July/August 1997· Vol. 61· No. 1

by Cynthia Burbank and S. Lawrence Paulson

For those who are helping to decide the future of the nation’s transportation system, there won't be many leisurely days this summer. Reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 has taken center stage on Capitol Hill, and a great deal is riding on the outcome. Secretary of Transportation Rodney E. Slater said the bill “will determine whether our nation can enter the 21st century ready to compete and win in a global economy.”

ISTEA, which expires Sept. 30, was a landmark six-year funding law that made dramatic changes in the way the federal government dealt with transportation policy. It recognized for the first time that the components of the nation's transportation infrastructure truly function as a system. It gave states unprecedented flexibility to use federal funds for a wide array of projects to meet local and regional needs, whether they involved new highways, mass transit, or bikeways. And it attempted to balance the need for improved transportation with other vital national goals — a cleaner environment, a stronger economy, a more secure future.

Now Congress is involved in an intense battle over ISTEA’s successor, and even veteran legislative observers are reluctant to predict the outcome. The issue has already become entangled in the fiscal year 1998 budget resolution, even threatening at one point to derail the balanced budget agreement reached by President Clinton and congressional Republican leaders. Earlier predictions that a new bill would be in place by the time ISTEA expires are being reconsidered.

After ISTEA

There are plenty of candidates to be the next ISTEA. The Clinton administration’s proposal, the National Economic Crossroads Transportation Efficiency Act (NEXTEA), was introduced in the Senate (S. 468) by Sens. Daniel Patrick Moynihan, D-N.Y., and John Chafee, R-R.I., and in the House (H.R. 1268) by Rep. Bud Shuster, R-Pa. NEXTEA is considered a key step in developing a successor to ISTEA and an important source of ideas for bill drafters, but it is not a likely candidate to advance on its own through the legislative process. Congressional committee chairmen, after all, traditionally demonstrate their independence by distancing themselves from executive branch proposals. Nonetheless, U.S. Department of Transportation officials say they have been pleasantly surprised by the respect NEXTEA has garnered on the Hill, and it may prove to be highly influential in shaping the final bill. On the Senate side, a key proposal is STEP 21 (Streamlined Transportation Efficiency Program for the 21st Century), sponsored by Sens. John Warner, R-Va., and Bob Graham, D-Fla. The bill (S. 335) addresses one of the key issues related to ISTEA reauthorization: the distribution of federal transportation funds to the states. Under ISTEA, 20 states, clustered mostly in the South and Midwest and known as the “donor” states, received less in transportation funding from the Highway Account of the Highway Trust Fund than they remitted to the Highway Account. The “donee” or “recipient” states, mostly in the Northeast and West, received more than they contributed to the fund. Not surprisingly, lawmakers from the donor states want to change the formula in their states’ favor.

The National Economic Crossroads Transportation Efficiency Act was introduced in the Senate by Sens. Daniel Patrick Moynihan (left) D-N.Y., and John Chaffee (center), R-R.I., and in the House by Rep. Bud Shuster, R-Pa.

Besides ensuring that a greater percentage of transportation dollars would go to donor states, STEP 21— introduced in the House (H.R. 674) by Majority Whip Tom DeLay, R-Texas — would authorize about $26 billion a year for highway projects, significantly more than ISTEA. More controversially, it would eliminate ISTEA’s Congestion Mitigation and Air Quality Improvement (CMAQ) Program, a fact that has caused some local officials in the South to criticize the legislation even though the bill is designed to give more power over transportation programs to states and localities. Warner said STEP 21 “would move us beyond the advances of ISTEA by further streamlining the current bureaucratic maze of federal programs and allowing state and local partners to determine their own transportation priorities.”

A Northeast-oriented bill (S. 586) that generally favors the current funding formula has been introduced by Moynihan. His “ISTEA Works” legislation would fund highways at about $26 billion yearly, increase funding for enhancement programs to about $600 million annually (about the same as NEXTEA), and would almost double annual CMAQ funding. In introducing his bill, Moynihan stressed its continuity with ISTEA, which he was instrumental in getting through Congress.

