“FAST Act – The Good and the Bad”

January 7, 2016

The recent enactment of the “Fixing America’s Surface Transportation Act” (FAST Act) has rightly been acclaimed as a significant legislative achievement and an important step forward in national transportation policy. The passage of the five-year FAST Act represented the first time in ten years that Congress has been able to enact a surface transportation authorization bill covering more than two years, and it was done with overwhelming majorities of both parties in both Houses of Congress.   The bi-partisanship that characterized consideration of this legislation was, in and of itself, a remarkable event in a deeply partisan and ideologically divided Congress.

In passing a multi-year bill, Congress provided an important degree of predictability and certainty to the state transportation departments, transit agencies, and other state and local grantees that are still dependent upon significant federal assistance to pursue and implement their capital programs. Although the level of federal surface transportation grants has stagnated over the last decade or more (a matter that I will discuss in more detail, below), the anticipated average of $60 billion annually in federal funds to state and transit agency grantees under the FAST Act insures that surface transportation remains one of the largest programs in the federal domestic budget. Without this money many state transportation departments and transit agencies could not continue their infrastructure investments.

Beyond the certainty of multi-year funding that is a key element of FAST Act, there are other significant features of this legislation.

First, it reaffirms the national interest and the federal role in surface transportation. While some members of Congress advocate, generally, for a reduced federal role in domestic matters and a shrinking of the federal government and, specifically, for a devolution of surface transportation programs to the States, that is clearly not the perspective of the vast majority of Congress without regard to party or ideology.

Second, it is clear that for all the discussion about whether transportation should be funded only with user fees, the FAST Act re-affirms that these programs will draw upon both user fees and general taxes and that the Highway Trust Fund (HTF) will continue to be a mixed fund.   With FAST Act dependent upon a transfer of $70 billion of general funds to HTF, about 25 percent of HTF deposits over the five years of the FAST Act will come from general taxpayers, rather than from user-based fees, such as federal motor fuels taxes.

This continues an almost decade-long trend of an increasing dependence of federal surface transportation programs on general funds. These circumstances have effectively eliminated the “donor-donee” battle over state apportionments that characterized Congressional debates over surface transportation bills for many years. Today, all states are “donees,” that is, they receive more in federal surface transportation grants than is collected from federal gasoline taxes within their borders.

Moreover, the argument that money collected from highway users should only be used on highways has less relevance in the context of increasing general funds’ being used for surface transportation funding. Hopefully, as a result, the lines between transportation modes will begin to fade, and we can view the nation’s transportation system more holistically and on an integrated basis.

Third, the FAST Act advanced the cause of multi-modalism in surface transportation in another significant way: for the first time a surface transportation authorization act contained a title on intercity passenger rail (although Amtrak and other passenger rail programs will continue to be funded strictly from general funds, rather than from HTF, and through regular annual appropriations processes). Amtrak and other federal passenger rail programs will be authorized for five years.

Fourth, the FAST Act advanced national policy on freight and goods movements. For the last 15 or 20 years there has been a growing awareness at the federal level that there is a clear national interest in addressing freight bottlenecks and in enhancing intermodal goods movements. The programs in the FAST Act, including discretionary grants for freight projects and a freight formula program for states, build on earlier initiatives in federal legislation, including the Projects of National and Regional Significance in SAFETEA-LU (fully earmarked by Congress) and the TIGER program, (originally established in the economic recovery act in 2009 and continued since under succeeding appropriations measures).

The new freight initiatives in the FAST Act are important steps toward meeting the needs of a nationally significant freight program.

But FAST Act was not all good news.

First, while providing continuity and predictability in federal surface transportation programs and grants, Congress failed again to develop sustainable revenue streams to support these programs. As noted above, assuring that the authorized program levels will be met over the five-year term of the FAST Act depends on another massive transfer of general funds to the HTF (or another fiscal “patch”) and on a series of dubious “pay-fors.” In a word, the FAST Act is dependent upon budgetary gimmicks and questionable (and controversial) fiscal maneuvers.   This leaves these programs on very uncertain ground over the long term.

Second, despite a slight bump in federal funding for highways and transit during the first year of the FAST Act, “real” funding under this bill will largely remain flat or stagnant throughout its five-year life. (While nominal funding increases by an average of 2.5 percent pear year compared to the end of MAP-21, this is only slightly more than inflation.) This means that the relative funding burdens on states and localities to bring the nation’s surface transportation system to a state of good repair will continue to grow, as the federal proportion of addressing these needs (that is, the federal “slice of the pie”) continues to shrink.

Third, the FAST Act made no further progress in introducing performance measures and real accountability in federal surface transportation programs. The small, but significant, steps taken in MAP-21 on performance will continue to depend upon the regulatory measures of, and guidance from, the operating entities of U.S. Department of Transportation. For now, there are few consequences, if state and local recipients of federal transportation funding fail to meet the performance metrics mandated by federal law.

Finally, the FAST Act failed to introduce any significant reforms in the deeply fragmented and often politicized transportation planning and capital programming processes of metropolitan and state agencies that are involved in the investment of federal surface transportation funds. At a time of scarce resources it is critically important that decisions about the investment of federal funds reflect national purposes, strategic local goals, and the greatest economic, social, and environmental benefits.

“Wise investments” should be a key goal of national transportation policy, but it is a concept largely absent from the FAST Act, and, while there is much to applaud in the passage of the FAST Act, it is one of many major challenges unaddressed by this legislation.

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