This article is a lengthy discussion about the federal intentions for transportation funding, with our focus on the high-speed rail part. So, I edited this document by Robert Poole to stress the HSR issues, since that is our central concern.
Let's get real. The high-speed rail action -- the most sensitive pressure points -- are in Washington, not California. I'm no longer looking to Sacramento for anything.
The legislature is dominated by Democrats who will NEVER terminate the high-speedrail project, no matter how egregious it is. (There is nothing I would like better than to be wrong about this.)
However, I have no hopes that we will see a turn-around with either Jerry Brown or with the Legislature, even with growing support from the Republican minority in the Legislature.
So, Congress it is, particularly the House. We'll have more to say about that in the near future. The most recent suggestion of yet another $700 million for the CHSRA to spend in the Central Valley may have been hurriedly pushed through by LaHood and the Democrats in the DOT since they realize with a new Republican House, they will be stopped.
We don't know, right now, if all those FRA stimulus dollar awards to California can be rescinded, but it's certainly worth a try and the key Congressmen should hear from us about all the rail authority shenanigans as we provide them with ample factual ammunition to make their case.
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http://reason.org/areas/topic/311.html
REASON FOUNDATION
By Robert W. Poole, Jr. Director of Transportation Studies Reason Foundation
Surface Transportation Innovations
Issue No. 87, January 2011
In this issue:
• Election’s impact on federal transportation policy
• No more earmarks?
• Rethinking ports and waterways funding
• New toll concession projects in the Midwest
• Emission-reducing highways
• Upcoming Conferences
• News Notes
• Quotable Quotes
The Election’s Likely Impact on Federal Transportation Policy
The November election did more than change the Republican/Democrat balance in Congress. It also led to fairly dramatic changes in where key leaders come from—changes that can be expected to lead to increased support for core highway programs and less support for transit, high-speed rail, and the Administration’s “livability and sustainability” agenda. As demographer and economic geographer Joel Kotkin wrote last week on NewGeorgraphy.com:
Power is shifting within state delegations. Before the elections, California’s most influential House members hailed from coastal districts. In contrast, Rep. Kevin McCarthy, the new majority whip, represents Bakersfield, an oil-rich, largely agricultural area known as “little Texas”—a far cry from the urbanity of Pelosi’s San Francisco. This change in geography also suggests a change in the balance of power. The old Congress owed its allegiance largely to the “social-industrial” complex around Washington, Wall Street, public-sector unions, large universities, and the emergent highly subsidized alternative energy industry. In contrast, the new House leaders largely represent districts tied to more traditional energy development, manufacturing, and agriculture.
Jeff Davis, in the Nov. 18th issue of Transportation Weekly, pointed out that “The median Democratic district [in 2011] will have a population density eleven times larger than the median Republican district”—compared with only four times greater in the expiring Congress. That means House Republicans will have far fewer districts whose transportation needs are a good match for mass transit. Transportation analyst Tom Rubin reviewed the membership list of the new House Transportation & Infrastructure (T&I) Committee, to check for GOP members representing the 10 largest urbanized areas: there are none.
While these are still early days in terms of a transportation reauthorization bill, there are many straws in the wind. Last fall, before the elections, the conservative Republican Study Committee in the House released a plan that, among other things, would cut back all non-entitlement spending to 2008 (i.e., pre-stimulus) levels; among its impacts would be to eliminate nearly all high-speed rail (HSR) funding. Advocates of a $4 billion Livable Communities Act that would provide grants for smart-growth land-use plans now despair of getting it through the Senate, let alone the House. New T& I chairman John Mica (R, FL) has said he will revisit all pending HSR grants and reallocate unspent money to “where it makes sense.” GOP House members from both California and Wisconsin have introduced bills to take back unspent HSR funds and redirect the money to deficit reduction.
Putting all these pieces together, Kenneth Orski of Innovation NewsBriefs addressed the annual meeting of the National Conference of State Legislatures last month in Phoenix. Orski suggested the twin themes of the new Congress will be to reduce the scope of federal programs and to cut discretionary federal spending. What this might mean for a reauthorization bill, he said, could be the following:
•Reducing or eliminating non-core activities such as “transportation enhancements” and “livability” programs;
•Eliminating “executive earmarks” such as TIGER grants;
•Compensating for the lack of new federal money by empowering states to leverage existing funds via expanded scope for TIFIA, Private Activity Bonds, and public-private partnerships;
•Curtailing the HSR program and reallocating unspent stimulus funds either to the Trust Fund or to deficit reduction.