“We had a great success in both the House and the Senate,” Moynihan said of ISTEA, “and we hope to do the same thing again this year.”

Sen. Max Baucus, D-Mont., ranking minority member of the Senate Environment and Public Works Committee, introduced a bill (S. 532) called the Surface Transportation Authorization and Regulatory Streamlining Act (STARS 2000). This bill would give somewhat more authority to states and localities although not to the extent favored by supporters of STEP 21. STARS 2000 would authorize about $27 billion yearly for highway programs, increase enhancement funding by a modest amount over ISTEA levels, and reduce — but not eliminate — air pollution expenditures. In addition, Baucus’ bill would ensure that Western states don’t lose out in the Highway Trust Fund formula. Baucus said his bill will streamline the transportation program while maintaining ISTEA’s integrity.

“Such streamlining will provide greater flexibility to the states so they may choose priority transportation projects without the straitjacket imposed by today’s program,” Baucus said.

A far more radical approach is taken by Sen. Connie Mack, R-Fla., whose Transportation Empowerment Act (S. 867) — introduced in the House (H.R. 1470) by Rep. John Kasich, R-Ohio — would cut the federal gasoline tax by 12 cents and turn most transportation funding authority over to the states. In introducing his bill, Mack said that the highway system “is a perfect example of a program that ought to be returned to the states.”

Getting to Markup

Predictions that markup of a transportation bill would be underway in the House and Senate by May proved overly optimistic. One reason was the emergence of transportation funding as a major issue in the debate over the FY 1998 budget resolution. A key player in this skirmish — and in the entire effort to reauthorize ISTEA — was House Transportation and Infrastructure Committee Chairman Shuster, a staunch supporter of increased highway funding.

Shuster wants $32 billion a year for highway funding and favors using the current $23 billion balance in the Highway Trust Fund for roads. In addition, he has been highly critical of the current use of 4.3 cents of the 18.3-cents-per-gallon federal gasoline tax for deficit reduction rather than transportation, calling it a “cynical shell game.” Shuster argues that “the relentless growth of traffic, estimated at 3.4 percent per year since 1980, has taken a toll on roads and bridges throughout the country.”

“We need to unlock the trust fund balances now; we need to recapture the 4.3 cents being diverted from the trust fund; and we desperately need to invest in our highways and transit systems,” Shuster said.

To help accomplish his goals and to lay the groundwork for his committee’s work on ISTEA reauthorization, Shuster proposed an amendment to the budget resolution that would have increased transportation funding by $12 billion over five years. His proposal would cut other discretionary programs in the resolution by 0.39 percent and reduce proposed tax cuts by the same amount. The result would have been to reduce defense spending by $6 billion, domestic spending by $5 billion, and tax cuts by $1 billion over five years.

Shuster's amendment apparently caught congressional leaders off guard, and it nearly passed. At one point, according to Congressional Quarterly, Shuster's amendment appeared to be ahead by about 40 votes. But Republican leaders, concerned that the provision could quash hopes for balancing the federal budget by 2002, conducted an all-out effort to rally votes against Shuster's amendment, and it failed by a 214-216 vote in the early morning hours of May 21.

Nevertheless, the closeness of the vote demonstrated the popularity of transportation spending, and Shuster is not expected to abandon his effort to increase highway funding. In fact, aides to Shuster told reporters following the House vote that “all options remain on the table,” including a reauthorization of ISTEA for only one or two years or even a delay in action on a bill until next year when all members of the House will face reelection. Officially, though, committee staffers insist a committee bill on ISTEA reauthorization could be completed by July or August. Procedurally, the legislation the committee will use for markup will be a Shuster bill that had not yet been introduced as this issue of Public Roads went to press.

Things are somewhat more straightforward in the Senate, where the committee with jurisdiction over ISTEA reauthorization is the Environment and Public Works Committee, chaired by Chafee. A bill to serve as a markup vehicle was still being drafted as of early June, but staffers expressed hope that markup could be completed by the July 4 recess. Even on the Senate side, however, there is considerable sentiment for increasing transportation spending. An amendment to the budget resolution sponsored by Warner and Baucus that would have boosted highway funds was tabled by only two votes, 51-49.

