Freight Groups, States Reject ‘Devolution’ Idea

This story appears in the Sept. 29 print edition of Transport Topics.

The top organizations representing the freight industry and state transportation officials again urged Congress to reject efforts by a small group of conservatives looking to diminish vast federal funding for big-ticket transportation projects.

In a letter to congressional leaders this month, the 17 groups said that so-called “devolution” efforts to require states to take full responsibility for transportation planning and funding are “misguided” and would “eliminate the federal government’s constitutionally mandated role in promoting interstate commerce.”

The groups specifically referred to the Transportation Empowerment Act, a bill introduced last year by Sen. Mike Lee (R-Utah) and Rep. Tom Graves (R-Ga.), which would greatly reduce funding for the federal-aid Highway Trust Fund within five years.

“If TEA passed and states replaced the lost revenue with an increase in their fuel taxes, on average their gas taxes would have to increase by 16 cents, and some states would have to raise their taxes by more than 30 cents,” wrote the groups, including the American Society of Civil Engineers, the U.S. Chamber of Commerce, the American Association of State Highway and Transportation Officials, and American Trucking Associations.

“Devolution proposals are not a solution to the long-term infrastructure funding question, but rather serve as a distraction from the debate about how best to fund our nation’s infrastructure,” they added.

ATA spokesman Sean McNally said the letter was a way of putting down a marker ahead of the long-term Highway Trust Fund debate that the bill’s sponsors plan to hold before a law that funds highway projects expires in May.

The Chamber of Commerce’s transportation expert, Janet Kavinoky, added that “devolution” shuns the federal government’s responsibility to maintaining national transportation programs. She said the federal government is best suited to manage the network that connects states.

But with nearly 50 co-sponsors, all Republicans, Lee and Graves said the tea party movement is behind having a robust state role over infrastructure funding without federal restrictions.

“Our bill does away with the Washington middleman and streamlines the highway program,” Graves said.

The bill’s sponsors sought to move the legislation this summer, while Congress was working to pass a short-term funding extension in July.

Heritage Action’s Dan Holler told reporters the plan “was never about getting TEA in July, it was about creating a climate” that made the bill more acceptable to members.

Heritage Action and other conservative groups continue to seek support for “devolution” around Capitol Hill, and they expect the legislation to gain momentum after the election if Republicans are successful in controlling the House and the Senate. The GOP now controls the House, while Democrats control the Senate.

“There is no doubt the debate has shifted our direction,” Holler said.

Ken Orski, a transportation analyst who champions greater jurisdiction for states on highway funding, said current “fiscal uncertainties in Washington” are encouraging state officials to plan and invest on infrastructure without federal support, a trend that will continue amid congressional legislative gridlock, he said.

“To further make themselves fiscally independent, many states have turned to financing large-scale construction projects with long-term credit. They are borrowing front-end capital and repaying it over extended periods of time with dedicated sources of revenue,” Orski added.

Over the next 10 years, the Highway Trust Fund, which is mostly dependent on fuel tax receipts to pay for highway projects around the country, will need about $130 billion in general Treasury transfers to stay at current levels, according to the Congressional Budget Office.

That’s why business groups, including the trucking industry, favor paying higher fuel taxes, noting that the federal gas tax has not been increased since 1993.

A recent report by Pew Charitable Trusts concluded that the Highway Trust Fund’s financial woes provide an opportunity to rethink the framework for paying for transportation needs and stresses that partnerships among different levels of government are critical. The report, which does not take a position on options, noted that public-private partnerships and other financing mechanisms that require repayment are not funding solutions.

Most members of Congress, including transportation leaders, have shown little interest in raising fuel taxes to fund a long-term program to pay for roads and bridges. The extension of the 2012 highway law, MAP-21, in July keeps federal spending at current levels through next May.