Wednesday, March 9, 2011

Keeping our eye on the Northeast Corridor (NEC) and high-speed rail funding

Here's what I think is going on. On the Democratic side, especially within the Department of Transportation, there is an understanding that they have already distributed billions of stimulus funding to California.  And, there is mounting opposition to HSR in many parts of the state, especially from California House Republicans.

In this article, below, TransportationNation states that ten Democratic Senators from various states within the Northeast corridor have already addressed Sect. Ray LaHood, seeking those rejected $2.4 billion Florida HSR funds. They correctly claim that the FRA has neglected what is obviously the most eligible high-speed rail corridor among the eleven in the United States. 

The NEC is eligible on the basis of data offered by a letter from a number of these NorthEast corridor Senators; that it represents 20% of the Nation's population and one fifth of the Nation's GDP.  Also, the NEC has 250 million annual rail passengers on eight commuter rail systems. 

Republican Congressman John Mica, head of the House Transportation Committee concurs with this argument; that the NEC is the only truly eligible corridor for HSR.  Like the present ACELA train, it would connect a number of major cities, including Washington, Baltimore, Philadelphia, New York and Boston.  

And, HSR within the NEC  would have regional, commuter capability absent in the thinking of the California rail authority.  Indeed, the CHSRA has adamantly denied that they are building commuter rail service.  Instead, they tell us that it will be primarily, if not exclusively, high-speed inter-city rail between SF and LA.  

So, I believe that as a consequence of the many negotiations now taking place in resolving the budget issue and the Transportation budget authorization act, the Democrats will be permitted to save face by salvaging the Florida funds for the NEC, and the Republicans will have their victory by denying any further funding for HSR in any of the other rail corridors.  There may even be additional out-year HSR funding in the final budget version, perhaps $1 billion per year, for the NEC. 

Needless to say, this being a forecast about politics, I could be very wrong about all this.  However, that is what it looks like to me at this time.

Below this article, is another Ken Orski Innovation Newsbrief report from Washington and a statement he presented there at a surface transportation conference. His views of the Washington process and transportation issues are, in my mind, highly reliable.

Senators Meet With Lahood, Ask For $$ For Northeast Corridor High Speed Rail
A congressional delegation today met with U.S. Transportation Secretary Ray LaHood, asking him to redirect to the Northeast Corridor the money Florida Governor Rick Scott rejected for high speed rail.  The U.S. DOT will only say it will make a decision “soon." 

Senator Frank Lautenberg’s office issued the following press release — TN
WASHINGTON— During a meeting today in Senator Lautenberg’s office, U.S. Sens. Frank Lautenberg (D-NJ), Tom Carper (D-DE), Robert Menendez (D-NJ), Richard Blumenthal (D-CT) and Chris Coons (D-DE) asked U.S. Department of Transportation Secretary Ray LaHood to redirect the $2.4 billion in High-Speed Intercity Passenger Rail Program funds rejected by the state of Florida to the Northeast Corridor.
“If Florida doesn’t want this critical transportation funding, the Northeast Corridor will take it.  The Northeast Corridor is a proven success that has greatly benefitted our regional economy,” the Senators said.  “Train service is critical to our region and smart infrastructure investments will help create jobs and further grow the economy.  It would also help ease congestion on our already crowded roads and highways, and reduce harmful air pollution that is detrimental to public health and the environment.  

As train ridership in our region continues to grow, the Northeast Corridor has a unique opportunity to serve as a national model for high-speed rail transportation in America.  The Northeast Corridor is the best place to invest Florida’s rejected high-speed rail funding.  We appreciate Secretary LaHood meeting with us and look forward to continuing our work with him and our colleagues to support and improve high-speed rail in the Northeast.”

In a February 28th letter to Secretary LaHood requesting the funding, the Senators at today’s meeting, along with Sens. John Kerry (D-MA), Barbara Mikulski (D-MD), Joseph Lieberman (I-Conn), Benjamin Cardin (D-MD) and Kirsten Gillibrand (D-NY) noted that the Northeast Corridor accounts for roughly one-fifth of the nation’s gross domestic product and twenty percent of the nation’s population and has the nation’s only operating high-speed train.  More than 250 million rail passengers use the Corridor annually and the Acela Express has built the foundation for high-speed rail service throughout the country.  Ridership on the Acela Express has risen six hundred percent during its nine years of service.
On February 16, Florida Governor Rick Scott rejected $2.4 billion in federal funding for construction of a high-speed rail line between Tampa and Orlando.

Vol. 22, No. 8

 March 9, 2011

The Look and Feel of the New Congress
This year's annual legislative conference of the International Bridge, Tunnel and Turnpike Association (IBTTA) took place against a background of unprecedented uncertainties concerning the future of the federal-aid transportation program. With Transportation Secretary Ray LaHood unable to explain to a skeptical Senate Budget Committee how the Administration would fund its ambitious $556 billion six-year transportation program, and with Congress bent on reducing the federal budget deficit and cutting discretionary spending, the assembled audience was reduced to speculating how to "do more with less." 
Easing restrictions on tolling, encouraging public-private partnerships, expanding federal credit instruments, improving project delivery and cost-benefit analysis were some of the suggested means of leveraging and supplementing reduced federal dollars. Admittedly, these could only partly compensate for impending cuts in federal funding.
As in the past, the IBTTA meeting drew an impressive roster of speakers including transportation journalists, congressional staff members, toll agency executives and policy analysts. Luncheon speakers included Secretary Ray LaHood and former Pennsylvania Governor Ed Rendell, who delivered a spirited plea for more investment in infrastructure. "The next highway bill must clear the way for more expansive use of public-private partnerships and lift the prohibition on tolling interstate highways," Rendell said.
One of the highlights of the conference was a concluding panel discussion involving some leading transportation policy analysts. The panel was asked to speculate about the future of the transportation policy agenda. Predictably, members of the panel split between advocates of a strong federal role and more generous funding for transportation, and those who felt that the federal presence in transportation should be curtailed and focused on infrastructure of national importance. No surprises there.
An earlier session, titled "The Look and Feel of the New Congress," focused on the congressional outlook for transportation legislation. The panel, moderated by former Member of Congress from Michigan, Bob Carr, included Jennifer Hall, Counsel, House Committee on Transportation and Infrastructure; Alex Herrgott, Minority Staff Member, Senate Committee on Environment and Public Works; Peter Loughlin, President of Loughlin Enterprises and formerly with the House Transportation and Infrastructure Committee; and your editor, Ken Orski. My prepared remarks can be found below.

