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Two Recent Reports Address Federal Transportation Funding
Two recent reports from Washington D.C.-based think tanks describe important policy challenges pertaining to federal transportation funding. In "The Consequences of Reduced Federal Transportation Investment," the Eno Center for Transportation and the Bipartisan Policy Center estimate the impacts of decreasing the federal transportation program by 35 percent, as would be required to keep spending in line with receipts to the Highway Trust Fund. State and local governments would need to increase revenues to make up for the federal cut. The report concludes that new state and local revenue could cover about half of lost federal revenue for highways, but would fail to replace the lost federal transit funding.
In the second report, "Highway Robbery," the Center for American Progress argues for the use of more performance-based formulas in apportioning federal transportation funds across states. It analyzes the Equity Bonus program and various minimum set-aside rules for the federal transportation program, which ensure that all states receive certain levels of funding. The authors contend that these programs and requirements serve political purposes rather than meet the needs of the nation's transportation system.
Moving Ahead for Progress in the 21st Century (MAP-21), the recently passed two-year transportation reauthorization bill, does not resolve the policy issues discussed in these reports. MAP-21 maintains current spending levels on transportation. However, receipts to the Highway Trust Fund have not met these expenditure levels over several years. Since 2008, Congress has transferred about $35 billion in general revenues to the Highway Trust Fund just to maintain its solvency. MAP-21 does little to address the nation's crisis in transportation finance, and instead it relies on ten years' worth of projected savings and new tax revenues from a wide array of sources to finance only two years of spending. The Congressional Budget Office estimates that the Highway Trust Fund will be insolvent in FY 2015.
Although the new law eliminated the Equity Bonus program in its consolidation of federal programs, the funding allocated to states in MAP-21 is based on states' federal apportionments in FY 2009. Those FY 2009 apportionments, in turn, incorporated the Equity Bonus program, so MAP-21 is indirectly continuing the practice. In the same way, MAP-21 also continues the practice of minimum set-asides for various programs. For example, all states receive apportionments through the Congestion Mitigation and Air Quality Improvement (CMAQ) program even if they have no areas in nonattainment or maintenance of federal air quality standards. Because CMAQ funds are spread across the country, the regions most in need of assistance receive fewer funds than they otherwise would.
CMAP supports adequate federal investments in transportation based on sustainable revenue sources. Further, CMAP recommends the use of performance-based programming in transportation. Unfortunately, MAP-21 fails to deliver on either front. While MAP-21 imposes new requirements for states, metropolitan planning organizations, and transit agencies to begin collecting performance data and to develop performance targets, it generally does not tie the allocation of funds to performance outcomes. And as discussed above, MAP-21 relies on financing gimmicks to maintain current spending levels.
The next transportation reauthorization offers an opportunity to address these issues at the national level. In the meantime, GO TO 2040 calls on the region to investigate its own revenue sources, including innovative strategies such as congestion pricing, value capture, and public-private partnerships. CMAP recently completed a study of congestion pricing on selected facilities in northeastern Illinois and launched a microsite dedicated to the topic. GO TO 2040 also supports performance-based programming, and CMAP will continue to work with the Illinois Department of Transportation (IDOT) to implement such an approach for the state highway program. This past summer, CMAP hosted a peer exchange on performance-based funding to discuss these issues with IDOT, and the CMAP Board and MPO Policy Committee in October asked IDOT to convene a state-level working group to begin the implementation of a performance-based funding system in Illinois.