Update on Surface Transportation Bill

Public-Private Partnerships, Highway Tolls Key Issues in Conference

By Nathan Hurst, CQ Staff

As conferees resume work this week on a highway bill, stakeholder groups are in a final push for public-private partnerships, a key element used to stretch federal transportation dollars.
At issue is whether states should be allowed to introduce tolls on existing interstate highways and whether highways leased to private investors should be counted in formulas that determine each state’s share of federal surface transportation aid.
The two-year, $109 billion surface transportation measure (S 1813) passed by the Senate in March includes a major expansion of the Transportation Infrastructure Finance and Innovation Act program, which gives states and localities access to federal dollars up front for projects that are eventually financed through public-private partnerships. The Senate bill is expected to be the basis for most of what the conference committee agrees to.
Sen. Barbara Boxer, the California Democrat who is chairing the conference committee, called the expansion of TIFIA funding from $100 million currently to $1 billion under her bill a “big step forward” in leveraging federal dollars to go further for highway projects, claiming it will create 1 million jobs in the process.
But other financing language has created a rift among transportation interest groups.
Transportation advocates at the motor club AAA, the American Trucking Associations and the American Highway Users Alliance have banded together in support of Senate language that would remove from highway funding formulas portions of highway mileage that states have privatized.
The coalition supports the language, which was added to the bill through an amendment by Sen. Jeff Bingaman, D-N.M., contending “states that remove highways from their balance sheet through long-term lease agreements (and with it the cost of maintaining those roads) should have those costs covered through the lease terms.”
Their prime example is the Chicago Skyway, a stretch of freeway leading into the Windy City from nearby Indiana. It was leased for 99 years to foreign investors for a one-time $3.5 billion payment, which Illinois then spent to pay down debt.
Other groups, including the libertarian Reason Foundation and the Bipartisan Policy Center, argued in favor of another amendment, offered but ultimately withdrawn by Sen. Thomas R. Carper, D-Del., that would have expanded the ability of states to impose tolls on existing stretches of interstate highways. Carper’s amendment was withdrawn along with a proposal by Sen. Kay Bailey Hutchison, R-Texas,, that would have restricted the imposition of new tolls on existing freeways.
In a letter to conferees last week, the Reason Foundation-led coalition argued that flexibility with tolling expansion would “greatly enhance the capacity of states and metropolitan regions to leverage additional private capital for investment in the restoration, rehabilitation, and expansion of major transportation facilities.”
The disagreement about tolls is among the unresolved questions facing the 47-member conference committee, which is racing to reach an agreement before the current extension of surface transportation authorization (PL 112-102) expires on June 30.
After House Republicans were unable to bring their five-year, $260 billion highway bill (HR 7) to the floor because the caucus was divided, the House passed an extension (HR 4348) that also included oil and gas drilling provisions and a mandate for executive branch approval of the Keystone XL pipeline project.
Last week, Boxer remained optimistic that conferees would be able to produce a conference report by early to mid-June, providing both chambers with enough time to vote on the measure and send it to President Obama.
Though several significant policy disagreements remain, Boxer predicted there were “no sticking points” that would hold up a conference report. She also was upbeat about the financing of the bill, which will need more than $10 billion in revenue offsets to cover the difference between its cost and the amount expected to be available in the Highway Trust Fund, which relies mostly on slumping fuel tax receipts.
Boxer said Senate Finance Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Dave Camp, R-Mich., had found a “very sweet spot” for financing the bill, though several Republican aides said Boxer’s assessment was “overblown.”
Baucus struggled for months to identify enough offsets to fund the Senate bill, which Boxer eventually moved ahead without a fully formed financing plan.