Public Transportation / Infrastructure

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Public Transportation
–What is Public Transportation?
–Funding and Financing Public Transportation
–More About FAST: Fixing America’s Surface Transportation Act
–Public Transportation: Resources and Reports
U.S. Infrastructure Assessment
Infrastructure: Recent Developments
Infrastructure: Financing

Infrastructure: Resources and Reports

PUBLIC TRANSPORTATION

  • What Is Public Transportation?
    • Public transportation (also known as public transit, mass transit, or mass transportation) is defined in federal law (49 U.S.C. §5302) as “regular, continuing shared-ride surface transportation services that are open to the general public or open to a segment of the general public defined by age, disability, or low income.  (excerpted from CRS)
    • The main forms of public transportation are bus, heavy rail (subway and elevated), commuter rail, light rail, paratransit (also known as demand response), and ferryboat.
      • About 50% of public transportation trips are made by bus;
      • 36% by heavy rail;
      • 5% by commuter rail;
      • 5% by light rail (including streetcars);
      • 2% by paratransit; and
      • less than 1% by ferries.
    • Since the end of the Second World War providers of public transportation have struggled to maintain ridership due to a number of interrelated factors, particularly rising incomes, growing automobile availability and use, and residential and employment decentralization.
    • Despite the long-term trend, ridership has risen over the past two decades from a low in 1995 of 7.8 billion trips to 10.7 billion trips in 2013.Public transportation accounts for about 2% of all daily trips and about 5% of commute trips.
    • About 74% of all public transportation trips are made in 10 large urbanized areas: New York, Los Angeles, Chicago, Washington, San Francisco, Boston, Philadelphia, Seattle, Miami, and San Diego. The New York City urbanized area alone, an area that includes parts of New Jersey and Connecticut, accounts for about 4 of every 10 public transportation trips nationally.

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  • Funding and Financing Public Transportation

    • For many years, federal surface transportation programs were funded almost entirely from taxes on motor fuels which have not been increased at the federal level since 1993.  (excerpted from CRS, Funding and Financing Public Transportation)
    • Prior to the Great Recession, annual increases in driving were sufficient in most years to keep revenue rising steadily, but this is no longer the case.
    • Although vehicle miles traveled have recently surpassed pre-Recession levels, future increases in fuel economy standards are expected to reduce motor fuel consumption and fuel tax revenues.
    • Since 2008 Congress has financed the federal surface transportation program by supplementing fuel tax revenues with general tax revenues.
    • The most recent reauthorization act, the Fixing America’s Surface Transportation Act (FAST Act; P.L. 114-94), was enacted on December 4, 2015, and authorized spending on federal highway and public transportation programs through September 30, 2020.
    • The act provided $70 billion in general fund transfers to the HTF to support the programs over the five-year life of the act.
    • Congressional Budget Office (CBO) projections indicate that the HTF revenue shortfalls will reemerge following expiration of the FAST Act.
    • Financing Options:
      • Raising motor fuel taxes could provide the HTF with sufficient revenue to fully fund the program in the near term, but may not be a viable long-term solution due to expected declines in fuel consumption. It would also not address the equity issue arising from the increasing number of personal and commercial vehicles that are powered electrically and therefore do not pay motor fuel taxes.
      • Replacing the fuels tax with a mileage-based road user charge or vehicle miles traveled (VMT) charge would need to overcome a variety of financial, administrative, and privacy barriers, but could be a solution in the longer term.
      • Treasury general fund transfers could continue to make up for the HTF’s projected shortfalls but could require budget offsets.

  • More About FAST: Fixing America’s Surface Transportation Act

     


