The nation's focus on reducing budget deficits has contributed to the creation of an infrastructure deficit that needs to be corrected in the next six-year surface transportation bill to help the economy expand, U.S. Secretary of Transportation Anthony Foxx said Wednesday.
In a speech before the Transportation Research Board's annual conference in Washington, the former Charlotte mayor said passing a transportation reauthorization bill with adequate funding for maintenance and upgrades of highways, bridges, and transit systems is one of his top priorities during President Obama's second term.
The neglect of transportation systems is a key reason why the United States has fallen 20 spots — to number 24 — in the World Economic Forum's global rankings of overall infrastructure quality, "which puts us behind Barbados — a country with one airport," Foxx said.
The previous six-year transportation bill expired in September 2011 and, after some stop-gap spending measures, was followed in the summer of 2012 by a two-year bill (MAP-21) that lacked any new funding sources. It expires on Sept. 30, the end of the government's fiscal year.
The major problem facing transportation investment is that the Department of Transportation's Highway Trust Fund has been teetering on the brink of insolvency for several years, and it has required Congress to funnel more than $50 billion from the general fund because receipts from fuel taxes and excise taxes on trucks and truck tires have not kept up with obligations to states undertaking road and bridge projects. That's because the gas and diesel taxes are not indexed to inflation and have not been adjusted since 1993, while the amount of miles vehicles travel has increased. At the same time, the fuel efficiency of vehicles has significantly improved, which undercuts a system that assesses the user fee on a per-gallon fuel basis. Federal highway aid is used to reimburse states for projects already underway or recently completed. The Congressional Budget Office projects spending authority for highway projects will drop from $40 billion to $6 billion if the balance in the Highway Trust Fund is used as the only source of revenue.
In fiscal year 2013, the DOT had contract authority for $40 billion, but revenues came in several billion dollars below that mark. In the fall, Congress transferred $9.7 billion to the highway account. The cash balance as of late December stood at $8.5 billion. Foxx warned that the trust fund could run out of money as soon as August.
The uncertain funding situation has made it difficult for state and local governments to make long-term construction plans.
The more the nation delays, the more inflation erodes the purchasing power of governments for construction projects, Foxx said.
"When we talk about our long-term infrastructure deficit, let's understand that every day we fail to tackle it, we’re actually creating more expensive projects. And we’re kicking those higher costs to our kids and our grandkids," he said, according to a copy of his prepared remarks.
Foxx announced that the DOT has posted on its website a ticker counting down how much money the Highway Trust Fund has remaining each month
to highlight for Americans the urgency of finding new revenue for transportation needs.
Congress has been reluctant the past five years to consider raising the gas tax, but several new funding proposals are floating through the House and Senate. President Obama has said transportation could be funded with proceeds from corporate tax reform — in particular, closing loopholes for parking profits overseas.
Foxx said he would work hard to help Congress come up with a bill. Fifteen Democrats on Thursday asked House Ways and Means Committee Chairman Dave Camp to hold hearings soon about ways to rescue the Highway Trust Fund.
The transportation secretary's other priorities are bringing down the cost of transportation projects
through more efficient project management and technologies, developing a first-ever national vision for transportation to guide investment, and maintaining the momentum on safety initiatives, as he first touched on soon after taking office last summer.
Foxx said the government has to find ways to stretch its money further. The Federal Highway Administration's "Every Day Counts" program, for example, helped Utah save $260 million by completing the extension of I-15 two years ahead of schedule, he said. One of the innovative ideas used was to have project designers and builders work on-site together. Another type of innovation for road construction is the advent of warm-mix asphalt, which doesn't have to be heated as hot to pave roads and will save the government $3.6 billion by 2020, Foxx said.
He cited a new study from McKinsey & Company that argues nations generally can obtain the same amount of infrastructure for 40 percent less
by adopting best practices for construction. The United States might get 20 percent extra for its money because it has already adopted many of the ideas, which would represent $21 billion under MAP-21's funding level, "enough to pay for airport upgrades and the cost associated with NextGen."
NextGen is the Federal Aviation Administration's new satellite-based air traffic control system that will take years to roll out.
"That’s why we’re going to do even more to find efficiencies — implementing performance measures that reward projects completed under budget and ahead of schedule … and remaking our permitting process so that, in the vast majority of cases, it takes days or weeks instead of months and years," Foxx said.