily, April 4).
The House Transportation and Infrastructure and the House Budget committees will hold a joint hearing Thursday to discuss the variety of long-term financing solutions that have been proposed to keep the highway funding on solid footing.
In addition to the Baucus-Grassley proposal and the mass transit transfer, the committees will likely examine a bipartisan transportation committee recommendation for a major increase to the federal gasoline tax — which provides the majority of funding for transportation projects — as well as sweeping system changes such as congestion pricing and pay-as-you-drive schemes being championed by the Department of Transportation (Greenwire, April 28).
In a separate hearing Thursday, the Senate Environment and Public Works Committee will examine the relationship between transportation and the economy from a different angle. The EPW Committee will investigate how the exponential growth of freight movement on the nation’s roadways is contributing to the nation’s infrastructure woes and how a stronger system could be a boon to industries that rely on shipping.
Schedule: The joint hearing is Thursday, May 8, at 10 a.m. in 2167 Rayburn.
Witnesses: Peter Orszag, director of the Congressional Budget Office, and Patricia Dalton, managing director of the physical infrastructure team at the Government Accountability Office.
Schedule: The EPW Committee hearing is Thursday, May 8, at 10 a.m. in 406 Dirksen.
Witnesses: Michael Gallis, Gallis & Associates; Charlie Potts, chief executive, Heritage Construction and Materials, on behalf of the American Road and Transportation Builders Association; and Mortimer Downey, PB Consult chairman, on the behalf of the Coalition for America’s Gateways and Trade Corridors.