U.S. Infrastructure Assessment

INFRASTRUCTURE: RECENT DEVELOPMENTS

  • LATEST INFRASTRUCTURE NEWS (from ASCE)
  • Feb 12:  President’s FY 2019 Budget 
    • Ensuring modern and efficient interstate commerce to keep the U.S. economy integrated and economically competitive is a federal responsibility under the Constitution. However, the President’s Budget requests only $21 billion for infrastructure in FY 2019, at a time when ASCE estimates $2 trillion is required to address U.S. infrastructure rated “at strong risk of failure” and “mediocre.”
    • Misleading:  This anemic request is puffed up as the first installment of a $199 billion 10-year investment that will leverage $1.5 trillion together with State, local, and private investments–ignoring the reality that State and local governments are financially stressed, and highways, bridges, transit, airports, seaports, and waterways are public — not private sector — responsibilities.
    • $122 billion cut in the highway program…. There are no new revenues to fund this meager investment — the spending would be taken from other domestic programs including transportation, with a $122 billion cut in highway programs after the expiration of the current highway bill.
  • Jan 30, 9:30 pm:   Here is what the President said in the State of the Union; note that there is no commitment to investment federal resources: “As we rebuild our industries, it is also time to rebuild our crumbling infrastructure.  America is a nation of builders. We built the Empire State Building in just 1 year — is it not a disgrace that it can now take 10 years just to get a permit approved for a simple road?  I am asking both parties to come together to give us the safe, fast, reliable, and modern infrastructure our economy needs and our people deserve.  Tonight, I am calling on the Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment we need.  Every Federal dollar should be leveraged by partnering with State and local governments and, where appropriate, tapping into private sector investment — to permanently fix the infrastructure deficit.  Any bill must also streamline the permitting and approval process — getting it down to no more than two years, and perhaps even one.  Together, we can reclaim our building heritage. We will build gleaming new roads, bridges, highways, railways, and waterways across our land. And we will do it with American heart, American hands, and American grit.”
  • Jan 30, 2018:  Politico releases an “infrastructure timeline”
  • Jan. 2018:  National League of Cities launches “Rebuild with Us” initiative.
  • Jan 30, 2018:  WAPO: “Chuck Schumer: What I’m listening for in Trump’s State of the Union”: “When President Trump addresses the nation in his first official State of the Union on Tuesday night, he should urge Congress to deliver a substantial investment in our nation’s infrastructure. On this issue, Democrats agree with the president: America’s physical infrastructure is the backbone of our economy, and we have fallen behind. If we do not quickly repair and modernize our infrastructure, we risk ceding the next century of global economic leadership to China or India.”
  • Jan. 30, 2018:  The key on infrastructure is how much federal public investment is being proposed.  Thus far, the most the Administration is reported to have considered is $200 billion over 10 years, claiming it would “leverage” as much as $1.7 trillion dollars in state, local, and private sector investment. That’s only $20 billion per year of federal investment — one half of one percent of the federal budget — to address a $2 trillion infrastructure gap.  Moreover, the $20 billion per year is not grounded in new funding. Congressional Quarterly reports that last week an Administration adviser told the nation’s mayors that there would be no new revenues to pay for the federal portion and, instead, it would be funded by cutting Amtrak and mass transita move Congress is unlikely to support.
  • Jan 30, 2018:  CBPP analysis concludes that the net effect of  the new $200 billion Trump initiative combined with previously proposed cuts to Highway Trust Fund spending and other transportation programs would be “large and growing annual cuts in infrastructure spending.
  • Jan. 24, 2018:  The Hill reports that “President Trump said Wednesday he plans to discuss a $1.7 trillion infrastructure package during next week’s annual State of the Union address….Trump said his administration is “working to rebuild our crumbling infrastructure by stimulating a $1 trillion investment, and that will actually, probably, end up being about $1.7 trillion.” (emphasis added)   The key here is the word “stimulating” — press reports have indicated the Administration may propose up to $200 billion over 10 years to “leverage” a trillion dollars of public-private investment.
  • Jan. 22, 2018:  Leaked White House infrastructure doc
  • Jan. 7, 2018:  Washington Post reports that Gary Cohn, the President’s chief economic advisor, “said the administration hoped $200 billion in new federal government spending would trigger almost $1 trillion in private spending and local and state spending, according to people familiar with his comments.”
  • Sept. 25, 2017:  CBO presentation on “Approaches for Increasing the Productivity of Federal Infrastructure Spending”
  • Aug. 10, 2017:  Trump on Infrastructure (as reported by Politico):  “I’m not sure that we will bring [Democrats] in. I mean, maybe we’ll bring them in, maybe not. I think the infrastructure bill will be bipartisan. In fact, frankly, it may have more support from the Democrats. I want a very strong infrastructure bill.”
  • July 19, 2017:  The House Budget Committee reported a Budget Resolution that supports federal infrastructure investment only if it is “deficit-neutral” over the next 10 years – rejecting the longstanding governmental practice of issuing long-term bonds to finance capital investments.  If Congress rejects long-term bonds (deficit-financing) as a means of paying for long-term investments in our nation’s infrastructure, the state of U.S. infrastructure is likely to continue its rapid decline.   Language of the House Budget Resolution: “SEC. 402. RESERVE FUND FOR INVESTMENTS IN NATIONAL INFRASTRUCTURE. In the House of Representatives, the chair of the Committee on the Budget may adjust the allocations, aggregates, and other appropriate levels in this concurrent resolution for any bill or joint resolution, or amendment thereto or conference report thereon, that invests in national infrastructure to the extent that such measure is deficit neutral for the total of fiscal years 2018 through 2027.”  (emphasis added)  The rejection of deficit-financing suggests the unworkable principle that capital investments can only occur when long-term projects can be squeezed into annual operating budgets.
  • May 23, 2017:  The President’s FY 2018 Budget, released on May 23, 2017, asserted that “more Federal funding for infrastructure is not the solution,” despite the record of successful federal investments in the nation’s highways, waterways, and airports during the last century — beginning with the Eisenhower Administration’s historic investment in the national highway system.  The Budget proposes only $5 billion for infrastructure for FY 2018 and a 10-year investment of only $200 billion – a tiny fraction of the resources needed to meet the nation’s infrastructure deficit (as explained below).
  • March 9, 2017:  Quadrennial 2017 Infrastructure Report Card released by American Society of Civil Engineers giving the U.S. a cumulative grade of D+ and finding: ” We can no longer afford to defer investment in our nation’s infrastructure. To close the $2.0 trillion 10-year investment gap, meet future needs, and restore our global competitive advantage, we must increase investment from all levels of government and the private sector from 2.5% to 3.5% of U.S. Gross Domestic Product (GDP) by 2025. This investment must be consistently and wisely allocated, and must begin with the following steps:
    1. Put the “trust” back into “trust funds.” Dedicated public funding sources on the local, state, and federal levels need to be consistently and sufficiently funded from user-generated fees, with infrastructure trust funds never used to pay for or offset other parts of a budget.
    2. Fix the Highway Trust Fund by raising the federal motor fuel tax. To ensure long-term, sustainable funding for the federal surface transportation program the current user fee – 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel – must be raised by at least 25 cents per gallon and tied to inflation to restore its purchasing power, fill the funding deficit, and ensure reliable funding for the future.
    3. Authorize programs to improve specific categories of deficient infrastructure and support that commitment by fully funding them in an expedient, prioritized manner.
    4. Infrastructure owners and operators must charge, and Americans must be willing to pay, rates and fees that reflect the true cost of using, maintaining, and improving all infrastructure, including our water, waste, transportation, and energy services.”
  • March 1, 2017:  Nonpartisan Congressional Budget Office unveils a web-page for “Spending on Infrastructure and Investment”
  • Feb. 28, 2017:  In an address to a joint session of Congress, President calls for a $1 trillion investment in infrastructure.
  • Nov. 17, 2016:  Congressional Research Service Report:  Infrastructure Finance and Debt to Support Surface Transportation Investment
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INFRASTRUCTURE: FINANCING

