WASHINGTON - The failure of Congress to agree on sustainable, long-term federal transportation funding is leading to more local solutions, experts said Monday at The Bond Buyer's Transportation Finance and P3 Conference.
The latest short-term patch of the chronically insolvent Highway Trust Fund will expire May 31, and the prospects for Congress approving an extended funding bill before then are minimal, said John Porcari, senior vice president and national director of strategic consulting at Parsons Brinckerhoff.
"If you had any hopes that we'd get a multi-year transportation bill early next year from the new Congress, you can give those up," Porcari said. "You can look forward to a series of short-term fixes that rely on budget gimmicks like pension smoothing with a strong component of general fund transfers."
There are some broad areas of bipartisan agreement in Congress for a federal role in transportation funding but it remains unfocused, Porcari said.
"The House leadership has been working behind the scenes trying to build consensus on how to move ahead, but we're still a long way from that," he said.
Short-term patches are also likely when the Federal Aviation Administration's current program of airport grants expires in fall 2015, Porcari said.
"The last time that the FAA was authorized, we had 23 short-term extensions," he said. "Expect more of the same."
The emphasis on transportation funding is shifting from the federal aspect to the lower levels of government, said Rob Puentes, senior fellow and director of the Metropolitan Infrastructure Initiative at the Brookings Institution.
Local transportation funding initiatives have posted a 75% success rate at elections since 2003, he said.
"State, local and regional agencies are doing the hard work to get things done," Puentes said. "The federal government will have a limited role in funding transportation in the future, and the innovative ideas are going to come from outside the [Washington] Beltway."
Public-private partnerships will become more common in transportation projects as federal funding dwindles, he said.
"It is essential that federal regulations provide the flexibility that allows locals to innovate," he said. "Local governments tend to have a strong sense of the importance of transit and other transportation modes to their economic well-being."
The Obama administration strongly supports P3 projects, said Duane Callender, director of the Transportation Department's Transportation Infrastructure Finance and Innovation Act credit program.
"We're here, we're open, and we have a lot of money to spend," Callender said. "The administration and the department are pushing P3s, and we're giving local governments the technical assistance and the tools they need to evaluate proposals."
DOT is currently considering eight P3s for TIFIA assistance in the 2015 funding round and more applications are expected, he said.
The president has proposed raising the cap on private activity bonds for transportation projects to $19 billion from the current $15 billion, Callender said. The federal PABs are not subject to state limits.
"We have issued $6 billion of the PABs, we have another $4 billion allocated, but we want to move ahead with another $4 billion," he said.