Difficult Issues

The debate over ISTEA reauthorization is already in full swing, and it seems apparent that the issues that are now dominating that debate will continue to be controversial until the final votes are cast. Key issues are the state funding formula, increased spending flexibility for states and localities, and the total amount of money available for ISTEA reauthorization. Supporters of enhanced transportation funding argue strongly that these subjects are closely related. Without more money in the bill, some members argue, it will be difficult to negotiate serious differences, turning ISTEA reauthorization into something of a zero-sum game that pits region against region and interest against interest. But the commitment to a balanced budget is strong, and there will continue to be heavy resistance to any substantial hike in transportation spending.

The Transportation Enhancements Program, one of the most innovative aspects of ISTEA, has its adherents and its detractors. Localities generally like using transportation funds for bikeway construction because these projects have proven to have a strong and vocal constituency. Renovations of abandoned railway stations and other transportation facilities are also a locally popular use of enhancement funds because such projects frequently help revitalize neglected downtown areas and spur other economic development. But some state transportation officials object that requirements to set aside funds for enhancement projects often prevent them from meeting their most critical transportation needs. And some highway advocates tend to view enhancements as luxuries the nation can’t afford when there is so much work that needs to be done to improve the transportation infrastructure.

“When we look at the current conditions of our roads and bridges and we look at the rising death toll on our roads, it’s hard to say this is the right time to be diverting money to bike paths,” said American Highway Users Alliance President William D. Fay.

There is less controversy about keeping mass transit funding in a reauthorized ISTEA. And while it’s doubtful that intermodalism is in any serious danger, a debate could arise over Amtrak funding, which the administration included in NEXTEA, but which was not part of ISTEA. Sen. William Roth, R-Del., suggested that Amtrak might not survive if it doesn’t get the same access to capital funding that other transit modes received under ISTEA. “We can continue to focus on building new roads and larger airports where land is available, with the realization that this cannot possibly meet demand. Along with this construction, however, comes congestion, lost productivity, pollution, and gridlock. The alternative is to augment our existing highways and airports with an improved passenger rail system that alleviates congestion, saves precious open space, and eases gridlock,” Roth said.

But Sen. Kit Bond, R-Mo., called funding Amtrak through ISTEA’s successor an “outrage.” Bond said, “Until we have dramatically closed the gap on the safety needs of our nation's roads and bridges, I am not willing to spend one dime of highway money on Amtrak or any other pet cause.”

Because there are so many controversial issues to resolve, it’s virtually impossible to find anyone willing to predict that a successor to ISTEA will be awaiting President Clinton's signature by Sept. 30, the date the present law expires. Some observers believe that after approving a temporary extension of ISTEA, Congress will pass a new bill by the end of the year. Others are betting that the issue will remain unresolved until 1998. But many are hoping that the widespread support for ISTEA programs and transportation infrastructure overall will lead Congress to act on a multiyear bill by the end of 1997. What’s certain is that ISTEA has set a standard that no one in Congress is taking lightly. Lawmakers understand that in crafting ISTEA’s successor, nothing less than the nation’s economic future is at stake, and they seem determined to take the time to get it right.

