Streetsblog Los Angeles

Gov. Ed Rendell (D-PA) and Los Angeles Mayor Antonio Villaraigosa (D), two of the nation's best-known advocates for greater investment in the built environment, today joined several House Democrats in calling for federal action on a National Infrastructure Bank (NIB) -- even as questions about how the bank's scope, and Congress' resistance to raising sustained new transport funding, continued to dog the debate.

Rendell and Villaraigosa came to the Capitol for a visit to the House Ways and Means Committee's revenue panel, which faces the challenging task of finding a workable financing mechanism for long-term federal transportation legislation.

Villaraigosa used his high-profile push for federal assistance with his city's "30/10" transit plan, which would expedite construction of 13 rail and rapid bus projects using proceeds from a voter-approved sales tax, to urge lawmakers' support for an NIB.

"We're not only arguing for infrastructure investment on the federal level," he said. "We're saying ... at a time of spiraling deficits, we've got to encourage local governments to put up their own money. We have done that [in L.A.]."

Rendell, who has used his role as co-chairman of the advocacy group Building America's Future to amass support for an NIB, quoted GOP Sen. Jim Inhofe's (OK) support for federal transport spending in a bid to depict infrastructure as a uniquely bipartisan issue.

"The American people are way ahead of us," Rendell told Ways and Means members. "Infrastructure is something they can touch, they can see, they can experience ... This is easier, in terms of public perception, than anybody thinks."

But even as the duo focused on the NIB -- which Rendell and Rep. Rosa DeLauro (D-CT) agreed should be placed outside the U.S. DOT, counter to the White House's proposal -- the specter of the federal gas tax hung over the room. One day after conservatives began using anti-gas tax arguments in a bid to derail the new Senate climate bill, lawmakers prodded Rendell and Villaraigosa to share their views on the subject.

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Transportation groups of all shapes and sizes have been concerned that the Senate’s forthcoming climate bill could set back the prospects for a federal transportation measure by imposing extra carbon fees
on Big Oil — which would then be passed on to customers at the pump,
effectively increasing the gas tax for purposes other than funding new
infrastructure projects.

But it looks like there’s no need to worry. The Obama administration yesterday gave a statement to the Wall Street Journal
that sought to lock down any attempt to associate the Senate climate
plan with higher fuel charges: “The Senators don’t support a gas tax,
and neither does the White House."

A spokesman for Sen. Lindsey Graham (R-SC), the climate
proposal’s sole GOP sponsor, also denied that the bill would include a
gas tax. The bulk of the back-and-forth is a semantic battle that
reflects how politically poisonous a gas tax increase remains for both
parties in Washington.

But it may also suggest that Graham
and his co-authors are moving away from the carbon fee they had
originally conceived. Graham described the idea to The Hill
last month as "an assessment on what they do in the carbon world. They
are creating a carbon product, they are going to pay a fee." The cost
of such a fee, he added at the time, would be partially passed on to
customers at the pump.

On the whole, the fact that the
White House is already denying the existence of a gas tax more than a
week before the climate bill is set to emerge may not bode well for its
future (not to mention that of the still-stalled six-year transportation legislation).

"So Much For Kerry-Graham-Lieberman Global Warming Gas Tax?" the press office of Sen. Jim Inhofe (R-OK) tweeted.

As Tax Day prompts a rush of political rallies and media coverage, it’s worth looking back at the history of the federal levy that helps pay for transportation projects: the gas tax.

Most
Americans who follow infrastructure can cite the year of the last
federal gas-tax increase (1993) off the top of their heads, but how did
the tax grow to its current, non-inflation-adjusted level of 18.3 cents
per gallon? A helpful table from the Tax Foundation tells the story.

The
two most recent gas-tax hikes came in 1993 (a 4.3-cent per gallon
increase) and 1990 (a nickel per gallon increase). Congress approved
both hikes using "reconciliation," the filibuster-proof legislative
tactic that became something of a household name this year when Democrats used it to pass their health care bill.

