WASHINGTON — Transportation officials and lobbyists will be watching Capitol Hill early next year, hoping lawmakers pass long-term reauthorization legislation funding aviation and surface programs that would bring much-needed stability to the sectors.
Lawmakers haven’t managed to agree on a long-term bill reauthorizing funding for surface transportation since the last one expired in September 2009, and have instead enacted a series of short-term funding extensions to get through the last two years, the eighth of which expires March 31.
The reauthorization bill for the Federal Aviation Administration is on its 22nd extension, which will expire Jan. 31.
While these short-term extensions continue to provide funding, the lack of long-term bills make transportation project planning difficult for state governments, localities and private companies.
“I have heard from many of our members that they are extremely worried about the number of projects coming down the pike for 2012,” said Laura Perrotta, director of government relations at the American Traffic Safety Services Association. “They see a huge cliff ahead. It truly makes their business uncertain and their employees’ job security fragile.”
Lawmakers must either come together on long-term reauthorization bills or authorize another round of extensions.
Fitch Ratings has already warned that it may lower its ratings on grant anticipation revenue vehicle bonds if a multi-year highway and transit bill is not enacted. Garvees are backed by anticipated federal transportation grants.
But several lobbyists are cautiously optimistic that lawmakers will be able to agree on a longer-term surface transportation bill.
“I am more optimistic than I have ever been before about getting a highway and transit bill,” said Janet Kavinoky, executive director for transportation and infrastructure at the U.S. Chamber of Commerce.
The question is how far the legislation will go as far as timing and reforms and whether Democrats and Republicans will be able to agree on a source of funds to help pay for it.
The Senate Environment and Public Works Committee unanimously passed a bipartisan, $109 billion, two-year billion highway and transit bill in November.
That legislation, called Moving Ahead for Progress in the 21st Century, or MAP-21, was pushed by both the committee chairman, Sen. Barbara Boxer, D-Calif., and the top Republican on the panel, Sen. James Inhofe, R-Okla.
However, it is $12 billion short of the revenues needed to pay for it. Sen. Max Baucus, D-Mont., a member of the committee and chairman of the Senate Finance Committee, has promised to come up with the $12 billion, but has not found a source for the funds yet.
Things have moved more slowly on the House side.
House Transportation Committee chairman John Mica, R-Fla., in July released plans for a six-year bill that would have limited surface transportation funding to the money available in the highway trust fund, which has not been growing to keep pace with funding needs.
The bill would have totaled $230 billion, a cut of about 33% from current funding levels.
Industry officials were pleased with the proposed six-year timeframe, but balked at the reduced funding.
In the fall, House Speaker John Boehner, R-Ohio, finally relented, saying Mica could have $15 billion more per year for surface transportation if he could find the money.
Last month, Boehner said House Republicans would soon introduce a five-year bill that would be paid for with provisions to expand domestic energy production. He did not provide any estimates, but sources said the measure could cost about $260 billion or $52 billion per year. The bill has still not been introduced.
But lobbyists are encouraged that lawmakers in both chambers want to maintain current spending levels, consolidate programs and provide an extra $1 billion per year for the Transportation Infrastructure Finance and Innovation Act, or TIFIA, which provides federal loans, loan guarantees and standby lines of credit to projects of national and regional significance.
“I believe the House and Senate will manage to produce highway bills and they will come together and hopefully produce something,” said one lobbyist who did not want to be identified. “What I cannot predict is when, but hopefully it will be by March 31.”
An added incentive for Congress to act by March 31 is that the ability to collect and place taxes in the highway trust fund will expire at that time and the fund could lose $110 million per day if that authority is not reauthorized.
“It’s probably the ultimate drive” for congressional action, according to another source.
Most industry advocates would prefer that Congress pass a five- or six-year funding measure, like the five-year $260 billion legislation to be introduced by House Republicans.
That proposal, however, would be at least $57 billion short of the revenue needed to pay for it, and Senate Democrats have been openly hostile to House Republican suggestions that expanded domestic energy production could provide funding to fill the gap.
Deron Lovaas, federal transportation policy director at the National Resources Defense Council, an environmental group that lobbies on a range of issues, said MAP-21, or something like it, is the most likely measure to move forward because Republicans won’t be able to find the money to cover a bill of five or more years.
“Unless Congress comes up with more money somehow, it’s hard for me to imagine a more long-term spending bill,” she said.
Lovaas said the two-year measure is the most plausible scenario.
“It’s far from a slam-dunk,” Lovaas said, “but it’s more likely than it was a couple of months ago.”
Perrotta agreed that a two-year authorization looks likely. “I would not be surprised if we ended up with a two-year bill due to funding challenges,” she said.
Industry insiders are much less optimistic that Congress will be able to agree on a long-term FAA bill by Jan. 31. There hasn’t been a long-term aviation funding bill since the last one expired in 2007.
Though House Republicans and Senate Democrats have each crafted multi-year aviation bills, language about airline employee-union procedures has become a point of contention that neither side appears willing to give in on.
Jane Calderwood, vice president for government and political affairs at Airports Council International, said the conference committee resolving the House and Senate airport funding bills appears to be hung up by partisan disagreement over how workers vote to unionize or to decertify a union.
The National Mediation Board ruled early in the Obama presidency that rail and airport workers could unionize or decertify a union if the action was approved by a majority of the workers voting. But the House bill contains language reversing that decision and requiring a vote of a majority of all the workers in the union, a change the Democratic-controlled Senate will not back.
With only six legislative days scheduled for January, Calderwood said, she is not confident Congress will pass a long-term bill before the latest extension expires. Unless either Republicans or Democrats give way, a 23rd short-term extension seems all but certain.
“I’m feeling terribly pessimistic at the moment,” she said.
Mica on Dec. 17 said that he would like to take care of the FAA bill in January and the surface transportation bill before the end of February. Meanwhile, proponents of public-private partnerships contend congressional inaction could spur more P3 financings.
D.J. Gribbin, a managing director at international financial firm Macquarie Capital and former general counsel at the U.S. Department of Transportation, said he is pessimistic that lawmakers will be able to come together on new transportation bills with national elections looming in November.
“At a certain point, you’re thinking, 'Let’s just extend this for a year, and get past the elections,’ ” Gribbin said. “I don’t think we’re going to see a whole lot of federal leadership.”
That, according to Gribbin, will fuel the need for P3s, with more private sector investors partnering with governments to pay for and construct infrastructure projects.
“State and local governments are going to step up. We’re likely to see a little more self-help,” Gribbin said.
In the past, most local governments didn’t explore financing options beyond the traditional tax-funded model, Gribbin said. But increasingly flat revenues stemming from the depressed economy are leading more states and municipalities to explore the P3 option.
“We’ve crossed that critical point. This is something mainstream,” he said.
Gribbin said P3s could make possible massive infrastructure projects not provided for by TIFIA dollars, such as the $4 billion Ohio River Bridges project connecting Louisville, Ky., with southern Indiana via two bridges over the Ohio River.
The bridge project’s current financial plan is based entirely on traditional financing and federal grants, but Gribbin acknowledges the possibility of “additional and-or alternative funding sources” playing a role.
“The need is going to be greater next year than it was this year,” he said. “It should be a very interesting year.”