Posted September 19, 2012

Despite political constraints and dwindling resources, wise investments are more urgent than ever

By Emil Frankel

On September 13th, the National Transportation Policy Project (NTPP) of the Bipartisan Policy Center (BPC), in collaboration with the Eno Center for Transportation (Eno), released its latest report, The Consequences of Reduced Federal Transportation Investment. While NTPP has, over the last few years, consistently noted the need to increase investment in the nation’s transportation infrastructure, the current fiscal crisis and the unwillingness of the administration and Congress to address the issue of sustainable funding in the recently enacted surface transportation bill, MAP-21, suggest that the level of federal transportation funding is likely to remain stagnant, or even decline, for many years.

The NTPP-Eno report makes informed, if speculative, judgments about how state and local transportation agencies are likely to respond to such reduced federal funding levels. The report concluded that the effect of cutting federal support for surface transportation to a level consistent with current and projected revenues from federal motor fuels taxes at current rates (a reduction of 35 percent from current funding levels) would be severe. In the area of highways, small population states would be the hardest hit, since generally, they are the most dependent upon federal assistance for their capital programs. While many states are likely to replace some portion of lost federal support, by increasing their gasoline and diesel taxes, by making greater use of tolls and other forms of user charges, and/or by greater reliance on other broader-based general taxes, a 35-percent reduction in federal funding is still likely to lead to a reduction of about 40 percent in highway capital investment at the state level.

The impact of a reduction in federal transportation funding is likely to be even more severe in the transit sector, since transit agencies generally have little capacity to replace lost federal support for their capital programs. “The bottom line,” noted the report, “is that most transit agencies will respond to funding cuts by shifting remaining resources to operations and reducing capital maintenance expenditures.”

The report concludes that the effect of cutting federal funds for transportation without implementing the fundamental programmatic reforms that NTPP has been urging are likely to be severe, in terms of progress toward the national goals that BPC has articulated. The most dramatic effects would be on economic growth.

The benefits of investing in America’s transportation system and assets, particularly, at a time of slow economic growth and persistent long-term unemployment, seem clear, but current political and fiscal realities make dramatic increases in federal funding for transportation appear unlikely. In these circumstances, we should not both cut federal transportation funding and fail to reform how we invest the scarce resources that are available. The report makes clear that the “wise investments” that are at the heart of NTPP’s recommendations over the last few years are more urgent than ever.

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Read more blog posts from Emil Frankel here.

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National Transportation Policy Project