House T&I Kicks Off 2019 With Infrastructure Hearing
The House Transportation and Infrastructure Committee of the 116thCongress formally kicked off its work yesterday with a marathon seven-hour hearing entitled “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.”
Per the hearing title, Chairman DeFazio (D-OR) set the stage with some numbers to reflect the cost of inaction: the U.S. now has an investment gap over the next 10 years of $2 trillion, according to the American Society of Civil Engineers, and failure of the tunnels under the Hudson River could cost the US economy $100 million per day.
Yet to date, “highlighting these needs hasn’t spurred action by Congress…so I am going to focus on the costs of inaction,” stated DeFazio.
The first panel of the hearing featured three public-sector perspectives (since most federal infrastructure spending is indirect, coming the form of financial assistance to the state and local governments who actually carry out the programs), represented by:
- Tim Walz, Governor of Minnesota (on behalf of the National Governors Association) – written testimony here.
- Eric Garcetti, Mayor of Los Angeles (on behalf of the US Conference of Mayors) – written testimony here.
- Ray LaHood, Co-Chair of Building America’s Future (former USDOT Secretary) – written testimony here.
Several recurring themes were featured prominently, such as: establishing a reliable source of funding (or mix of sources) to address the growing Highway Trust Fund gap as the 2020 reauthorization deadline approaches, including determining an appropriate balance of funding from all levels of government and the private sector; incorporating technological advances into infrastructure improvement efforts; climate change and resilience; and streamlining environmental permitting.
Much attention was given to states’ successes raising their own gas taxes despite failure to raise the federal gas tax since 1993. When panelists were pushed by Rep. Holmes-Norton (D-DC) to indicate why they believed Americans were ready for an increase at the pump, Gov. Walz pointed to his successful campaign strategy of advocating for an increase in Minnesota’s gas tax, which he attributed to citizens knowing that infrastructure is deteriorating. Yet Mayor Garcetti indicated that – despite LA’s success in passing a 12-cent gas tax increase in 2017 (SB1) and fending off its repeal in 2018 (Prop 6) – it’s difficult to go to voters asking for an increase in taxes to maintain infrastructure, since there’s an expectation that maintenance is something governments are always doing. He stated that the federal government should be a trusted partner in maintaining infrastructure. Echoing this, Sec. LaHood indicated that in a time when many states, like Illinois, are struggling financially, infrastructure improvements often take a lower priority in the state budget.
Rep. Eddie Bernice Johnson (D-TX) asked panelists to opine on the likelihood that private dollars would be used to invest in infrastructure. Garcetti and LaHood pointed to the Denver airport train and the WMATA silver line, respectively, as successful past examples of leveraging private dollars. However, LaHood also acknowledged that investors are waiting for a signal that Congress is serious about infrastructure and Walz indicated that investors pay attention to fiscally-stable states with high credit ratings.
When asked by Rep. Bob Gibbs (R-OH) about the possibility of a vehicle miles traveled (VMT) fee, Walz indicated that states and localities are looking for ways to improve vehicle electrification – for example, by improving charging infrastructure – though they need indication from the federal government that funding in research and development will be available. LaHood indicated that there need to be many alternatives to supplement the gas tax, and that the pending legislation can include language regarding a national VMT fee. Garcetti reiterated the need for federal help to help LA achieve its climate goals. He indicated that the technology to reduce emissions is available, but financing toward the electric grid, charging infrastructure, and bus loans, which would be paid back by the agency, would help to spur the electric vehicle industry.
A brief discussion of earmarks was spurred when Rep. Dina Titus (D-NV) asked how the committee should establish project priorities, especially in the face of natural disasters. Responding to her question of how to determine where and when to allocate money, LaHood indicated that, rather than explicitly containing earmark language, future bills could contain language that prioritizes intergovernmental or interstate cooperation. In response, Garcetti stated that America’s mayors, “would support that as well as earmarks.”
The streamlining of environmental review processes was discussed in the context of responses to extreme weather events. Rep. Brian Babin (R-TX) expressed interest in a simplified set of funding streams in the aftermath of such events, to which LaHood responded that future legislation can include language that streamlines rules and regulations that hamper communities from accessing the necessary funds to clean up and rebuild.
LaHood had to leave early, and then DeFazio had promised Mayor Garcetti that he could leave at 1 p.m., so that panel finished and was then replaced by a second panel of mode-specific interest representatives:
- Amtrak – Richard Anderson, President and Chief Executive Officer, Amtrak – written testimony here.
- Aviation manufacturing – Hon. Eric K. Fanning, President and Chief Executive Officer, Aerospace Industries Association – written testimony here.