  • Infrastructure Finance and Debt to Support Surface Transportation Investment (excerpts from CRS report):
  • Investment in surface transportation infrastructure is funded mainly with current receipts from taxes, tolls, and fares, but it is financed by public-sector borrowing and, in some cases, private borrowing and private equity investment.
  • Financing is normally not arranged at the federal level, as the federal government builds few transportation projects directly.
  • This (CRS) Report discusses current federal programs that support the use of debt finance and private investment to build and rebuild highways and public transportation. It also considers legislative options intended to encourage greater infrastructure financing in the future.
  • The federal government’s largest source of support for surface transportation infrastructure is the Highway Trust Fund (HTF), which is funded principally by taxes on gasoline and diesel fuel. Funds from the HTF are distributed to state governments and local transit agencies for projects meeting federal standards.
  • State governments, local governments, and transit agencies must also contribute their own resources because grants from the HTF do not meet states’ entire surface transportation capital needs.
  • The federal government supports additional infrastructure spending by providing a tax exclusion for owners of municipal bonds, or “munis,” issued by state and local governments.
  • The federal government also supports project finance through loan programs, such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and the Railroad Rehabilitation and Improvement Financing (RRIF) program, which can help leverage private investment via public-private partnerships (P3s), and through federally authorized state infrastructure banks (SIBs).
  • All of these financing mechanisms impact the federal budget, although none are as costly as federal grant funding.
  • With less federal support, financing places a greater burden on state and local governments to identify revenue sources to repay loans or to provide a return to private investors.
  • In many cases, non-federal revenue to finance a project is provided by a highway or bridge toll, but it could be a pledge of future sales tax or real estate tax revenue.
  • There are many legislative options that Congress might consider in modifying the federal role in surface transportation financing.
  • This (CRS) Report considers five:
    • Creation of a new type of bond offering federal tax credits to investors in infrastructure.
    • Changes to the TIFIA and RRIF programs.
    • Greater encouragement for P3s.
    • Creation of a national infrastructure bank to provide low-cost, long-term loans for infrastructure on flexible terms.
    • Enhancement of state infrastructure banks (SIBs) that already exist in many states, possibly with dedicated federal funding.

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INFRASTRUCTURE: RESOURCES AND REPORTS