Former DOT head Burnley offers up his take on the state of national transportation infrastructure

With the mid-term elections now in the rearview mirror, Democrats now have a bigger seat at the Congressional table. That could lead to to movement on a new surface transportation authorization, or not, depending on how things go politically. While it is too early to definitively know what may happen, there are more than a few possibilities and options to be sure. LM Group News Editor Jeff Berman recently caught up with James H. Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan, to get an insider's take on things. A transcript of their conversation follows below.

Logistics Management (LM): As we think about a new national infrastructure bill, what, in your opinion, are some of the key trends and themes related to it between now and when a bill would actually drop?

James Burnley: I think there are a few factors to think about in terms of the framework. One is that the current surface transportation authorization bill expires on September 30, 2020. A new reauthorization bill needs to be passed in the few years or we start to go into short-term extensions, and that will be much more challenging to figure out. A few years back, the Highway Trust Fund (HTF) collapsed, but the shortfall is covered through the end of this reauthorization bill. You cannot just go back to doing those short-term extensions without addressing the need to come up with additional sources of funding. Until, or unless, there are new revenue sources, though, there will have to be further transferring from the U.S. general treasury so that complicates things.

LM: What about the revenue-related aspects of a new bill?

Burnley: Another very important part of the framework to always remember in anything coming out of the HTF is that the House Transportation and Infrastructure and Senate Environment and Public Works committees have nothing to say about revenues. A lot of press coverage on these issues tends to ignore that. Rep. Peter DeFazio (D-Oregon, the incoming head of the House T&I Committee) will certainly have an influence on how this plays out, but he does not write the revenue part of the bill. That gets written in Ways and Means, and Democrats that control Ways and Means are now talking about creating an infrastructure subcommittee. This would be a good idea in terms of focusing institutionally on infrastructure in a way that has not been done in recent past, but their definition of infrastructure is a lot broader than just transportation infrastructure.

LM: How do you view the impact of rising interest rates and the federal deficit on a new bill?

Burnley: We have rising interest rates, which means the federal debt is even expanding more rapidly than it otherwise would. And we have a daunting deficit projected by CBO over the next several years, and that is an important part as it relates to the context of the transportation infrastructure discussion. And then President Trump said he wants to work with Democrats on several things, including infrastructure, but if all they are going to do is investigate then he basically said forget about it. He was very clear in that message, as it remains clear that Democrats are going to investigate. Those are the key factors here, never mind what the revenue source might be. Rep. DeFazio is talking about looking at a user-fee system of one kind or another, which is good, and I think we need to do that, but I just think that right now that part of the discussion is not as critical as other things.

LM: On a separate but related note, what do you think about things like TIGER, or INFRA, grants, and other things like multimodal-focused legislation that has been introduced? What needs to happen to get things moving, from a funding perspective that both sides can live with?

Burnley: There is no magic to it. It requires relevant leadership in both houses and both parties to start working seriously and systematically and with each other to put legislation together. There are ideas out there, aside from DeFazio recently saying we need to work together on a user-fee for surface transportation on the federal levels. There is a lot of talk about the idea of John Delaney, who is just retiring from the House in Maryland, running as a Democrat for President. He put a very good bill together a few years ago to create a national infrastructure bank. Given the budgetary environment we are in, I think we are going to hear a lot more about that kind of approach, and that is a scenario where I am not sure there is a partisan dividing line on that. I think there is a reason to be cautiously optimistic that both sides can come together on that. The question then is does relevant congressional leadership move in that direction as a for instance working on that concept. I think the Trump administration would work on that, unless, of course, the situation gets so acrimonious that between the executive branch and the Congress that nothing gets done, so we will have to see about that. Right now, we have a lot of posturing on both sides so we will need to see what happens starting in January.

LM: The concept of an infrastructure bank had momentum a few years back and it still looks promising, in terms of having the potential to be productive. Could it work long-term?

Burnley: It could but it really depends on the details. Delaney’s bill was a very reasonable approach, and I think it would have generated a lot of capital over not very many years to invest into infrastructure. The key to this bill, he said publicly and privately, was that the board of the bank had to be people who were qualified to serve and had professional backgrounds in banking, finance, accounting etc. That is a critical component as you get into the nuts and bolts of designing a bill like this. Hopefully this is a starting point for a well-crafted bill. The transportation segment of infrastructure is helped in terms of its prospects for action by the fact that reauthorization needs to be done in the next two years, at least in theory. That needs to be a conversation.

LM: What should shippers and supply chain stakeholders be most focused on, as it relates to a new bill?

Burnley: Without question, it is the dire condition of the HTF in terms of it being a massive problem for which there is no known answer in a political sense. It is financially sapped. There are a few ways to fix it. One way is you either spend less money on the federal level on surface transportation or you increase the revenues that are dedicated to the HTF. Those are the stark fundamental choices. Another option we have been exercising is propping up the HTF by infusions of tens of billions of dollars to cover current programs, because HTF revenue flow does not cover it. Doing that will be a very hard sell the next go around, because the demands, I think, are going to rise, with both parties to start doing something about the deficit. And that is an environment in which it is going to be harder to do what has been done these last several years, with these transfers from the general treasury. By the CBO’s projections, it starts to explode, in terms of the shortfall, in the 2021-2025 period. I don’t know anybody that thinks we can continue the path we are on now. It is not feasible, given the demands of the overall budget process.