Would the DRIVE Act Spend Federal Funds More Effectively?

Would the DRIVE Act Spend Federal Funds More Effectively?

July 29, 2015  | ENO CENTER FOR TRANSPORTATION

It has been six years since the transportation community had the opportunity to mull over a six-year transportation bill written by a Congressional Committee. The new DRIVE (Developing a Reliable and Innovative Vision for the Economy) Act, from the Senate Environment and Public Works (EPW) Committee, and the Surface Transportation Assistance Act, which came from Chairman Jim Oberstar and the House Transportation & Infrastructure Committee, have one important thing in common – they are coming out of an authorizing committee with no indication that there is any financing in place to pay for them. Congress would need to come up with at least $100 billion to fund this new long-term bill. This means that enacting the DRIVE Act into law is a long shot.

Nonetheless, from a policy perspective the DRIVE Act gives insight regarding the direction Congress would take if it had the money. Importantly, given that we are continuing to operate in a period of fiscal uncertainty, without any indication of the ability to create a sustainable revenue stream for transportation, it is more critical than ever that we ensure whatever funds we have are spent as effectively as possible. In fact, it is highly unlikely we will ever raise sufficient revenues for transportation unless and until we provide accountability for how we are spending what we have in a way that advances national goals.

Unfortunately, it appears the EPW Committee is not particularly interested in reforming how we spend money on transportation. While MAP-21 took several critical steps by introducing national goals and performance measures, it did not go nearly far enough. It was hoped that this next bill would be an opportunity to push further. Admittedly, three years after MAP-21, the U.S DOT has not even completed the rulemaking on several performance measures specified by that bill, despite being directed to do so by Congress. This has made it more difficult for new legislation to advance the ball. Nonetheless, there are ample opportunities to make the DRIVE Act more focused on improving the return on investment for federal transportation dollars. The following are a few ideas for improving the DRIVE Act before it becomes law:

  • Add accessibility as a performance measure.

MAP-21 introduced the idea of performance measures related to national goals for transportation investment. Some measures are easier to develop than others – safety and pavement condition, for example, are relatively straightforward compared to system performance or congestion. However, the primary purpose of transportation is to enable the economy to function more effectively (safety and emissions are externalities that need to be mitigated, and pavement condition is a poor proxy for economic benefits). The U.S. DOT rulemaking on these measures has not yet been completed, and the DRIVE Act is silent on them. In fact, the DRIVE Act proposes nothing new whatsoever with respect to specific performance measures.

Congress should help and push U.S. DOT by specifying a new measure of accessibility. One of the reasons system performance and congestion have been difficult is that “system performance” is ambiguous and not everyone agrees that reducing congestion in all circumstances should be the goal (for example, how much should New York City spend trying to reduce congestion on 6th Avenue when the real economic benefits would come from upgrading the subway under 6th Avenue). There is strong consensus within the academic and research community that accessibility is a far preferable economic measure for transportation. It measures how quickly and reliably people can get where they need to go, which is not only an appropriate economic measure, but also resonates well with travelers. Accessibility is also multimodal, which makes it far more effective in large urban areas where there are multiple alternatives to personal vehicles. Congress should relieve U.S. DOT of the responsibility of developing these other measures and push them to focus on accessibility.

  • Begin to tie performance to funding.

This was the biggest flaw of the MAP-21 goals and performance measures. When performance outcomes remain independent from funding, and targets for performance are set by grantees themselves, it is unlikely that these measures will have a substantial impact on outcomes or provide accountability for federal investment. It was understandable that the first attempt to introduce performance, especially in a two-year bill, would be cautious. But the DRIVE Act is a six-year bill, which provides ample opportunity to begin tying performance to funding.

Now is the time to make this happen. The simplest way to do this would be to carve out a small amount of money to reward states that meet their targets (once the rulemaking on the measures is complete). This could be a small pot of money to start, with all states receiving a minimum apportionment, and gradually increase in size towards the end of the six-year legislation. A small program that rewards performance with flexible cash could substantially improve project selection processes at very low cost.

  • Make the discretionary programs more effective.

The DRIVE act takes some important and beneficial steps forward by creating new discretionary grant programs that are intended to foster innovation and move critical projects forward. The “Assistance for major projects program” provides $300-$450 million for “critical high-cost projects” based on a competitive grant process with criteria specified by Congress. The Intelligent transportation systems program provides $30 million for a competitive program to accelerate ITS. These are both a good start, but they can be substantially improved.

There are two critical roles for a federal competitive grant program. One is to allocate funding to the most useful and innovative investments from a national perspective. This is accomplished in part by these programs since they involve objective criteria and a rigorous selection process. However, because they are only for highway projects – understandable given that this bill is derived from the EPW Committee – they will exclude potentially worthwhile projects that are on other modes or multimodal. The program should be made mode-neutral in order to take advantage of non-highway projects that also meet the criteria. Second, the programs should use federal funds as a way to better leverage state and local funding. Elsewhere in the legislation, the DRIVE act has removed most restrictions on tolling. While this might be helpful in raising revenue, it will be much more likely to actually result in new revenues if there are incentives. States and localities face significant challenges in implementing tolls or raising revenues through any means. Competitive grant programs are an opportunity to reward those that overcome these political challenges to create new revenue streams for transportation investment.

  • Improve the research agenda regarding the future of the program.

The DRIVE act includes some new research programs that could be critically important. The first is a $5 million study to examine the future needs of the Interstate System to be performed by the Transportation Research Board. The second is a $115 million program to research surface transportation system funding alternatives. Both of these programs relate to how to spend federal funds more effectively. The first directly, by looking at how best to preserve the Interstate, and the second indirectly because how revenue is raised has a direct impact on how the revenue is spent.

While both of these projects are tackling admirable goals – assessing need and figuring out how to pay for it – it is difficult to understand why yet another study is needed in this area. SAFETEA-LU created two commissions to look at these issues very thoroughly, and we are no further along in addressing the funding problems for the federal program now than we were in 2005. More critically, this very large program to examine funding alternatives specifically excludes non-user-based alternatives. This is an extraordinary amount of money to spend on a project that is likely to recommend the same ideas – gas taxes, vehicle miles traveled fees, tolls – that have been discussed endlessly with no result. If yet another study is needed in this area (and that is debatable), Congress is digging a deeper hole by deliberately exclude non-user-based alternatives from the study. Studying non-revenue alternatives is essential at this point. Without general revenue infusions, the transportation program would have already been cut by at least 30%.

Conclusion

EPW’s DRIVE act and the administration’s GROW AMERICA represent two different visions for the future of the federal program. While neither is likely to become law due to the continued funding challenges facing the program, they both have ideas embedded within them that could become law.

It is critical that, even as the funding crisis for federal transportation drags on, we keep our focus on how we spend revenue. It is easy to become distracted by the need to get anything passed and the urgency of providing some level of funding stability to state and local governments. But focusing on funding and a long-term bill exclusively, even if successful, will not target funds to the most needed investments, improve the operations of our system, or help states and localities raise additional funds for transportation. All of these are important goals that can only be accomplished if we keep our focus on improving how federal transportation dollars is invested.

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