Infrastructure Alert - March 26, 2012

As Congress heads towards a two-week break surrounding the Easter holiday, little has been resolved surrounding the major issues facing how the nation will fund major infrastructure and transportation safety programs over the coming years. While the Senate was able to pass a bill to authorize major programs and outline funding priorities for a two-year period, the House has been unable to make any progress and will most likely pass another short term extension before heading home for the break. Set against what seems to be a gridlock in Congress, the administration and broad coalition of U.S. business interest are calling for action on a longer term funding measure that states need to plan. To support these calls, the administration released a new report pointing to the gap between current levels of investment and what is actually need to just maintain our current highway and transit system and states continue to focus on innovative financing for a wide range of infrastructure projects.

On the Hill

On March 14, the Senate passed its two-year, $109 billion, transportation reauthorization bill, Moving Ahead for Progress in the 21st Century Act (MAP-21). The bill passed by a vote of 74 to 22, with 22 Republicans voting to pass the legislation. The reauthorization bill provides transit agencies increased flexibility to spend federal money during times of economic hardship and streamlines the “New Starts” program, which eliminates duplicative steps and allows smaller projects ($100 million or less) to complete an expedited review process.

After both supporting their long-term transportation reauthorization bill, which would have tied transportation funding to revenues gained from expanded oil drilling, and rejecting the Senate passed bill, House Republicans introduced a three-month, short term transportation funding extension. House leaders hope that over the 90-day period they can rally more support for a long-term bill. The short-term bill would continue to fund transportation at current levels and would be the ninth extension since a long-term bill was passed.

Complicating the situation, Senator Majority Leader Reid (D-Nev.) has said he is “not inclined” to support a short term extension.   In the event no bill is passed and funding comes to a halt, Democrats estimate that thousands of projects across the country will be put on hold, threatening countless American jobs. They maintain that any funding shutdown for transportation will cause colossal problems in comparison to last year’s partial FAA shutdown.

As the government works through its process for determining a fiscal year 2013 budget, House Budget Committee Chairman Paul Ryan (R-Wis.) introduced his budget plan, which is backed by House Republican leaders. The plan seeks to shrink the deficit to $3.13 trillion over 10 years, undo 2010 health care reform, and modify entitlement programs. Ryan’s legislation was introduced in contrast to President Obama’s budget which was introduced last month. The Republican bill would cap discretionary federal spending at $1.029 trillion, which is $18 billion dollars less than is provided in the president’s budget, and would spend 25 percent less on infrastructure than the president’s plan.

At the Agencies

On March 16, Department of Transportation Secretary Ray LaHood announced the completion of a new report on the status of America’s transportation infrastructure. The report, 2010 Status of the Nation’s Highways, Bridges and Transit: Conditions and Performance, points to a sizeable gap between current spending and projected levels of investment needed to maintain the nation’s highway and transit systems. The report projects that the United States will need $101 billion annually, plus increases for inflation, from all levels of government for the next 20 years to keep the highway system in its current state. It also identifies significant opportunities for investments to improve the current state of highways and bridges that could total up to $170 billion a year.

Last week President Obama, in collaboration with the Department of Energy, announced a new Executive Order on Improving Performance of Federal Permitting and Review of Infrastructure Projects, which will require agencies to make faster permitting and review decisions for vital infrastructure projects while protecting the health and vitality of local communities and the environment.

The Department of Transportation announced $25 million in competitive funding to help communities advance local transit options. The funds are available through the Federal Transit Administration’s Alternatives Analysis grant program. The notice of funding availability can be found here.

On March 20, Secretary LaHood announced $9.98 million in Department of Transportation grants for 15 small shipyards through the country to pay for modernizations that will increase productivity and competitiveness.

In the States

Illinois: The Chicago Infrastructure Trust continues to be lauded as an innovative approach to infrastructure investment. Although private financing is a key component of the Chicago Infrastructure Trust, selected infrastructure projects will remain in public control. Avoiding putting public assets squarely in the hands of private companies may alleviate a traditional public concern of public-private partnerships.

New York: The New York Thruway Authority is in the process of negotiating a deal with unions that will save the state $300 million and help accelerate the construction progress of the new Tappan Zee Bridge. The deal would save the state money by “unifying work rules, implementing a no-strike clause, providing a flexible work week [and] allowing the contractor to control work sequencing and operations.” There are still four consortiums competing to win the $5.2 billion bridge project.

Delaware: A $3.7 million grant was approved to help pay for a runway extension project at Sussex County Airport in Georgetown, Delaware. The grant money comes from the Delaware New Jobs Infrastructure Fund. The Infrastructure Fund was set up in 2011 to help finance transportation improvements such as roads, utilities and airports.  

California: Discussions are heating up in California over the state’s controversial high-speed rail plan. At a Senate hearing on March 13, Dan Richard, the head of the California High-Speed Rail Authority, claimed that the project will cost less than the initial estimate of $98 billion. Within the next two weeks, the California High-Speed Rail Authority intends to release a final business plan that will be evaluated by the state Legislature. The Legislature will then vote on whether to spend $2.7 billion to match $3.3 billion in federal funds to start building in the Central Valley in early 2013. Richard has also recently attended several town hall meetings across California to discuss the project’s financing, environmental impact, and potential economic benefits. 

Vermont: The Vermont House Transportation Committee has proposed a $639.4 million spending package on roads, bridges and other forms of transportation infrastructure. The budget allocation, which is the largest ever and $103 million more than last year, is primarily due to the increase in federal funding in the wake of damage caused by Tropical Storm Irene.

Upcoming Events

On Tuesday, March 27th at 10:00 a.m. the House Water Resources and Environment Subcommittee will hold a hearing on "A Review of the President's FY2013 Budget Request for the Army Corps of Engineers."

On Wednesday, March 28th at 2:30 p.m., the Energy and Water Development Subcommittee (Chairwoman Feinstein, D-Calif.) of Senate Appropriations Committee will hold a hearing on the fiscal 2013 appropriations for the Army Corps of Engineers.

On Thursday, March 29th at 10:00 a.m., the Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on management issues at the Department of Housing and Urban Development and the Department of Transportation.

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