Upcoming Bill Would Allocate $1B to Back MPO Bonds

WASHINGTON — The $450 billion transportation bill that is to be introduced soon by the House Transportation Committee chairman will provide $1 billion of federal funds for designated metropolitan planning organizations to issue bonds to finance transportation projects.

The bill, which will be called the Surface Transportation Assistance Act, will allow the MPOs to use the taxing and bonding authority of cities and state transportation departments, chairman James L. Oberstar, D-Minn., told reporters yesterday at a briefing. The $1 billion will support tax-exempt, tax-credit, private-activity, and grant anticipation revenue, or Garvee, bonds, in addition to a popular federal loan program, he said.

The bill is expected to be introduced in time for the committee’s highways and transit subcommittee to vote on it as early as next week, subcommittee chairman

Peter DeFazio, D-Ore., said at the briefing.

In the meantime, the committee plans today to publicly release an 80-page white paper summarizing the bill.

But detailed spending levels will not be determined for a while, DeFazio said. The House Ways and Means Committee that has jurisdiction over the tax portion of the bill will hold a hearing June 25 on transportation funding needs, he said.

If Oberstar’s policy goals are followed, the bill will give state and local governments more control over how their federal funds are spent, according to the chairman and documents.

Oberstar said the current law is too prescriptive and bureaucratic, likening it to telling localities to build a three-layer cake using only certain ingredients. The forthcoming bill will give them more freedom in how to reach national goals, he said.

For example, the bill will allow metropolitan areas to toll new capacity on their roads and bridges, and will give them the ability to do congestion pricing.

The programs would “save the local governments ... and the transit districts a phenomenal amount of money,” DeFazio said. He added that metropolitan planning organizations “are going to be getting a substantial amount of money” but with strings attached requiring them to draft six-year plans and meet certain benchmarks.

The metropolitan areas would be granted $1 billion of “sustained revenue” over six years, overseen by an Office of Public Benefit that would make sure the funds are spent on transportation, Oberstar said.

The National Academy of Sciences would evaluate MPOs, and it or the Transportation Research Board would recommend some or all of them to participate in the program, Oberstar said.

In addition to establishing the MPO program, the bill would consolidate the country’s more than 100 different funding categories into four major programs — highway safety improvement, preservation of “critical assets” such as highways and bridges, congestion mitigation and air quality improvement, and a surface transportation program that could provide MPO sub-allocations based on population estimates. It would also establish smaller programs for some transportation modes such as recreation trails or ferry boats.

The bill will establish a national transportation infrastructure bank, and will include high-speed rail provisions at the request of the White House, DeFazio said.

In order to implement all the programs laid out in the bill, Congress will need to decide on a funding source to replace or supplement the existing federal gasoline tax.

The White House is “very reluctant” to look at traditional sources such as a gasoline tax increase, but it is not entirely off the table as an option, DeFazio said. Any gas tax increase would “ideally” be indexed to construction costs and implemented after two quarters of positive economic growth, Oberstar said.

Oberstar added that one “attractive idea” for funding the federal transportation program would be a mileage tax, but said technical and privacy-related issues still need to be worked out.

Also “under consideration” for the bill is a provision that would allow tolling for new capacity on highways, but not on existing federal highway miles.

Oberstar said that Transportation Secretary Ray LaHood plans today to ask a Senate Appropriations Transportation Committee panel to extend the current transportation law beyond its expiration date of Sept. 30. The Obama administration also has proposed fixing an expected highway trust fund shortfall by using funds generated through offsets instead of general funds.

LaHood said yesterday that he is “proposing an immediate 18-month highway reauthorization that will replenish the highway trust fund. If this step is not taken the trust fund will run out of money as soon as late August and states will be in danger of losing the vital transportation funding they need and expect.”

He acknowledged that “there will be concerns raised about this approach,” but said that surface transportation legislation should not be rushed.

Commenting on the 18-month extension, Oberstar said, “That’s not my plan,” and called it “unacceptable.” The transportation committee chairman has threatened to torpedo any attempt at extending the current law instead of passing a new multi-year transportation bill.

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