Transportation Policy Resolutions for the New Year

Transportation Policy Resolutions for the New Year
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BY Joshua L. Schank
President & CEO
Eno Center for Transportation

2013 promises to be an eventful year for federal policy-making. The entire tax code and virtually all domestic spending programs are likely to be scrutinized as we search for a way to get our debt under control and keep the economy moving. But transportation is likely to be an afterthought.

Transportation—and aviation most harshly—would be impacted by the looming sequester, postponed by Congress for two months as part of the resolution of the “fiscal cliff” problem. However, most federal funding for transportation would be protected were the sequester allowed to move forward, and so far Congress has demonstrated that it will likely continue to act to postpone or eliminate the sequester threat.

Many of the bigger issues in transportation are likely to get lost in this discussion. Neither the FAA nor the surface transportation reauthorizations expire in 2013, so Congress has little incentive to make progress on either of them. The TIGER program was not reauthorized, High-Speed Rail appears has no more federal funding, and MAP-21 is funded through next year. Other than legislation on Amtrak and rail safety, there is little pressing on transportation this year that would cause Congress or the Administration to act.

That said there are numerous opportunities for transportation policy improvements this year. Just because there are no significant legislative opportunities for transportation does not mean there are not large policy issues with substantial long-term implications. The following are some goals (or resolutions) for transportation policy-makers in 2013:

1. Resolve the long-term funding issue for surface transportation. We are all too familiar with this problem. Receipts from gas taxes and other fees into the Highway Trust Fund (HTF) are insufficient to maintain spending at current levels. Congress has dealt with this issue so far by using General Fund revenues to cover the gap between receipts and spending obligations, while keeping spending flat in real terms. Among the problems with this approach is that it fails to provide sustainable funding, thus inhibiting solid long-term decision-making. It also caps total spending on transportation, preventing us from making sorely needed national investments.

While legislative action would be required in order to achieve this objective, it is the most significant legislation that is likely to pass Congress this year. This might be the best opportunity we have had yet to address this problem since the first HTF bailout in 2008. The quick fix passed to avoid the fiscal cliff does not secure the revenue necessary for real deficit reduction. As long as new revenue is needed, there is an opportunity for transportation to make its case. It remains likely that a larger deal on the debt will be debated this year in Congress. If such a “grand bargain” occurs, it is possible that transportation could be a part of it. This is probably easier than fixing transportation as part of a standalone package.

Both the Simpson-Bowles and Dominici-Rivlin deficit reduction plans recommended increasing the fuel tax. Another possible solution could be a carbon tax, which could generate revenue for deficit reduction, transportation, and clean energy. President Obama has consistently pushed for new spending on infrastructure as part of a larger debt deal. Our goal should be to make sure that it is not only included, but that instead of being seen as a vehicle for job creation, instead it is spent wisely on investments of national importance.

2. Make significant progress on NextGen. NextGen may seem like an intractable technology problem that demands a legislative fix, but it is actually a political problem that demands strong leadership and innovative solutions. With the confirmation of Michael Huerta as Administrator of the Federal Aviation Administration (FAA), there is a NextGen champion at the helm of the implementing agency. The problem is that the FAA still faces tremendous hurdles to faster NextGen implementation, in part because of its dual mission as a safety regulatory agency and an air traffic control operator.

Mr. Huerta’s approach as acting administrator has been to implement NextGen on an incremental basis. This pragmatic approach has been fruitful, but has not led to the faster implementation so many in the industry have been seeking. A faster approach will necessitate leadership from the White House. The private sector – particularly the airlines and aircraft manufacturers – is going to continue to be reluctant to invest in NextGen without greater certainty. If the White House pushes FAA to develop specific performance measures for NextGen that they can then present to industry, they would dramatically increase the chances that the private sector will invest in NextGen. This can happen this year and does not even require any Congressional action.

3. Develop effective MAP-21 rulemakings. MAP-21 is only two years long but many of the provisions last longer than that. Many of the rulemakings being developed by U.S. DOT with respect to MAP-21 laws could have policy implications lasting well beyond two years. For example, U.S. DOT will be developing performance measures with respect to major highway and transit formula programs. Though guided by legislation, the specific measures are largely going to be determined by U.S. DOT. Their choices will in turn determine both the success of performance measurement in federal transportation policy, and hopefully, how well the measures help to move us towards wiser investment.

Perhaps one of the biggest things U.S. DOT can do with respect to performance would be to push states to adopt aggressive performance targets. Under MAP-21, states are required to set their own targets for meeting their performance objectives. The natural inclination for most states could be to set targets that they know can be achieved. However, setting more aggressive targets is more likely to force innovation. With encouragement from U.S. DOT – and assurances that missing targets will not have any financial consequences under existing law – states could set targets beyond their comfort zone that will cause them to think of creative solutions to transportation problems. For example, aggressive targets but limited resources could encourage a greater focus on operations over capital investment. This is an initiative U.S. DOT could cautiously undertake without any new legislation.

4. Create a clear path for freight policy. The creation of a freight policy council within U.S. DOT is a good first step towards developing a strategic freight policy for the nation. The council should make the most of its opportunity by seeking to define some of the critical components of the policy. For one, a national freight policy should be mode-neutral – that is it should look to create ways to move goods as efficiently as possible without caring about specific mode shifts. Without care, freight policy can devolve into something simplistic as “moving more goods from truck to rail” which not only alienates the largest segment of the freight industry by specifically trying to cut into their business, but also may not actually serve the intended goals of moving freight more efficiently.

Second, a national freight policy must clearly define the national interest with respect to freight in order to distinguish it from local interests or strictly private sector interests. For example, a project to reduce a “freight bottleneck” could provide large economic benefits for the nation, or in some cases, it could merely ease local traffic. We need to be able to distinguish between the two. Similarly, when private industry such as the freight railroads are involved, we need a mechanism to ensure that freight rail investments are not simply substituting for private money that furthers the interest of the railroads. These are critical issues to sort out and the freight policy council has the ability to begin the process without further legislative authority.

Conclusions

The upcoming year does not present many big opportunities for legislative action in transportation policy. The one potentially big area where legislative action could matter is in the area of deficit reduction. Transportation could be a part of that discussion, and if fruitful, the outcome could be a game-changer for years to come. But on a lesser scale, there are several non-legislative actions that could occur this year with meaningful impacts for transportation. Real progress can be made on NextGen, performance measures, and freight policy. It will take some effort on the part of this Administration, and will include multiple political challenges. But these advances are well within reach, and next year we will be awash in more legislative challenges including reauthorization of MAP-21. Now is the time to seize the opportunity.

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of The Eno Center for Transportation.

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