Congress Grapples Over Infrastructure Funding


October 2009

Congress Grapples Over Infrastructure Funding


highwayWhen the American Recovery and Reinvestment Act passed in February, it was clear that Washington had finally gotten the message that infrastructure investment was critical to America's economic success. How to continue investing in infrastructure improvement, however, remains a sticking point in Congress—between Democrats and Republicans, and even between the Senate and the House.

Before adjourning for the August recess, Congress passed a bill (H.R. 3357) that would add $7 billion to the Highway Trust Fund to keep it solvent through the end of FY09, until Congress can act on longer-term funding this autumn. The fund was expected to run short in August and faces an additional $8 billion to $10 billion shortfall in FY10.

Republicans opposed the bill, arguing that there were ways to keep the fund afloat without adding to the nation's deficit. Senator David Vitter (R-LA) offered an amendment to replenish the Highway Trust Fund with unused money from the American Recovery and Reinvestment Act (ARRA), contending that only 10% of the stimulus money has been spent so far. (His amendment was defeated.)

The current highway law, known as SAFETEA-LU, is set to expire on September 30. The White House has asked Congress to extend the law for 18 months, until after the 2010 elections, and add $20 billion to the Highway Trust Fund to keep it solvent until March 2011. The Senate is on board with the White House's proposal; but the House plans to introduce a six-year, $500 billion transportation authorization bill this autumn.

Unlike the short-term infusion of cash needed for a SAFETEA-LU extension, the House's Surface Transportation Authorization Act of 2009 would require a significant source of revenue that could generate an additional $144 billion beyond the current gas tax. House Democrats have suggested revenue-raising ideas including reimbursing the Highway Trust Fund for foregone interest, using bond financing, and creating a transaction tax on oil futures trades. The White House has urged the House to hold off on the bill for now, citing the difficulty of raising so much revenue during a recession.

In the meantime, some state transportation officials have complained that uncertainty about the likelihood of a multiyear transportation authorization bill—and thus, future funding—is forcing them to forego larger-scale transportation plans in favor of smaller maintenance projects because they do not know how much funding will be available when a full authorization is finally enacted.
The U.S. Chamber of Commerce has joined engineering groups in supporting the House's six-year authorization bill, citing the potential effects of failing infrastructure on the U.S. economy.

Part of the resistance to the House's comprehensive authorization bill is that the U.S. has already invested nearly $81 billion in infrastructure this year as part of the $787 billion ARRA. But with most of the ARRA money obligated, many are disappointed with the results. The funding was slower to flow to projects than expected. The bill's directive that money should be spent on "shovel-ready" projects (in order to spend the funding quickly) also limited the types of projects that could be completed using the funding.

"Shovel-ready" projects such as guardrail repairs or road repaving have short-term value for both infrastructure improvement and creating jobs; but the ability to begin larger projects would have had the potential to create jobs outside the construction industry and create more long-term value from infrastructure investment. Charlotte, North Carolina, Mayor Patrick McCrory echoed the frustrations of many when he wrote in an August 12 Wall Street Journal opinion piece, "While President Roosevelt built dams and President Eisenhower built an interstate highway system, President Obama's stimulus fills pot holes."

While the ARRA was a start to rescuing America's decrepit infrastructure, it cannot replace a comprehensive funding plan like the House's six-year authorization bill. Where ARRA funding went to small-scale projects like highway repairs, the authorization bill would focus on long-term goals like moving goods and people more efficiently and lessening the impact of transportation on the environment. Infrastructure investment has historically stimulated the economy, so it has a logical place on the recession agenda.

Keeping SAFETEA-LU limping along 18 months at a time may make sense from a short-term standpoint, but a comprehensive bill that would allow for six years of planning would allow states to strategically plan maintenance and upgrades of infrastructure, allowing for more responsible spending and, ultimately, the modernization that U.S. infrastructure desperately needs.