Monday, June 11, 2012

Will Presidential Politics Bankrupt The Highway Trust Fund?

While Senate Democrats are still hoping for passage of some sort of conference compromise long term reauthorization measure for the federal Highway Trust Fund, it now appears House Republicans just want to kick the can down the road past the presidential election. Trouble is, that maneuver would likely put the Highway Trust Fund in insolvency.

Last week, in response to an end of press conference question on surface transportation appropriations, House Speaker John Boehner said, “We’re going to go with a six month extension” when the current band aid measure expires at the end of this month. The reply from Senate Majority Leader Barbara Boxer, who is still conducting behind closed doors leadership meetings aimed at pushing through some sort of conference committee long term reauthorization measure, was steely and pointed: “I am very disappointed that Speaker Boehner is even talking about a long term transportation extension, which would lead to the Highway Trust Fund going bankrupt. Three million jobs and thousands of businesses are at stake.”

Boxer is right. If Congress refuses to deal now with the long term problems facing funding for infrastructure construction in the United States, declining motor fuel tax revenues resulting from higher mileage cars and trucks and folks driving fewer miles, future and even current projects for road and bridge repairs, drinking and waste water treatment systems, rail and waterway transportation, airport expansion, and other infrastructure construction paid for from the Trust Fund and managed mostly by fiscally struggling state and local government agencies, will grind to a halt, leaving skilled construction tradespeople and construction contracting businesses across the country high and dry.

For example, Mark Foster, North Carolina’s Department of Transportation chief financial officer, has to check his cash balance every morning at 7 a.m., to be certain the state has not committed more spending that it can reasonably expect to receive reimbursement from Washington for the federal 25% of the state’s transportation funding total. “We … watch our IOU’s from the feds very closely, in terms of what we have extended in the state dollar in anticipation of recovering the federal dollar,” he says. “You make sure at the end of the day, when you make a commitment, you can pay for it.” The Congressional enactment of nine sequential temporary extensions of Highway Trust Fund appropriations since 2009, with no effort whatsoever toward rectifying the long term problems with federal funding for surface transportation, makes state and local officials more and more nervous with each passing day. Foster, for one, says he is daily attempting to avoid “hard stops and starts just based on what is happening in Washington. That’s not fair to our industry and certainly that causes lots of consternation locally as we make priority commitment to certain projects.”

Nevada DOT spokesman Scott Magruder is equally cautious. “We are monitoring our cash flow. There is a potential, yes, where new construction projects would get delayed down the road.” Washington Governor Chris Gregorie echoes that sentiment, remarking that the state’s major projects “are all at risk.”

The lack of effective leadership on this issue in Congress is appalling. The construction industry is a significant factor in our nation’s economic recovery, and already lags well behind manufacturing and other sectors in terms of bouncing back. Construction lost 28,000 jobs in May, and general contractors don’t see significant revenue increases for 18 months to two years. Construction’s share of gross domestic product has declined from the characteristic 4% to 5% down to a historic low of a mere 3%. Construction industry recovery is still a long way off, and political leaders in Congress shoulder a major share of responsibility for that fact due to their refusal to face the tough issues involved in long term Highway Trust Fund reauthorization.

Shame on them all.

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