The
gas tax was also raised in 1982 by then-President Reagan, a fact cited
often by House transportation committee chairman Jim Oberstar (D-MN)
and others who seek to puncture the current bipartisan resistance
to increasing fuel levies. Reagan had vowed just months before pursuing
the tax increase that gasoline fees would not rise "unless there’s a
palace coup and I’m overtaken or overthrown," but it didn’t take long
for him to change his mind, as the Tax Analysts newsletter reported:

Despite
the absence of a coup, Reagan acknowledged two weeks later that a gas
"user fee" was under discussion. And two weeks after that he announced
his plan to ask the lame-duck
Congress to increase the gas tax and earmark the funds for highways,
bridges, and mass transit.

Support in Congress was strong and bipartisan.

When the gas-tax increases passed during the Reagan, Clinton, and first
Bush administrations are compared with the current Congress’ predicament, two interesting patterns emerge.

The
first: All three hikes approved in the past 30 years had to be steered
past Senate GOP filibusters or Democratic challenges. In 1993,
then-Vice President Al Gore had to cast the deciding Senate vote on
raising gas taxes. In 1990, as Tax Analysts notes,
Sens. Max Baucus (D-MT) — now chairman of the influential Finance
Committee — and Kent Conrad (D-ND) both took aim at the proposed tax
increase. And in 1982, then-Sen. Jesse Helms (R-NC) led a conservative rebellion against a gas-tax increase backed by Reagan as well as less anti-tax GOP leaders.

The
second: All three hikes were approved separately from the six-year
federal transportation legislation that sets national policy for roads,
bridges, transit, and bike-ped infrastructure. The situation faced by
lawmakers this year, in which a gas-tax increase is necessary to
generate sufficient financing for a long-term federal bill, is to a
certain degree unprecedented.

As part of the compromise allowing Governor Schwarzenegger to eliminate the gas tax and replace with with an excise tax (ABX8 6 and ABX8 9), monies collected from the diesel tax are being used to partially replace the funds being removed from the State Transit Assistance Fund (STA). Despite the removal of the transit funding mechanisms in the gas tax, these bills ensure that transit operators have steady funding for operations by using the sales tax on diesel to replenish the State Transit Assistance Fund (STA).

In L.A. County, that means that, for at least one year, that $115 million will be coming to help aide Metro and other regional operators during this time of major fare hikes and service cuts. For L.A. Metro, the agency that already has an increase on the books for this July, the nearly $100 million it will receive, $99.8 million to be exact, will go a long way in relieving the quarter of a billion structural deficit on the books for the fiscal year beginning July 1.

Some advocates are already looking at the arrival of these state funds as reason to hold off or cancel this summer's fare hikes. Esperanza Martinez, from the Bus Rider's Union, argues that

It should definitley go to stop the proposed 2010 fare increase, protect the 145,000 hours of bus service proposed to be cut in the 2010 budget. The proposed 2010 fare increase will bring about $24 million, the MTA could stop it with the $115 in STA funds, clearly this would help protect many of the jobs that MTA is talking about cutting.

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As Sens. John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) prepare to unveil a new climate change measure that includes
a tax on motor fuels, eight of their colleagues are urging the trio not
to forget local transportation planning — and warning that any new gas
tax should be used to help pay for a new federal infrastructure bill,
not redirected for other purposes.

In a letter sent today to Kerry, Graham, and Lieberman, the eight Senate sponsors of a proposal
to guarantee clean transport a share of the revenue generated by a
cap-and-trade system for cutting emissions asked that their bill’s core
mission be preserved in the upper chamber’s new "tripartisan" climate bill.

The
Senate letter follows a similar missive sent to Kerry, Graham, and
Lieberman last week by 27 groups representing road, transit, bicycling,
engineering, and labor interests.

Those groups warned the
trio bluntly that using proceeds from a new fuel tax for purposes other
than funding new transportation projects — such as rebating the money
back to consumers, as Graham suggested last month — would exacerbate the already significant funding crisis facing federal infrastructure policymakers.

But the hesitation of Kerry, Graham, and Lieberman’s
colleagues ultimately could carry the most weight, given that the
trio’s forthcoming climate bill would need to win backing from nearly
every Democratic senator in order to overcome a GOP filibuster.

"We
are concerned that, in addition to realizing insufficient
transportation emissions reductions, your legislation may not invest
revenue generated from the transportation sector into our crumbling
infrastructure," the group of eight wrote.

