This is the second and here is the first in a two-part Policy Update on the American Energy and Infrastructure Jobs Act (AEIJA), the U.S. House of Representatives federal transportation reauthorization bill.  The previous post discussed CMAP’s chief concerns with the bill, while this post analyzes AEIJA according to CMAP’s established reauthorization principles.
 

1.       Provide transportation investments based on regional priorities using performance-driven criteria that lead to decisions that are transparent, outcome-based, and mode-agnostic.

Partially implements CMAP principles.  The House bill contains extensive language on the use of performance-based evaluation criteria in allocating funds and developing strategic plans.  For example, AEIJA would require states to develop asset management plans for the National Highway System (Section 1105).  These plans would include economic and engineering analysis to define a maintenance and operation strategy that would achieve a long-term state of good repair at the least public cost.  AEIJA would provide for national goals, require that the state asset management plans contain various subcomponents (e.g., an asset inventory and a financial plan), while tying compliance to federal funding (i.e., states that fail to meet the asset planning requirements would see their federal match decline to 70 percent).  As a second example, AEIJA would establish a National Performance Management System, which would include national goals, core performance measures, technical guidance, and a state performance management process, which in turn would consist of state performance targets, implementation strategies, and reporting requirements.

AEIJA makes strides toward implementing a transparent performance-based funding system, but it falls short in ensuring that investment decisions are made based on regional priorities.  It invests states with the responsibility for identifying performance targets, for building plans and policies around these targets, and for measuring progress based on the state’s performance measures.  The role of metropolitan planning organizations (MPOs) is largely unmentioned; the bill merely says states must “collaborate” with MPOs, for example in setting core performance measures under the National Performance Management System.  Nevertheless, AEIJA’s emphasis on performance measurement among transportation officials is a positive step toward improved accountability to the public and better cost-effectiveness of the federal transportation program. 

2.       Evaluate and prioritize infrastructure investments in a comprehensive way that looks beyond transportation benefits to include land use, economy, environment, and other quality-of-life factors.

Partially implements CMAP principles.  As described above, AEIJA emphasizes the use of performance measures.  The text of the bill at times refers to economic growth, environmental, and safety goals in the context of performance measurement, along with more traditional transportation benefits.  For example, the core performance measures for the National Performance Management System would include traditional engineering criteria such as pavement and bridge conditions along with measures of safety, congestion, connectivity, freight mobility, and air emissions and energy consumption.  Many of the bill’s other references to performance goals or measures are currently undefined; it is currently unclear to what extent they would implement this reauthorization principle.  Defining the criteria in a manner recommended by CMAP’s reauthorization principles is contingent on the regulatory decisions made by the U.S. Department of Transportation and state DOTs.  

AEIJA does appear to indirectly uphold this reauthorization principle through its increased support of the Transportation Infrastructure Finance and Innovation Act (TIFIA) program.  The TIFIA program seeks to support large, complex projects of regional and national significance through various credit assistance programs.  The TIFIA Joint Program Office selects projects using a variety of criteria, including measures of environmental impact, use of new technology, and innovative project organization and delivery.  In addition to meeting these criteria, proposed TIFIA projects must repay loans using dedicated revenue sources, they must be included in their state’s TIP and long-term transportation plans, and their debt must have the potential to achieve investment-grade rating. Further, AEIJA’s emphasis on encouraging private sector involvement in transportation – whether through the TIFIA program, state infrastructure banks, or regulatory reforms at the U.S. Department of Transportation – suggests that a different set of evaluation criteria would be applied to some transportation projects in the future.  Private entities, for one, would presumably consider economic and potentially apply land use criteria when choosing whether to make an investment.

Additionally, AEIJA consolidates or eliminates nearly 70 programs, and the reduced number of programs should provide states and metropolitan areas with greater flexibility in programming federal funds.  To the extent that greater flexibility allows states to choose projects in a more comprehensive manner, AEIJA could thus further implement this CMAP recommendation. 
 

