Budget cuts imperils roads, jobs
While the debate rages in Washington over whether to raise the debt ceiling by Aug. 2, Congress faces another deadline on Sept. 30 to approve a six-year reauthorization for funding the maintenance and repair of the nation”™s highways and bridges. Under one budget scenario that passed the House earlier this year, a massive cut in funding would result in the loss of more than 20,000 jobs in New York state.
Although most transportation leaders say the U.S. and, locally, New York state must spend more on infrastructure work, the harsh economic realities in both Washington and Albany are causing some politicians to advocate significant cuts in spending. Most transportation advocates are hopeful that funding levels from the state and federal governments can remain status quo.
President Obama has called for a $556-billion, six-year bill, significantly higher than the $286.4-billion Safe, Accountable, Flexible and Efficient Transportation Equity Act bill, which expired on Sept. 30, 2009. Since then Congress has passed budget extenders that have kept highway and bridge funding status quo until September of this year when the authorizations run out. While the Obama administration has floated the lofty funding level, few details have been released on how those funds would be raised. Most political observers are skeptical that Congress will pass a reauthorization at anywhere near the president”™s proposal.
”˜Proposal provides the stability states need”™
House Transportation and Infrastructure Committee Chairman John Mica released a proposal July 7 that calls for less than half of the president”™s funding plan and $56 billion less than current funding levels. The Florida Republican”™s plan calls for approximately $230 billion in funding over six years. Mica said those levels match current revenue being deposited into the Highway Trust Fund from federal gas tax receipts and comply with House rules that do not permit authorization of more funds than those collected.
He added the proposal also recognizes that Congress will not pass an increase in the gas tax to raise revenues for further highway and bridge funding.
“Given U.S. House rules and budget constraints, this proposal maximizes the value of our available infrastructure funding through better leveraging, streamlining the project approval process, attracting private sector investment and cutting the federal bureaucracy,” Mica said. “Most importantly, this six-year proposal provides the stability states need to plan major transportation improvements and create long-term jobs.”
U.S. Sen. Barbara Boxer, chairwoman of the Senate Environment and Public Works Committee, said she will propose a two-year bill totaling $109 billion. The authorization would keep funding at current levels, but would require $12 billion in additional monies from some other governmental source or sources.
On July 6, the California Democrat released a statement in stark contrast to those of Mica concerning the highway reauthorization bill and Congressman Paul Ryan”™s fiscal year 2012 budget proposal that passed the House in April and calls for $6.2 trillion in spending cuts over the next 10 years.
“We are at a critical moment today when it comes to our nation”™s infrastructure,” Boxer said “I am here to shine a light on what is at stake for our nation”™s economy and American families. The current surface transportation bill expires on Sept. 30 and Congress must decide in the coming days which path to choose: protect jobs and put people to work, or throw hundreds of thousands of people out of work in a sector that has suffered enormously during the recession.”
She added, “The Senate is working on an approach that will immediately jumpstart the economy, but we are running out of time and must act quickly.”
Adding up the numbers
Boxer released figures from the Federal Highway Administration (FHWA) that estimated 490,627 construction and private sector jobs would be lost in fiscal year 2012 if Congress approved the House-approved budget plan that calls for a 36 percent reduction in transportation spending.
The statistics state the House-approved budget would cut actual federal highway investment from $41.7 billion in 2012 to $27 billion, a reduction of $14.1 billion. According to the FHWA statistics, the House plan would result in the loss of $586.1 million in federal highway funding to New York state (a 36.71 percent decline) and 20,384 jobs as compared to current federal highway funding levels.
To date, no such analysis of the impact of Mica”™s proposal has been released.
Jennifer Post, a spokesperson for the state Department of Transportation, said Commissioner Joan McDonald and representatives of the Metropolitan Transportation Agency were in Washington, D.C., July 12 and met with members of the New York Congressional delegation to discuss their views on the highway reauthorization process.
Commenting on Mica”™s proposal, she said that department has “serious concerns” regarding a nearly 37 percent reduction in federal funding. Post added that, if enacted, Mica”™s proposal would “mean our (highway and bridge) program would be significantly curtailed.”
Post said the DOT supports some components of the Mica proposal, including streamlining projects”™ development and funding process, adopting public-private partnerships (which is currently not permissible in New York state) and maintaining the current highway-transit funding formula at 80 percent-20 percent.
”˜A crisis mode for infrastructure”™
The Construction Industry Council of Westchester and Hudson Valley Inc. of Tarrytown says prior studies of the U.S. transportation system indicate the nation needs to spend at least $350 billion over six years just to maintain the system. On the state level, the industry is facing cuts of some 35 percent to 40 percent on DOT highway and bridge contract work in the Hudson Valley this current fiscal year.
In addition, the state has only partially funded its multiyear capital programs for the DOT and MTA. In fact, both agencies face a projected $10-billion funding gap for the final three years of their respective capital programs. (See the association”™s viewpoint on the issues facing transportation on page 4.)
The General Contractors Association of New York is a Manhattan-based organization of heavy-construction contractors. While praising some components of Mica”™s proposal, the association was “deeply troubled” by the bill”™s funding levels.
“The chairman”™s emphasis on consolidating programs, reducing bureaucratic delays, streamlining project delivery and leveraging private investment is long overdue,” said the association”™s Managing Director Denise Richardson. “Chairman Mica understands that it is not solely about how many dollars you have, but about how those dollars are managed to ensure maximum return for the taxpayer.”
While she said she understands the funding dilemma Mica faces, “The reality is, however, that by reducing funding by as much as 30 percent, no matter how many efficiencies one implements, there will surely be a negative net impact on the bricks and mortar elements of our national infrastructure and its ability to efficiently move American goods, services and people,” Richardson said. “It will also reduce, rather than create, good, stable private sector jobs in both the long and short run.”
Stephen Morgan, secretary of the New York Roadway and Infrastructure Coalition, said the budget shortfalls in Washington and New York state and the uncertainty that now exists have resulted in “a crisis mode for infrastructure.”
John Lagomarcino, a lobbyist who represents the coalition, described the current stormy climate for the nation”™s transportation sector, by saying, “The political realities are that no one has identified a way to increase the funding of the programs that everyone can agree to. And then you are faced with a House resolution that actually calls for pretty severe cuts in the program. It will be difficult enough to maintain the current level of funding, much less add to it.”
He said if the respective House and Senate transportation funding bills are not marked up by the time Congress recesses in August, he doubts a bill will be passed by the House and Senate by the Sept. 30 deadline. A danger could occur at that time when Congress debates the passage of a funding extender if House members argue that any new funding must comply with the House resolution that would cut funding by 36 percent.
If that were the case, the FHWA expects significant budget cuts and thousands of jobs lost in New York state.