- Airports – Lawrence J. Krauter, Chief Executive Officer, Spokane International Airport – written testimony here.
- Water utilities – Angela Lee, Director, Charlotte Water; on behalf of The Water Environment Federation and The National Association of Clean Water Agencies – written testimony here.
- Freight – Rich McArdle, President, UPS Freight; on behalf of the U.S. Chamber of Commerce – written testimony here.
- Ports and waterways – Kristin Meira, Executive Director, Pacific Northwest Waterways Association (PNWA) – written testimony here.
- Labor – Larry I. Willis, President, Transportation Trades Department, AFL-CIO – written testimony here.
Much of the testimony of the second panel regarded the concrete (forgive the pun) needs of those specific modes – a summary of the dollar amounts and new funding techniques needed to maintain and expand existing infrastructure systems. Which is why it was somewhat surprising to see the aerospace representative focus his testimony on something altogether different – flying cars.
Yes, flying cars.
Called Urban Air Mobility (UAM), the concept (now under testing) involves autonomously piloted, car-sized VTOL air taxis holding between one and five persons that operate in urban environments. Many prototypes are electrically powered. Fanning pitched UAM to the committee as a way to get traffic off the streets – literally – and thus get cars off the road and lessen traffic and road wear-and-tear.
Aside from that, much of the way the second panel was presented appeared to be orchestrated by chairman DeFazio to address what he though of as unfinished business from previous Congresses – items which he might address in infrastructure legislation this year.
Passenger Facility Charge increase. In both his opening statement at the hearing and his remarks two days beforehand at the U.S. Chamber of Commerce infrastructure summit, DeFazio bemoaned the fact that Congress has not passed legislation increasing the maximum allowable PFC (“head tax”) that airports can charge on enplaning passengers since the year 2000. The cap is still $4.50 and is not indexed for inflation.
DeFazio and Rep. Thomas Massie (R-KY) introduced a bill in 2017 to abolish the federal cap on airport PFCs, but intense opposition from airline interests and from many knee-jerk anti-tax Republicans meant that a PFC increase could not be included in the comprehensive aviation reauthorization bill enacted into law last year. DeFazio seems to particularly enjoy skewering the arguments that airlines have made about how any PFC increase will decrease the public demand for air travel with references to baggage and other ancillary fees that have recently been imposed by airlines, which dwarf PFC rates.
Massie in particular lobbed repeated softball questions at the airport representative to draw him into a discussion of the $191 million terminal modernization project that the Spokane airport would fund if allowed a PFC increase of $2.00 to $4.00, and with his last questions of the day, DeFazio delved into the specifics of the relative debt load and interests costs of the various PFC and no-PFC scenarios for funding that project. The delta between the interest costs in six financial scenarios presented by the Spokane Airport representative is so striking (the interest costs in various scenarios varies between $151 million and just $19 million to build the same $191 million project) that we reproduce the chart below.
Harbor Maintenance Trust Fund fix. Several panelists mentioned the fact that the Harbor Maintenance Trust Fund has built up a $9+ billion unspent reserve (equal to about six full years of spending at current rates) because of chronic under-spending by the Appropriations Committees (over the last 30 years, outlays from the fund have averaged only about 73 percent of annual tax receipts and interest).
DeFazio has been pushing a legislative cure for this for years, and was able to get it out of committee last year but it was killed by the Republican leadership (see article here). Any infrastructure bill out of his committee will undoubtedly address this, but it’s an open question whether or not part of the problem may be solved before then, in the pending fiscal 2019 omnibus appropriations bill (see article here).
Gateway/NEC. DeFazio and others mentioned the precarious state of the Hudson River tunnels, built by the Pennsylvania Railroad a century ago and inherited by the federal government after the Penn Central bankruptcy in the 1970s. Amtrak, on behalf of the federal government, was then given ownership of the tunnels and the rest of the Northeast Corridor’s infrastructure, but New Jersey Transit (itself established from another part of the bankrupt Penn Central corpus) operates most of the trains that go through the tunnels.
After sustaining seawater corrosion damage from being flooded during Hurricane Sandy, the life expectancy of the tunnels is failing. DeFazio and others cited an estimate saying that the economic damage from having to close the tunnels before a replacement tunnel is opened would exceed $100 million per day, indefinitely.
Anderson’s testimony also discussed the big-ticket capital backlog items in the rest of the NEC: the Baltimore & Potomac tunnel (built in 1873 – replacement cost: $5 billion); the Susquehanna Bridge (built in 1906 – replacement cost: $1.7 billion) and the East River tunnels (replacement cost: $1 billion).