The National Economic Crossroads Transportation Efficiency Act of 1997 The Clinton administration’s ISTEA reauthorization bill, the National Economic Crossroads Transportation Efficiency Act of 1997 (NEXTEA), proposes to invest more than $174 billion during the next six years to maintain and improve the nation’s highway, transit, and rail systems and to enhance transportation safety. The legislation would boost federal spending for America’s transportation infrastructure by 11 percent compared to ISTEA, increasing the funds available to virtually every state. Here is a brief description of the bill. Highway and Intermodal Programs NEXTEA retains ISTEA’s core infrastructure programs: Interstate Maintenance, National Highway System (NHS), Surface Transportation Program (STP), Bridge Program, and Federal Lands Highway Program. Higher funding levels are provided for all but the Bridge Program, which would be cut slightly because it is the narrowest program and because bridges are eligible under the other major programs. The eligibilities of most core infrastructure programs are expanded to provide greater flexibility and intermodal scope. The biggest eligibility changes are in STP, which would include the publicly owned rail infrastructure as well as highways, transit, and bicycle/pedestrian facilities. To increase the efficiency of NHS, eligibilities are expanded to include publicly owned passenger terminals and freight transfer facilities that are on or adjacent to NHS. Environmental programs — Congestion Mitigation and Air Quality (CMAQ), Transportation Enhancements (TE), Scenic Byways, and Recreational Trails — are retained. CMAQ and TE funding is increased by more than 25 percent. Safety programs are strengthened, and funding is increased. Key special programs are retained, including State Investment Banks (SIBs), Interstate Reimbursement, Appalachian Highways, Territorial Highways, Emergency Relief, Value Pricing, and Tax Evasion. Three new programs are proposed: Border Crossing and Trade Corridors Program ($45 million per year) to supplement existing funding available for borders and trade corridors by providing special incentive funds for border corridor planning, trade corridor planning, and border infrastructure. Transportation Infrastructure Credit Program ($100 million per year) to provide loans and supporting credit assistance for large, nationally significant projects that are beyond the scope of the normal federal-aid program and are too large for SIBs. Intelligent Transportation Systems (ITS) Incentive Program ($100 million per year) to spur the integrated deployment of ITS technologies rather than individual ITS projects. Planning Process, Streamlining, and Research NEXTEA strengthens and streamlines the ISTEA planning process in several ways. Planning factors are simplified by focusing on seven broad goals, replacing ISTEA’s list of 15 to 21 factors. Designating or redesignating metropolitan planning organizations (MPOs) is made easier by reducing the population threshold from 75 percent to 51 percent of the affected population. The planning process is expanded to include operations and management of the transportation system, not just capital investment planning. And cooperation and consultation are strengthened by ensuring that rural officials are consulted by states in the statewide planning and programming process and by requiring MPO, state, and transit agencies to cooperate in developing financial estimates. NEXTEA also cuts red tape by eliminating quarterly, project-by-project certification of each state’s STP projects; reducing Department of Transportation oversight of the STP program; expanding the types of projects that can be funded; and removing a variety of restrictions on costs. It strengthens and focuses research and technology programs by increasing funding, putting more emphasis on technology deployment, and sharpening the tools for capacity building. And it provides new financing tools and flexibilities by making SIBs permanent, establishing the Transportation Infrastructure Credit Program, removing the prohibition on interstate highway tolls, and providing other changes that remove federal requirements and make it easier for states to finance surface transportation projects. Transit Reauthorization of the transit program in NEXTEA is organized around four key themes: flexibility, streamlining, predictability, and efficiency. Flexibility and local decision-making are enhanced by expanded eligibility for the use of federal funds, more flexibility to use highway and transit funds for either purpose, and the relaxation of certain other limitations. NEXTEA calls for: Making intercity passenger and freight rail projects eligible for funding. Allowing areas under 200,000 in population to use all their transit funds for any purpose, including operations. Making preventive maintenance eligible as a capital expense, thus helping to replace operating assistance for areas of more than 200,000 in population. Strengthening the role of MPOs in managing both authorization and obligational authority for “attributable” funds. Streamlining is advanced by combining some transit categories to make them easier to manage, reducing some of the administrative requirements that accompany federal funding, and applying simpler requirements to the entire transit program, rather than having different requirements for each element of the program. NEXTEA: Combines the Fixed Guideway Modernization and Bus Discretionary programs into the Urbanized Area Formula Program. Provides simpler and more flexible