US Transportation Secretary Anthony Foxx sent the Grow America Act to Congress for consideration at the end of April, delivering on his promise to make passing a surface transportation re-authorisation bill before the current law expires in September – and the Highway Trust Fund runs out in August – a priority.
The bill is based on the proposal put forward by President Barack Obama in late February to invest $302 billion – an approximate 37 percent increase over the last transportation re-authorisation law – in the country’s transportation network over a four-year period. Half of those funds will come from “pro-growth business tax reform,” according to the US Department of Transportation (USDOT) website.
In addition to significantly increasing the amount of funds that would be available for investing in transportation infrastructure, another very important provision of the bill is that it would allow states to toll the interstate highway system.
“You’re really talking about a kind of ‘cosmic shift’ in the ability to do viable P3 [public-private partnership] projects and generally fund transportation – if it passes,” says John Schmidt, a partner in law firm Mayer Brown’s infrastructure practice.
His colleague, David Narefsky, also a partner in Mayer Brown’s infrastructure practice, agrees: “It’s really encouraging to see the administration coming forward with their proposal to allow – not require of course – but allow states to toll existing interstates as a way of raising…desperately-needed money for transportation improvements and looking for solutions that are more palatable than a gas tax increase, which seems completely dead on arrival.”
In addition to allow tolling of the Interstate Highway System, the bill also aims at creating more efficient project delivery, promoting innovative financing, and investing in the US freight system.
Over the four-year period, the Grow America Act, if enacted, would allocate:
– $199 billion to the federal aid highway programme – which is $9 billion more per year than under current law;
– $92.1 billion to the National Highway Performance Programme to repair and reduce traffic congestion on the interstate highway system;
– $13.4 billion to the Fix-it-First Initiative, a portion of which will be used to improve road conditions on the interstate and structurally-deficient interstate bridges;
– $10.1 billion to the Highway Safety Improvement Programme; and
– $72 billion to public transit – a 70 percent increase in transit funding under the current law, MAP-21 [Moving Ahead for Progress in the 21st Century Act].
In addition to the funds the government expects to generate through tax reform, the bill is also intended to promote innovative financing by: expanding the Transportation Infrastructure Finance and Innovation Act (TIFIA) programme; strengthening the Railroad Rehabilitation and Improvement Financing programme; raising the $15 billion cap on private activity bonds (PAB) to $19 billion; and allocating $5 billion to the Transportation Investment Generating Economic Recovery (TIGER) grant programme.
Other provisions in the draft legislation include the establishment of an interagency infrastructure permitting improvement centre; implementing concurrent rather than sequential reviews; improving transparency and accountability; and implementing best practices – all with the aim of improving project delivery.
“Now of course, this is a proposal, but just having the President of the United States say it, is a significant event,” Schmidt notes, referring to the $302 billion President Obama allocated to transportation when he submitted the budget for fiscal year 2015.
Foxx has said that failing to act before the Highway Trust Fund runs out – which may occur as soon as August – “is unacceptable and unaffordable”.
“The history of Congress passing new multi-year legislation before the current mutli-year legislation expires is not a particularly positive one,” Narefsky observes. “It may often take a couple of go-arounds here but you’ve got to get some ideas out and get people to start thinking about them,” he adds, focusing on the positive.