3.       Provide adequate federal investments in the nation’s transportation systems.

Does not implement CMAP principles.  AEIJA would continue the existing motor fuels tax and other user fees at their current rate, despite recent evidence that at current rates the Highway Trust Fund would be insolvent by Fiscal Year 2014.  In total, AEIJA would provide some $262 billion over five years.  AEIJA would limit Trust Fund receipts to highway projects only, while current practice dedicates 2.86 cents per gallon to mass transit from the 18.4 cent-per-gallon federal gas tax.  Even with the narrower programmatic scope, AEIJA would supplement the Highway Trust Fund with revenues from expanded domestic oil and gas production.  Revenue estimates from offshore energy production, drilling in the Arctic National Wildlife Refuge, and oil shale development vary widely.

AEIJA would establish a new Alternative Transportation Account for transit projects and the Congestion Mitigation and Air Quality Improvement (CMAQ) program, as well as various ferry, Puerto Rico and territorial highway, and research and education programs.  The Alternative Transportation Account would be principally funded through a one-time $40 billion infusion from general revenues.  AEIJA and its companion funding bill in the U.S. House of Representatives Ways and Means Committee currently fail to identify offsets for the $40 billion transfer as required by the Budget Control Act.

Maintaining funding at current levels is insufficient to meet the transportation system’s needs.  According to 2009 estimates from the National Surface Transportation Infrastructure Financing Commission, the nation’s highways and transit face a $400 billion funding gap between 2010 and 2015, and a $2.3 trillion gap between 2010 and 2035.  This gap is the difference between total investment needs and anticipated revenues using current funding sources and tax rates.  Assuming the $400 billion is applied equally across the five-year period, investment needs are $80 billion a year.  Applying this annual figure to the 4.5-year term of AEIJA, the bill comes up some $98 billion short.

4.       Reform the transportation funding system by placing a new emphasis on sustainable revenue sources.

Does not implement CMAP principles.  AEIJA would not provide sustainable new revenue sources for the nation’s transportation system.  As described above, the bill relies in part on a one-time infusion of general funds and an ongoing supplement of revenues from domestic energy production.  While the latter would be dedicated to the Highway Trust Fund, the former would not.  As such, the newly-established Alternative Transportation Account would lack a dedicated funding source entirely, leaving transit, CMAQ, and research programs vulnerable to the uncertainties of the appropriation process. 

The new revenue sources proposed by AEIJA lack a rational nexus to the transportation system, and they are thus inconsistent with GO TO 2040's call for continuing the user-fees tradition in transportation finance.  GO TO 2040 recommends increasing traditional revenue sources, principally the gasoline tax, in the near term to meet immediate investment needs.  In the long term, the gas tax will need to be replaced as vehicles become more fuel-efficient or switch to other fuels entirely. 

Potential new revenue sources include congestion pricing, vehicle-miles traveled fees, or variable parking fees.  Tolling is a key tool for implementing these sustainable transportation funding sources, and it has the advantage of being a pure user fee.  Technological advances such as open-road tolling have substantially reduced the costs of tolling and also allow for more sophisticated applications.  For example, toll rates can vary by time of day and location to implement congestion pricing or advanced vehicle-miles traveled fees.  Unfortunately, AEIJA would do little to advance these innovative revenue sources.  It would not permit tolling on existing Interstates, although it would allow tolling on new lanes added to the Interstate system.

5.       Establish a national transportation vision that includes the movement of goods and the development of a national high-speed rail network.

Partially implements CMAP principles.  AEIJA makes some progress toward implementing this reauthorization principle, but the bill comes up short compared to freight needs in light of its importance to the regional and national economies.  AEIJA would require the U.S. Department of Transportation to develop a National Freight Policy in consultation with relevant public and private stakeholders.  The plan would be developed within one year of enactment of the bill, with updates every five years thereafter.  It would identify goals, specify programs that would achieve those goals, and also specify a process for moving those programs forward.  AEIJA would encourage but not require states to establish freight advisory committees and develop their own freight plans.  Additionally, the bill would require the U.S. Department of Transportation to conduct a truck parking study within 18 months of enactment, and it would reform the Railroad Rehabilitation and Improvement Financing program to better utilize that private sector financing program.

Despite these positive steps, AEIJA would not provide the commensurate dedicated funding to achieve the goals of the National Freight Policy, and it would eliminate the Projects of National or Regional Significance program.  Additionally, AEIJA is largely silent on high-speed rail and would provide no dedicated funds to that purpose.