program-area definitions of eligible capital costs, matching ratios, and grant requirements. Predictability is enhanced by having a much larger proportion of the transit program go out by formula rather than on a discretionary basis. This will help local agencies’ planning by reducing uncertainty, making fund distribution more equitable, and increasing the availability of innovative financing techniques to leverage federal funds. NEXTEA also: Continues to fund New Start projects that have Full Funding Grant Agreements in place. Funds the entire transit program from the Mass Transit Account of the Highway Trust Fund. Efficiency is improved by providing the resources — $5 billion per year — to build and maintain the transit infrastructure. And to ensure that welfare recipients have access to employment and training, NEXTEA provides grants to state, local, and private nonprofit organizations for transportation planning, service coordination, operating and capital expenses for service startup, promotion of employer-provided transportation, development of financing strategies, and administrative expenses. Rail Transportation NEXTEA provides $4.7 billion in direct funding to Amtrak. It also expands the flexibility of states and localities to select the most appropriate solutions to their transportation problems by allowing them to fund publicly owned rail and rail-related passenger and freight projects and to participate in rail-related public-private projects that provide public benefits. Eligibility under NHS, STP, transit, Transportation Infrastructure Credit, and SIB programs would be extended to qualifying rail projects. The High-Speed Rail Technology Development Program would be reauthorized, and the Border Crossing and ITS programs would include rail projects. Also, NEXTEA includes a new Infrastructure Safety Program made up of Rail-Highway Crossings and Hazard Elimination programs that replace and improve upon the current STP safety set-aside. Highway Safety NEXTEA increases overall funding for the National Highway Traffic Safety Administration by 11 percent, to $333 million, and places a new emphasis on performance-based management and quantifiable results. It establishes incentive grants in the following program areas: Alcohol-Impaired Driving Countermeasures. NEXTEA provides increased funds for a revised and updated alcohol program that encourages states to increase their drunk driving prevention efforts by setting new criteria. Occupant Protection Program. States can qualify for basic and supplemental grants by increasing safety belt use rates. State Highway Safety Data and Traffic Records Improvements. NEXTEA encourages states to improve data to identify safety priorities and evaluate the effectiveness of safety programs. Drugged Driving Countermeasures. States must meet five out of nine criteria to qualify for funding. Motor Carrier Safety NEXTEA restructures the national Motor Carrier Safety Program (MCSAP) to focus on program results, increased flexibility for grantees, updated information systems and analysis, and improvements to driver programs. MCSAP has two funding categories. The overall MCSAP Safety Grant Program has three parts: (1) basic grants to emphasize uniform roadside driver and vehicle safety inspections, traffic enforcement, compliance reviews, and current complementary activities; (2) performance incentives to encourage states to plan, identify problems, and implement accident countermeasures that address problems that are particular to their own jurisdictions; and (3) a special set-aside of up to 12 percent for national priorities and border enforcement. The Information Systems and Strategic Initiatives program establishes a permanent funding source for the operation of information systems and evaluation of programs. It provides the information needed to strengthen enforcement and improve the performance of poor carriers, implements the Commercial Vehicle Information System, and supports improvements to driver programs. Intermodal Research and Development The University Transportation Centers (UTC) and University Research Institutes (URI) programs would be continued and consolidated into a single program composed of up to 20 competitively selected colleges and universities. One university transportation center would be authorized in each of the 10 federal regions. The centers would be required to maintain an ongoing technology research area. In addition to continuing the research programs of the Federal Highway Administration and the Federal Transit Administration, NEXTEA authorizes intermodal strategic planning and intermodal research and development programs. Bureau of Transportation Statistics NEXTEA builds on the initial products and services of the Bureau of Transportation Statistics by establishing three major initiatives. Data collection and integration involving international transportation will be expanded; services to state, local, and private-sector decision-makers will be enhanced; and a grant program will be established to enhance data collection and data sharing throughout the transportation community.

S. Lawrence Paulson is a partner in Hoffman Paulson Associates, a writing/editing and public relations firm in Hyattsville, Md. He has written and edited numerous studies for the Federal Highway Administration, Federal Transit Administration, and National Highway Traffic Safety Administration. He also spent seven years covering Congress as the Washington Bureau Chief of a national daily newspaper, The Oil Daily.

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