Senate signs off on DRIVE Act but long-term obstacles linger

Earlier today, the United States Senate signed off on a six-year surface transportation authorization along with a three-month extension for surface transportation efforts that was recently voted on and approved by the House of Representatives.  , according to various media reports.

The bill, entitled the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, passed by a 65-34 margin and comes at a time, when the most recent extension for surface transportation funding expires tomorrow, July 31. While this vote provides some optimism for a new long-term bill that is badly needed to provide some stability and overdue attention for national and state transportation infrastructure-related projects, it is not likely to go anywhere in the short term.

Most industry stakeholders believe that a three-month extension will be the immediate course of action, as the alternative would be no funding for the Highway Trust Fund, the primary source of revenue for federal surface transportation projects.

The DRIVE Act includes guaranteed HTF funding for the first three years of the six-year bill.

Funding for current surface transportation efforts has been propped up in recent years by a series of continuing resolutions, or extensions, which are essentially little more than a piecemeal approach to keeping funding intact, and leaving federal and state transportation projects in a continued state of uncertainty in regards to long-term planning efforts. Congress recently signed off on the 33rd short-term extension, or continuing resolution, for surface transportation funding, since the last multiyear authorization, SAFETEA-LU, expired at the end of September 2009. This extension remains intact through July 31, at which point commences another fresh round of untenable uncertainty. And while these extensions keep funding at the same levels, with the Highway Trust Fund, the primary source of surface transportation funding, essentially insolvent, the current state of U.S. transportation infrastructure remains in a consistent state of disrepair.

The DRIVE Act pledges to reauthorize the Federal-aid highway program at an increased funding level for six years, from FY 2016 through FY 2021, and maintain the formula structure and increase the amounts each state will receive each fiscal year.
Perhaps the single most notable aspect of the bill from a supply chain and freight transportation perspective is its heightened focus on freight in the form of the creation of a new multi-billion per year freight program to help states deliver projects that promote the safe, efficient, and reliable transportation of consumer goods and projects that is on top of the existing formula programs. This would call for a minimum investment of $2 billion in dedicated funding for freight infrastructure, with the total DRIVE Act freight program providing $13.5 billion over six years.

This formula-based freight program would provide funds to all states to improve goods movement, reducing costs and improving performance for business and also expand flexibility for both rural and urban areas to designate key freight corridors that match regional goods movement on roads beyond the Primary Highway Freight System.

Other key aspects of the DRIVE Act include:
-requiring Highway Trust Fund transparency, with new provisions to improve the transparency of how and where transportation projects are funded and selected;
-updating the Transportation Infrastructure Financing and Innovation (TIFIA) program that would provide state and local governments new options for stretching transportation dollars and increasing efficiency and utilization; and
-build on the reforms of MAP-21 to continue to accelerate the project delivery process while protecting the environment and public health, among others

Given the “kick the can down the road” approach to funding a long-term surface transportation reauthorization that has become commonplace, especially in recent years, James Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan, observed that these beginnings of a long-term bill are somewhat encouraging.

“The Senate Environment and Public Works Committee is attempting to force the other relevant committees in Congress to come to grips with the need to pass a multiyear surface transportation bill, and to adequately fund such legislation,” he said.

The issue of how to adequately funding a long-term bill, though, still remains an issue.
Congress has been steadfast in its stance that that the federal gasoline tax, which has remained at the same levels going back to 1993 and serves as the main funding source for the Highway Trust Fund, will not be raised, while leaving the door open to other funding possibilities, including: dedicating funds from corporate tax reform to pay for surface transportation (also known as repatriation); a proposed streamlining of infrastructure permitting processes; infrastructure banks; and indexing the gas tax to keep pace with inflation; among others.

What’s more, the funding shortfall for surface transportation remains severe, according to a report in The Hill, which said the current gap in transportation funding is expected to be around $16 billion annually, with the federal government spending about $50 million per year on transportation projects, while receipts from the federal gasoline tax, which has not been raised since 1993, only bring in roughly $34 billion per year. It added that estimates from the Congressional Budget Office indicate it will take about $100 billion to close the gap for a duration long enough to pay for a six-year transportation bill.