House Proposes 5 Month Surface Transportation Fix

            Unable to come forward with any acceptable compromise on long term funding to keep the Federal Highway Trust Fund solvent over the long term, in the face of the July 31 expiration of the band aid measure passed at the end of May, the Chairmen of the House Transportation and Infrastructure Committee and the House Ways and Means Committee are jointly proposing to extend general revenue infusions totaling $8.1 billion into the highway till, to keep summertime road construction projects going through December 18. Bill Schuster (R-Pa.) and Paul Ryan (R- Wis.) issued a joint statement yesterday, proposing a bill which should come to a vote in the House today. They said, in part, “ This country needs a long-term plan to fix our roads, bridges and other infrastructure, and this bill gives us our best shot at completing one this year. … By providing resources through the end of the year, we can ensure construction continues while we work toward a package that could close the trust fund’s shortfall for as many as six years.”

            This House measure would transfer cash from general revenues to the highway trust fund account, to be offset by $8.3 billion in anticipated Transportation Security Administration fees. House Republican have ruled out any increase in motor fuel taxes, and the current proposal includes a $90 million tax cut for natural gas and LPG producers, to bring their rates in line with motor fuel taxes. While the House proposal does not include an unrelated renewal of Export-Import Bank authority, the Senate is expected to add that into its version of this must pass legislation, adding to the potential for last second histrionics in debate over the ultimate conference committee legislation.

            The Senate has before it a six year highway trust fund extension bill providing $300 billion in cash to the fund, but has failed to reach agreement on revenue to support the measure. The Senate’s thinking that a one time tax on $2 trillion in foreign profits of U. S. firms could fill the gap is clearly a non-starter in the House, despite Senate Minority Leader Harry Reid’s opposition to any more surface transportation band aids.

Summer Sizzles – Congressional Highway Funding Fizzles

            Facing a July 31 deadline for the expiration of Federal Highway Trust Fund appropriations, only one of the five key Congressional committees charged with legislating U. S. surface transportation policy seems capable of any action during this session. Senate Environment and Public Works Chair James Inhofe (R-Ok) and Ranking Member Barbra Boxer (D-Cal) have agreed on and passed out of their committee the DRIVE [Developing a Reliable and Innovative Vision for the Economy] Act, which proposes a six year, $350 billion surface transportation appropriation, and the Senate Banking Committee, in charge of transit construction appropriations, and the Senate Commerce Committee, in charge of rail and bus appropriations, are expected to add on as much $90 billion more to the dream pot of gold.

            The problems, however, are in the Senate Finance Committee, which will refuse to increase motor fuel taxes to bring sufficient Highway Trust Fund revenue to fund this ambitious package, and in the House Ways and Means Committee, where Chair Paul Ryan (R-Wi) refuses to consider a motor fuel tax increase, and offers no alternative sources of revenue.

            Congress has already pumped $62 billion in general revenue into the Highway Trust Fund to make up for money lost to CAFÉ’s increasing fuel mileage requirements for cars and trucks, to hybrid and electric vehicles, and to the fact that general economic woes have cut into everyone’s miles driven per year. The Congressional Budget Office estimates another $11 billion in general revenues will be needed next year just to keep federal surface transportation funds flowing to the states at current levels. Look for the 35^th successive band aid, short term legislative fix to push this issue out beyond the next federal electioin cycle.

Midwestern States Struggle Over Highway Appropriations

            Illinois, Wisconsin, Missouri and Michigan legislators are all faced with voters who want first class roads, but don’t want to pay for building or maintaining them. Illinois’ Department of Transportation projects that current revenue sources will provide less than 20% of projected highway funding needs for the next fiscal year. Wisconsin Governor Scott Walker opposes bonds to fund that state’s road and bridge budget, but also he opposes increasing motor fuel taxes or vehicle registration fees to bolster revenue for surface transportation needs. Last August Missouri voters soundly defeated a proposed $0.0034 retail sales tax  for roads and bridges, and this spring the Missouri legislature killed a 2 cents per gallon motor fuel tax hike. As a result Missouri lacks the cash to meet federal highway grant matching requirements, and MDOT says its entire budget will be consumed by maintenance requirements.

Michigan’s Proposal 15-1 would have increased that state’s retail sales tax to fund education and surface transportation programs, but it went down to voter defeat by a margin of 4 to 1 against. Republicans in the Michigan House responded with a bill to raise diesel fuel taxes and vehicle registration fees, and end the state’s low income earned income tax credit, but the Michigan Senate seems poised to kill that measure.

            Even if these hard hit states could come up with the cash required to meet federal grant matching requirements, there I no certainty that federal funds will continue to be available at current levels over the long term. Midwestern drivers will be steering around potholes and keeping an extra spare tire in the trunk for years to come, it seems.

Blackstone Group To Renovate Willis [formerly Sears] Tower

            Following the June 5 closing on its purchase of the former Sears Tower in Chicago, Blackstone Group announced its affiliate Equity Office will work together with CBRE and Telos Group LLC to expand the 700,000 square feet of retail and entertainment offerings in the building, and lease up the 3.8 million square of office space in the tower. No one has announced whether or not the name of the iconic building will be changed again.

Stalled Illinois Electric Utility Legislation Portends Summer Woes

            Political wrangling over the issue whether nuclear plants should get the same “clean energy” preferences now provided for wind and solar power in the state, and the prospect of a $2.00 per month increase in electric bills to consumers have delayed efforts to provide rate relief that could keep Commonwealth Edison’s six aging nuclear generation plants on line for many more years, save the jobs of thousands of nuclear plant employees, and help Illinois meet carbon emission reduction goals.

            Opponents of the various solutions now on the legislative agenda say that proposed peak demand billing to residential customers is a corporate bailout for Com Ed, rather than an incentive to increasing energy efficiency in the state. Meanwhile, the issue is complicated by super majority voting requirements resulting from the Illinois Legislature’s failure to resolve balanced budget issues during the regular session which closed at the end of May.

American Subcontractors Association Pushes Federal Contracting Revisions

            ASA is soliciting its members to push Illinois Senators Durbin and Kirk to vote in favor of Senate Amendment 1731 to HR 1735, which, if passed, would prohibit use of reverse auctions in solicitations for federal design and construction work, restrict use of individual surety bonds on federal construction projects covered by the Miller Act, increase limits on SBA’s surety bond guaranty program, and institute a two step process for awarding design/build contracts, with the first step focusing solely on qualifications of proposers, followed by a second step based on price.

Michigan Road Legislation Presages Midwest Legislative Battles

            Michigan’s state legislature is embroiled in road repair funding battles which could easily spill over into the capitals of other Midwestern states struggling to find ways to fund road and bridge projects in this era of increasing gas mileage and the consequent decrease in motor fuel tax revenues. One outrageous bill in the proposed package would even take away the state’s earned income tax credit for poor families and toss that cash into the road and bridge budget.

            Other proposals include increasing the diesel fuel tax to match the rate on gasoline – opposed by truckers – and increasing the license plate fees on electric and hybrid vehicles by $100 per car to offset the fact they obviously contribute less, or nothing at all, in motor fuel tax revenue though they do use the roads and bridges. Everyone acknowledges there’s a problem, but there is absolutely no agreement on a solution.