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Hyman and Hanka: Governments Need Spending Flexibility

In Washington, D.C., large pieces of legislation may mean more funding for local communities, but they also tend to result in greater federal control. The mammoth bill reauthorizing federal surface transportation programs is no exception to this rule.

[IMGCAP(1)]This year, cities, counties, townships and other units of local government are bracing for a large-scale overhaul of federal transportation programs. Will this new bill simplify or will it present a whole host of new “alphabet soup— programs to navigate? Washington policymakers often publicly ruminate about the needs of local communities, but who determines exactly what they need? Local communities — as a major stakeholder of federal transportation funding — genuinely need the added resources provided by this legislation, but they also deserve greater freedom to apply these resources to their individual situations.

The Ferguson Group specializes in representing municipal clients — from rural Oregon to urban New York — all with unique transportation interests. These interests are exceptionally diverse, running the gamut from keeping livestock off local roadways to improving transit systems that annually serve millions of riders. What these communities have in common is that they all look to Washington for financial assistance to cover a portion of the cost of their transportation systems.

In 1956, Congress created a well-defined national highway system, and in the years since funds have been returned to communities to help meet transportation needs. An excise tax was imposed on gasoline, which continues to this day. Tax revenue is collected at gas pumps from across the country and sent to Washington, where it is deposited into a Highway Trust Fund to be used only for transportation purposes. The revenue that accrues in the trust fund is divided at the direction of Congress among various programs and then sent back to state and local governments to improve transportation infrastructure.

The parameters for how these various programs will function are spelled out in the multiyear surface transportation bill. For example, Section 5307 Urbanized Area Formula Program funds are distributed by formula to transit agencies for capital expenses, whereas TCSP funds are awarded on a competitive basis to construct bicycle and pedestrian trails. Each of the 108 federal programs has a defined purpose and a specific mode of transportation for which funds can be spent.

When, as now, it is time for Congress to draft a new version of the surface transportation bill, interest groups from around the country storm Capitol Hill to preserve funding for the narrow programs that have accumulated over decades. Of course, this participation has its downsides. Almost reflexively the emphasis is placed on maintaining grant programs that are on the books, rather than on rethinking overall policy and eliminating programs that are no longer relevant.

As Congress has added programs to the pie, the slices have shrunk. Thus, many programs are pitted against each other for scarce federal dollars — highways against transit, bikeways against grade crossings. In the end, Congress provides local communities with a “Chinese menu— that actually limits local options as much as they offer them.

The program-specific nature of transportation spending has become obsolete. Limited roadway connectivity was the problem faced by nearly all communities in the 1950s when our national highway system was created. Therefore, directing the majority of federal funding to roadway improvement programs was the best approach at that time to improving our nation’s transportation infrastructure as a whole. While some communities still struggle to fund roadway construction, others have few roadway needs.

Communities should not have to put money into roads just because road money is the only funding available. Rural communities should not have to undertake construction of an intermodal facility just because the federal government calculates that they qualify for a rural transit grant. These needs are best understood and solutions are best defined at the local level.

Our current system of distributing funding through mode and project-type specific programs compels local governments to take a piecemeal approach to improve their infrastructure. Communities should not have to plan for projects based on what pots of funding are available to them. Instead of being directed to use federal funding for highways or transit or ferries, local governments should have the flexibility to use federal funding for comprehensive transportation purposes. These transportation needs should be defined at the local level and based on local needs.

Flexibility, however, doesn’t mean escaping accountability. Funding decisions should adhere to, and be held accountable for, meeting national priorities such as: ensuring the safety of and enhancing the performance of existing systems, ensuring long-term economic growth, improving mobility, reducing impacts on the environment, and responsibly managing the grant money. In allocating funding, the federal or state role should be to keep an eye on the big picture, ensuring that all of these local pieces fit together and meet broader goals of mobility and connectivity.

Changes aimed at consolidating programs as well as a variety of other reforms are in the 775-page bill being drafted in the House. That is a good sign.

It is our recommendation that certain principles be applied to the reauthorization legislation, specifically that the bill flexibly award federal dollars to local governments for general transportation purposes and be based on the comprehensive needs of the local transportation system. Local governments need to have the decision-making ability to improve their transportation systems as they see fit. It’s their community. It should be their choice.

Melissa Hyman and William Hanka are partners in the Ferguson Group, a Washington, D.C., lobbying firm with a transportation practice.