New York State Transportation Agency Capital Programs at Risk

The key federal funding source for highways, bridges and mass transit capital funding expires at the end of the month with no likelihood of a long-term reauthorization. At this point, it seems most likely that Congress will extend existing legislation for one to two years, with funding formulas holding at 2005 levels.

As a result, New York State transportation agencies that planned on increased funding in the coming years with a new transportation bill, now face even deeper capital budget deficits, which will further jeopardize critical improvement and expansion projects.

Passed in 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) provides roughly $1.75 billion of the State’s highway and bridge funding annually and approximately $1 billion per year for Metropolitan Transportation Authority (MTA) capital programs. As Lieutenant Governor Ravitch noted in a new report on the State’s transportation infrastructure, “the largest source of funds for both the MTA and State DOT capital plans is the federal government,” primarily through SAFETEA-LU.

Key Funding Issues Unresolved
In preparing five year capital plans, both the New York State Department of Transportation (State DOT) and the MTA budgeted large portions of their programs into the years 2012-14, partly in expectation that the federal government would have fully reauthorized surface transportation legislation and increased federal formulas to catch up to growing project costs and increased need.

For example, the MTA assumed an increase in federal aid of more than $750 million in the final three years of its capital plan. The MTA will now need to find this money from other sources or begin reducing the scale of its plan.

The consequences of a failure to reauthorize surface transportation are vividly reflected at State DOT, which originally assumed nearly $1 billion in new federal aid in the final three years of its five year capital plan. Due to the absence of progress on this legislation and the State’s own financial woes, State DOT simply cancelled its five-year plan and approved a two-year plan that, by its own estimates, does not maintain even the existing state of good repair.

Perhaps even more challenging, the absence of a predictable, five- to six-year funding horizon prevents long-term planning on critical projects, further delaying their implementation and increasing the ultimate cost of improvements. As Acting State DOT Commissioner Stanley Gee said in a recent letter to New York’s Congressional delegation, “Without a stable and predictable source of revenue, it becomes difficult to advance multi-year projects in an efficient and cost effective manner.”

Outlook on Reauthorization Cloudy
It is not likely that the new Congress and the President will come together on long-term reauthorization surface transportation legislation once it reconvenes in the new year. This means that extensions will likely continue to hew to 2005 funding levels until at least 2013, after the next Presidential election cycle.

It is worth noting a number of initiatives contained in the current House bill that would enhance infrastructure investment, including:

* National Infrastructure Bank. As envisioned in the House bill, a national infrastructure bank would be used to leverage other capital sources – including private sector money – through loans, guarantees and other mechanisms. The bank would be tasked with determining projects of national significance and encouraging their implementation.
* Increased funding for infrastructure. Overall, the proposed House bill recommended an increase in funding from $286 billion included in SAFETEA-LU to $450 billion. No sources for these additional funds were identified in the bill.
* More money for mass transit. In addition to restructuring initiatives to increase use of mass transit options, the House bill increased funding for capital investment in this area to $100 billion, a 90% increase over current levels.

Additionally, President Obama unveiled his own proposal to invest an additional $50 billion in new transportation initiatives in the first year of a new transportation bill, as part of an effort to stimulate spending and infrastructure investment. President Obama also supports a national infrastructure bank.

None of these ideas will be acted on without bi-partisan support. Leading Republicans on the House Transportation and Infrastructure Committee have expressed support for the infrastructure bank concept. However, while acknowledging the need for increased revenues for transportation, House Republicans have advocated only for “eliminating the federal gas tax and replacing it with an alternative funding mechanism.” It is worth noting that they have not, as of yet, put forward any practicable ideas for achieving new funding.

New York State could implement new policies at the State level to advance infrastructure priorities in the face of inertia at the federal level. To that end, the Building Congress submitted a white paper to Governor-elect Cuomo making several recommendations for the new administration to deliver projects more cost-effectively and provide new funds for transportation infrastructure.

WHAT YOU CAN DO:

* Contact New York State members of the House of Representatives and encourage them to get on the House Transportation and Infrastructure Committee to pressure both parties to reach agreement on a new surface transportation bill.
* Contact the Governor-elect and New York State legislators and urge them to take steps now to secure funding for transportation infrastructure and not wait for new federal legislation.
* Join New York Building Congress efforts to promote the importance and value of infrastructure investment in the City and State by contacting Vice President Andrew Hollweck at ahollweck@buildingcongress.com, calling 212-481-9230 or visiting www.buildingcongress.com.