As Congress dithers, states build own roads
By Matt Stearns | McClatchy Newspapers
WASHINGTON — When Congress passed a $286 billion transportation bill two years ago, many experts said it was far short — almost $100 billion short — of the investment needed to maintain the nation's roads and bridges.
But lawmakers weren't willing to take the political risk of increasing the federal fuel tax, which Congress has left unchanged since 1993. Last week's deadly bridge collapse in Minneapolis may not reverse that sentiment, either. President Bush declared his outright opposition to a gas-tax increase twice this week.
Frustrated with federal inaction, some states and municipalities are trying to find ways to deal with soaring infrastructure costs on their own. In the transportation realm, solutions include politically risky local tax hikes and leasing public assets to private investors.
Minnesota Gov. Tim Pawlenty, a Republican, has vetoed an increase in the state fuel tax twice, but said last week that he was now open to one after the bridge collapsed. The last time Minnesota's fuel tax was raised was 1988. Other states also are considering the move. Since 1993, the last time the federal tax went up, 28 states have hiked their fuel taxes, but only three have raised them enough to keep pace with inflation.
Toll roads are another popular solution. At least 23 states are planning new toll roads — including seven states that haven't had any — largely to deal with shortfalls from traditional funding sources, according to a federal report. About 5 percent of state highway revenues come from tolls, and that's expected to increase to 7 percent within a few years.
"For new construction, it's either toll road or no road," said Neil Gray, spokesman for the International Bridge, Tunnel & Turnpike Association, which represents toll authorities. "Because the federal money has been inadequate and the states have a growing raft of other needs."
An innovative approach: leasing. Several states and cities have leased assets such as toll roads and parking garages to private investors.
Proponents say the deals are dual wins for governments: They get a huge chunk of money to use for other infrastructure needs, such as schools or parks, and they offload operations and maintenance of the asset to the investor. For example, Chicago leased its Skyway toll road to investors for $1.83 billion.
"It doesn't ask the taxpayers anything," said Dana Levenson, the managing director and head of North American infrastructure for the Royal Bank of Scotland. "It funds their needs without asking them to pay taxes."
The market for such partnerships is expected to grow and to include virtually any type of public infrastructure asset, Levenson said.
"Where else is the money going to come from?" Levenson said. "The federal government isn't going to come through with it. State and local officials don't want to raise taxes. Yet the bill is very large."
Indeed, overall federal investment in U.S. infrastructure has declined steadily, from about 10 percent of nondefense spending in the mid-1960s to about 3.5 percent of nondefense spending last year, according to the Congressional Budget Office.
Despite the new action at state and local levels, many say nothing can replace robust federal action in ensuring the safety and efficiency of the nation's transportation system. They cite the estimated $1.6 trillion needed over five years to upgrade the nation's infrastructure appropriately, and the fact that highway construction and renovation costs have increased 70 percent since 1993.
``It's just a lot more efficient and a lot easier for the federal government to do it, so you don't have states competing against each other and disadvantaged for making investments they should be making," said Scott Lilly, a senior fellow at the left-leaning Center for American Progress. "Our transportation system will continue to go downhill as long as the federal commitment goes downhill."
Yet the 18.4 cents-a-gallon federal fuel tax, which raises most of the money the federal government uses to pay for the nation's surface transportation system, remains stagnant, failing even to keep pace with inflation. By 2015, the tax will have lost 55 percent of its buying power if it remains unchanged, according to a recent report by the American Association of State Highway and Transportation Officials.
The federal highway trust fund, which the fuel tax funds, is expected to be broke by 2009. Current projections indicate a deficit of $5.7 billion in 2010, which would result in a 42 percent reduction in federal transportation money, the association predicts.
"We'll fall off the cliff in 2009," said Sen. Kit Bond, R-Mo., who wrote much of the last transportation bill.
At the same time, the increasing use of high-mileage, alternative-fuel cars is expected to begin eating into fuel tax revenues, according to the Government Accountability Office.
All those facts, along with the Minneapolis tragedy, are building bipartisan support for raising the fuel tax.
"It's not very popular, but something needs to happen at the federal level," said Bond, who opposed a fuel tax hike at the time of the last transportation bill but said he saw few alternatives now. Rep. James Oberstar, D-Minn., who chairs the House Transportation and Infrastructure Committee, called this week for a fuel tax hike of 5 cents per gallon.
In rejecting that idea, Bush said a better way is for "Congress to revisit the process. If the federal government wants to set priorities, they ought to prioritize bridges. But that's not how it works on a highway bill. . . . There is a really large public-works committee. The first thing that happens is each member on the public-works committee gets to decide his or her priority and then they determine how to spend the bulk of the highway money."
However, the so-called earmarks that Bush was criticizing accounted for about 8 percent of the 2005 transportation bill, not nearly enough to address the nation's massive infrastructure needs. And many earmarks are based on legitimate needs identified by state and local transportation officials.
"Earmarks have nothing, I repeat, nothing to do with the lack of money in the highway trust fund," Bond said.
A jarring event such as the one in Minneapolis could be a turning point in developing such public priorities as tax rates, said Joel Tarr, an infrastructure historian at Carnegie-Mellon University in Pittsburgh.
"What do we do in this country? We respond to crises," Tarr said. "A bridge collapses and we're spurred to action. . . . But putting together a coalition of people willing to raise tax dollars is not easy."
McClatchy Newspapers 2007
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