The letter was spearheaded by Sens. Tom Carper (D-DE) and Arlen Specter (D-PA), lead authors of the so-called "CLEAN TEA"
bill, and signed by Sens. Kirsten Gillibrand (D-NY), Frank Lautenberg
(D-NJ), Ben Cardin (D-MD), Bill Nelson (D-FL), Michael Bennet (D-CO),
and Jeff Merkley (D-OR).

Their letter notes that the U.S. DOT
estimates that $30 billion more per year is needed simply to maintain
the nation’s existing transport infrastructure. "Improving our
infrastructure to provide for the maximum economic
benefit," they continued, "will require an additional investment of $75
billion per year. If your legislation raises revenue from the
transportation sector but does not reinvest funds into infrastructure,
our efforts to enact a surface transportation authorization bill in the
near future will be constrained." 

More than three dozen
transportation reform and environmental groups followed today with a
third letter making similar points. An excerpt from that letter follows
after the jump, along with the full transportation industry letter sent
last week.

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House infrastructure committee chairman Jim Oberstar (D-MN), facing steep political odds
in his push to pass a new six-year federal transportation bill this
year, has begun to pitch an outside-the-box solution to the financing
shortfall that is still stalling congressional action: Treasury bonds.

Oberstar’s
proposal would plug the hole in anticipated highway trust fund revenue
for the next transport bill with top-rated Treasury debt securities.
Those bonds, the Minnesotan explained on Friday, would "be repaid with
revenues from the highway trust fund out into the future. And we would delay the repayment for the first perhaps four years, giving the economy time to recover."

In
order to repay the Treasury for its up-front bond issue, Congress would
ultimately need to raise the gas tax — a step lawmakers have been
unwilling to take since 1993, and one that the White House has ruled
out for the time being.

"The idea of waiting three or
four years for the economy to recover would be an appealing part of"
the idea, Iowa state DOT chief Nancy Richardson told Oberstar when he
sought her reaction to the plan at a Friday House hearing. "[That]
would allow it to appeal to some of the dissenters in
terms of increasing funding."

Delaying for
three or four years, however, also would assume that future Congresses
would be more open to voting on a gas-tax hike that few lawmakers are
eager to debate, even in rosy economic times. The evidence of success
for such kick-the-can-down-the-road moves is few and far between: both
parties, for example, have habitually voted to postpone previously scheduled cuts in Medicare reimbursement rates for doctors rather than fix the long-term formula.

In addition, the growing production boom in semi- and fully electric cars casts doubt
on the gas tax’s ability to raise sustainable revenue for
transportation going forward. Depending on how popular highly
fuel-efficient cars become by the time Congress considers a future gas
tax change, the cents-per-gallon increase needed to repay the Treasury
may be much higher than any current predictions.

The gas-tax bonding plan has a third potential hiccup.

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The passage of health care legislation this week, while elating Democrats, has proven an equally potent motivator for conservatives advocates of states' rights. Appearing on Sean Hannity's Fox News show last night, Sen. Jim DeMint (R-SC) was asked about the viability of the legal challenge to the health bill filed by 14 mostly conservative attorneys general.

DeMint's reply included an interesting shout-out to transportation policy (emphasis mine):

[I]n fact, I think the states may be our only hope to stop this rampage of government takeovers at the federal level. If we had more states push back not only on health care, but on education, opening up their own energy supplies, on getting back their own transportation dollars, there are many things this federal government is doing that are outside the realm of the enumerated powers of the constitution.

That casual reference to state "transportation dollars" masks a long-simmering debate over the federal gas tax. For 17 years, Congress has declined to raise the tax (now 18.3 cents per gallon) or index it to inflation, despite polling that shows most of the public already thinks the latter move is settled law.

But lawmakers have shown an indefatigable will to fight over the dwindling gas tax revenues that the government does collect. Conservatives often push for states to get the maximum amount of their gas-tax dollars directed back home in the form of guaranteed highway spending -- a boon to states with more drivers and newer roads, but a setback for states with older infrastructure and denser cities that diminish the need for auto use.

This conflict is known as the "donor-donee" issue. It does not split states along near ideological lines: California is the federal road program's No. 1 "donor," with "donee" states concentrated in the northeast and mountain west, according to the lobbying group Coalition for Donor State Equity.

Nonetheless, DeMint's invocation of transportation funding as a battleground for states'-rights advocates reflects an active rhetorical current on the right.

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