I find that a plausible list, and have one key addition. As part of refocusing the Highway Trust Fund on core programs, it’s quite possible Congress would narrow its scope to just the Interstates and National Highway System, leaving the rest of the highways as state responsibilities. That partial devolution would mean costly federal regulations such as Davis-Bacon and Buy American would apply only to the core federal programs, enabling states to build and maintain other highways at lower cost.
This is a profoundly different reinvention of the federal program than many were writing about several years ago. But it would be no less of a revolution.
No More Earmarks?
The timing could not have been better. Last week, just as the new Congress was starting to function, USA Today published a major, front-page story headlined “Earmarks to Nowhere.” Based on an investigative journalism project by Cezary Podkul at Columbia University’s journalism school, it finally brought the light of day to a heretofore little-known aspect of transportation earmarks. Podkul’s research determined that about $13 billion of such earmarks remain unspent for one reason or another. It may be that the project was very low on the state DOT’s priority list and the state chose not to come up with the remainder (often the large majority) of the project’s cost. Or, there might be some error in the language designating the project—but such errors can only be corrected by the member of Congress who originated the earmark, and in some cases the member is no longer in office. The research project estimated that one out of every three highway dollars earmarked since 1991 remains unspent.
So in addition to the ban on new earmarks that will apply in the House for the next two years (and for Senate Republicans, as well), there is a case for corrective legislation that would free up the orphan earmark money for each state’s allocation of Highway Trust Fund monies.
There is still a lot of grumbling among many House members, of both parties, about the earmarks ban. Critics point out that in some programs (not highways and transit), the large majority of all federal funding is traditionally earmarked: over 90% of the Corps of Engineers budget and 72% of the Bureau of Reclamation’s budget are earmarked. So how could vital projects like harbor dredging and flood control get funded without earmarking? I guess we will soon learn how!
The other common complaint is that if Congress refrains from earmarking highway and transit funds, the U.S. DOT will do so instead. There is arguably as strong a case against “administrative earmarks” (e.g., TIGER grants) as there is against legislative earmarks. But that problem is entirely the fault of Congress—and is therefore correctable by Congress. Most of the earmarks in the SAFETEA-LU reauthorization bill were in accounts for which any non-earmarked money reverted to DOT for the agency to allocate administratively. Congress needs to just say no.
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News Notes
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New Reason Study Highlights Risks in Florida HSR Plan . A Reason Foundation policy study by Wendell Cox applies national and international experience with passenger rail megaprojects to estimate a range of possible cost over-runs that could expose Florida taxpayers to as much as several billion dollars in added costs. It also raises questions about the ridership projections, which—if overstated—could lead to demands for operating subsidies paid by Florida taxpayers. The report suggests provisions to include in a PPP deal in order to shift those risks to the developer/operator of the high speed rail system. (http://reason.org/studies/show/tampa-to-orlando-high-speed-rail-pl)
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Yet Another Review of California HSR . The ballot measure law approved by California voters to authorize bonds for this project required creation of a Peer Review Group to advise the Legislature and the public on key issues related to the project. Its Nov. 18 report raises concerns similar to those raised in half a dozen other outside reviews, including a detailed Reason Foundation due diligence report in September 2008. The Peer Review Group points to the lack of a business model for the HSR program, the lack of attention to risk management and risk allocation, the huge funding gap, questions about ridership projections and the possibility of a revenue guarantee (currently prohibited by the ballot measure law), and concerns about right of way availability. (www.calhsr.com/wp-content/uploads/2010/12/Peer-review-report-November-2010.pdf)
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Corrected URLs from December Issue . Gremlins must have affected my keyboard last month, causing two of the URLs in the News Notes section to be rendered incorrectly. For the Public Policy Institute of California survey on attitudes to public spending, the correct URL is: www.ppic.org/main/publication.asp?i=951. And for the article from Access magazine on fixing broken sidewalks, the URL is www.uctc.net/access/36/access-36brokensidewalks.pdf. I apologize for the errors.
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Quotable Quotes
“The lack of a clear financial plan is a critical concern. . . . [I]n a deteriorating budget climate . . . in which the likelihood of new large Federal funding programs appears small, there is an air of unreality about a plan that includes $17 to $19 billion in ‘free’ Federal funding from programs that do not yet exist. The same can be said of the expectation for large local or State funding for stations and area development when local governments are highly stressed and when the finances of the State are sufficiently weak that a sale of $9 billion in State General Obligation bonds might only be possible (if at all) at unusually high interest rates.”
--California High Speed Rail Peer Review Group, “Detailed Comments from the Peer Review Group,” Nov. 18, 2010.
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