In my 22 years of covering the transportation scene, I cannot recall a time when we've been faced with a more unsettled and volatile policy environment. In the past, the trajectory of the federal surface transportation program was fairly predictable: with each re-authorization, the program was expanded in scope and increased in funding. This time it's different. In the months ahead, Congress is likely to cut discretionary spending and this, I believe, will profoundly alter the scope of the federal role in transportation and the character of the federal transportation program.
A New Surface Transportation Bill

Sometime in the late summer, we shall hopefully see a new Surface Transportation bill reported out of the House Transportation Committee. With Chairman Mica making the authorization his top priority, there is a good chance that a six-year transportation bill will be passed by Congress and signed by the President by the end of the year.

How big a bill can we expect? Certainly not as big as the $500 billion bill proposed by former Rep. Oberstar or the $556 billion transportation bill proposed by the Administration, a 62 percent increase over the last authorization, but without a hint as to where the money would come from.

More likely, future funding will be limited to the revenues collected through the gas tax. Rep. Mica calls it "stabilizing" the Trust Fund, i.e. reconciling expenditures with revenues. Making sure that spending does not exceed tax receipts is essential if we are to avoid another bailout of the Trust Fund with general revenue.

According to the Congressional Budget Office, gas tax revenues are expected to average about $38 billion per year for the next several years. Thus, assuming that fuel taxes remain at their current rates ˜ a pretty safe assumption˜a six-year program could be funded at $230 billion, or about six percent lower than the SAFETEA-LU authorization (other congressional estimates range from $215 to 250 billion).
Can We Live Within a $230 billion Authorization?

Keeping spending within those limits will require a narrowing of the scope of the federal transportation program. Every one agrees that the first claim on the Trust Fund resources should be to keep the nation's existing transportation assets ˆ both highways and transitˆ in a state of good repair. Discretionary awards such as the TIGER grants, should have a lower priority. So should programs that are deemed of little national significance˜such as local community enhancements, set-asides catering to narrow constituencies and "livability" projects that more properly belong in HUD‚s community development program than in the U.S. DOT budget.

Most of these Trust Fund "hitchikers," as Sen. James Inhofe calls them, will have to be handed off to state and local governments˜ simply because the resources of the Trust Fund will be needed in their totality to take care of the legitimate federal objectives of maintaining, preserving and modernizing the nation‚s transportation infrastructure.

Rahm Emanuel liked to say "Don't ever let a crisis go to waste." Well, the funding crisis may finally do what conservatives have always hoped, but failed to accomplish through legislative reform: a de facto devolution of "non-essential" portions of the federal-aid program to states and localities.

Will states and local governments be willing and able to assume the added responsibilities? Some will, others may not. An example of a state that is aggressively moving to address its transportation needs without waiting for uncertain federal assistance, is the Commonwealth of Virginia. Last week, it passed a new budget that includes a $3 billion transportation program. The bill calls for the creation of a new State Infrastructure Bank (SIB) and a 900-project transportation improvement  program. The SIB will provide local agencies and private entities low interest loans to finance multi-modal investments. The bill does not include new revenues. Instead it relies on borrowing money and speeding up previously-approved bonds.

Many other states and localities have been wiling to do the same. In fact, voters approved 77 percent of all local transportation bond referenda in 2010 according to the Center for Transportation Excellence.
The End of the Line for HSR

One program whose future looks particularly precarious is the Administration's $53 billion High-Speed Rail initiative. Its fate may have been effectively sealed when Florida's Gov. Rick Scott turned down a $2.4 billion federal grant to construct a high-speed rail line between Tampa and Orlando, and the state supreme court unanimously affirmed his right to do so.
With Gov. Scott joining two other governors in rejecting HSR grants as a potential burden on local taxpayers; with House Majority Whip Kevin McCarthy telling reporters that spending federal money on high-speed rail is not a "smart investment"; and with President Obama's vision lacking any suggested source of funding, the prospect of continued congressional support for the program appears dim. "It's one less program we'll need to worry about when allocating dollars between the modes," one senior congressional aide quipped.
A Fresh Beginning

While the scenario I have painted may sound depressing and defeatist to some, to others it sounds like the dawn of a new era. Many fiscal conservatives in and out of Congress, see the current fiscal deficit crisis not as a debacle but as a fresh beginning. They welcome it as an opportunity to return the federal-aid program to its original roots, refocus its mission on legitimate federal objectives, restore its lost sense of purpose, and give states and localities more voice in managing their transportation future.

In time, the recession will end, the economy will start growing again, and the federal budget deficit hopefully will come under control. That will be the time, perhaps ten years hence, when this nation will once again be in a position to resume its tradition of what Felix Rohatyn has called "bold endeavors,"  major investments in new infrastructure. For now, prudence, good sense and the common welfare dictate that we, as a nation, learn to live within our means.


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