What Happened?
The U.S. Senate is considering a new bill that would set aside some federal transportation funding for states to be redistributed directly to localities on a competitive basis. The legislation allocates $5 billion annually to local-level projects, accelerating the time it takes for federal funding to reach cities.
Goal
The Innovation in Surface Transportation Act - Senate Bill 2891 – calls for 10 percent of the annual federal surface transportation funding to be set aside for local governments specifically. The $5 billion will be given split up between state governments evenly, and then awarded to local governments, transit agencies and regional planning agencies through a competitive process.
Often state governments are awarded federal funding and the money never finds its way down to municipal agencies and local governments. The Innovation Surface Transportation Act was drafted in response to many municipalities struggling to gather enough funding to complete basic transit projects such as sidewalk construction, bike lane additions or other transit initiatives. The bill is designed to direct federal funds to localities, bypassing state projects, to ensure local-level projects receive assistance.
The Need
According to a recent report from the Pew Charitable Trust the average annual spending on highway and transit projects nationwide was $407 billion from 2007 to 2011. Of that total:
- 40 percent ($82 billion) came from the states
- 36 percent ($74 billion) came from localities
- 25 percent ($51 billion) came from the federal government
Between 2002 and 2011, overall spending on surface transportation declined by $27 billion, or 12 percent. States reported a 20 percent decline in spending overall, down $20 billion. One major cause for the decline in transit funding is the gas tax has not generated enough revenue to keep pace with the increased cost of construction. Federal gas tax revenue dropped by 31 percent between 2002 and 2012, while state revenue dropped by 19 percent.
The Congressional Budget Office expects trust fund shortfalls will reach $162 billion over the next 10 years. Nearly all federal funding to states and localities for transit projects are provided as grants or reimbursements. Trust fund shortfalls can delay or reduce reimbursements to states and localities, further hampering transit project growth. The Federal Highway Administration estimates an additional $13 billion annually must be spent at all levels of government just to maintain current highway and transit systems.
Private Sector Pressure
The Innovation in Surface Transportation Act was birthed from demand for more federal transit dollars by local governments as well as small transit-oriented businesses. About 1,500 representatives from small businesses, manufacturing and transportation agencies recently met with Congressional leaders to discuss how transportation and infrastructure funding is disseminated across the country. The meetings focused on new jobs, economic growth and increased competitiveness at the local level, the Chicago Tribune reported.
Leaders from the National Association of Manufacturers, the U.S. Chamber of Commerce’s America’s Small Business Summit and the Transportation Construction Coalition pushed Congress to consider the Innovation in Surface Transportation Act, as well as a multi-year surface transportation authorization. The groups argued that making federal funding readily available at the local level will strengthen the competitiveness of the U.S. economy and improve the quality of life for residents.
New Roads to Efficiency
Gov1 has reported on federal funding opportunities for transit projects, as well as new technology to increase efficiency.