DOT's Mendez Sees Highway Funding at Crossroads

victormendezspeakingatwpbopening.jpg

WASHINGTON - President Obama is pushing for Congress to take up his proposed $302 billion, four-year Grow America Act before the extension of the Highway Trust Fund expires in May, a top Transportation Department official said Tuesday at The Bond Buyer's Transportation Finance/P3 Conference.

"We are not giving up," Deputy Transportation Secretary Victor Mendez said in a keynote speech. "We are going to push very hard on Grow America, and we're going to push very hard on increasing private investment in transportation projects.

"We don't know how it is going to shake out, but we're not giving up," Mendez said.

The administration is serious about reaching a transportation funding solution before the current 10-month, $11 billion extension of the HTF expires on May 31, 2015, Mendez said. "We want to try to get a solution for the HTF before it becomes another crisis," he said. "We don't know yet how the recent election will affect highway funding, but so far nobody has said they're walking away from it."

A long-term funding bill would allow states and locals to plan construction of projects that can take years to complete, Mendez said.

"Without a long-term funding commitment from the federal government, states find it hard to make the type of long-term investments needed for roads, bridges, and transit," he said. "Just last week, we saw Tennessee defer $400 million of road projects until 2016 because they can't be sure of their federal funding."

The Grow America Act includes $206 billion for new highway projects over the four years, $72 billion for transit systems, and $19 billion for high-performance and passenger rail programs.

The president's proposal also would provide $4 billion for Transportation Infrastructure Transportation Infrastructure Finance and Innovation Act loans and give states the flexibility to decide whether to toll existing interstates, Mendez said.

"We are getting a positive reaction from the states on interstate tolling, because states always want more flexibility," he said. "But it gets political and tolling can be hard to implement on the ground."

The United States is at a critical juncture in funding its transportation infrastructure, Mendez warned.

The nation's overburdened transportation network will struggle to serve a growing population and expanding economy unless it receives adequate funding from public and private sources, he said.

"We haven't been investing in our infrastructure at the levels we should have for the last 10 years," Mendez said. "We cannot stand more 'business as usual' for the next 10 years."

Federal involvement in transportation funding is part of the solution but not the final answer, he said.

Private investments are necessary to bring in the funding needed to build large projects, Mendez said.

"We can't solve our transportation problems without a federal contribution and we can't solve the problems with federal money alone," Mendez said. "We need to invest $2 trillion in our transportation systems by 2020, and to do that we have to attract more private investors."

The Grow America Act would transform the Highway Trust Fund into a Transportation Trust Fund that would provide grants for rail as well as highways and transit, and would also increase the cap on federal private activity bonds dedicated to transportation projects to $19 billion from the current $15 billion limit, Mendez said.

The newly established Federal Investment Center within the Federal Highway Administration will link state and local governments looking for private partners to the investors eager to participate in their transportation projects, Mendez said.

"It will be a one-stop shop for infrastructure," he said. "It will furnish model contracts that states can adapt to fit their needs, and it will be a clearing house of information where investors can find information on projects across the country suitable for P3s."

For reprint and licensing requests for this article, click here.
Infrastructure Transportation industry
MORE FROM BOND BUYER