September 2005

Domestic Policy Watch: SAFETEA-LU and the Road Ahead

By W. Paul Farmer, AICP
APA Executive Director

This article is one in a series that will examine the federal domestic agenda. As planners, we have views about issues of public policy. APA's adopted policies may be found at www.planning.org/policyguides. The purpose of this series is to add to the discourse about issues of great importance. These are not partisan issues. Rather, they are fundamental issues that will influence our communities for decades.

At long last, Congress and the Bush administration got together on a long-term reauthorization of the nation's surface transportation law. Last month, after more than two years and 12 extensions of TEA-21, President Bush signed the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA-LU). The new law provides $286.4 billion in transportation spending through 2009.

In most respects, the new law represents continuity with the landmark changes in federal policy ushered in by ISTEA and maintained in TEA-21. The basic structure of the federal programs remains intact. Certainly, SAFETEA-LU provides badly needed additional resources for planning and transportation projects. Yet, the measure also missed some important opportunities for reform, and in many ways the future appears less certain than ever.

First, the good news: After an early, ill-fated effort to gut Transportation Enhancements by making the spending optional, Congress recognized the broad, bipartisan support for this program. It remains a cornerstone of the new law. Similarly, almost all the key programs from TEA-21 were renewed.

Transit, too, ultimately fared well after weathering early threats. Transit will receive $52.6 billion from SAFETEA-LU, and — just as important — the ratio between highway and transit spending is roughly unchanged. The law also contains a new program known as Small Starts to fund smaller transit projects costing less than $250 million, such as streetcars, trolleys, and bus rapid transit.

Planning emerged with an important victory. The funding set aside for Metropolitan Planning Organizations was increased from 1 percent to 1.25 percent. These funds provide vital resources for transportation planning. APA and others had urged an increase to 1.5 percent, but given the overall fiscal constraints that largely defined the debate, any gain is a significant win.

Some useful changes were made to the planning process that should prove helpful to planners and their communities. Transportation planners must now consult and consider other state plans — including habitat and other environmental plans — when making investment decisions. This should help encourage a more comprehensive outlook and less conflict as projects move from plans to reality. The list of factors that planners must consider now includes safety and security and states are required to develop transportation safety plans. The law also specifically acknowledges the importance of coordinating land use and transportation.

Public participation in the transportation process also gets a boost in SAFETEA-LU. The law provides for expanded outreach and public involvement, including new requirements related to scenario planning and use of the Internet. The bill certainly could have gone further, but the new provisions coupled with expanded planning resources should spur innovative citizen engagement and ultimately lead to plans that better reflect community vision and values.

The bill contains advances for pedestrian and bicyclists through the creation of a federal Safe Routes to School program. Funded at $612 million, the initiative provides new resources for a variety of pedestrian, streetscape, and safety improvements. Some of the law's other new safety programs give planners an avenue to pursue enhancements that lead to streets that serve all users, not just automobiles.

Of course, not all the news is as promising. Congress missed a good opportunity to deal with the stormwater impacts of transportation projects. Senator John Warner (R-Va.), APA's 2004 Legislator of the Year, authored a provision in the Senate's version of SAFETEA that would have set aside 2 percent of a state's Surface Transportation Program dollars for stormwater mitigation. Unfortunately, this advance was dropped in the final compromise.

Lawmakers missed another major opportunity by refusing to further advance funding flexibility and local empowerment. APA and many partner organizations pushed Congress to consider so-called suballocation of more federal transportation spending. This approach would provide a greater share of funding directly to local communities and metropolitan areas. By insisting on routing most federal dollars through the states, Congress ignores the fact that metropolitan areas face the most significant mobility challenges.

The current process leads to inefficiencies, reduced flexibility, and decisions that too often ignore local priorities and needs. As I've written before, much attention is paid to the "donor state" issue, while equity concerns for metropolitan regions is largely ignored. Future reauthorizations should do a better job of promoting funding fairness that leads to more choices for taxpayers.

Although TEA-21's basic programs were reauthorized, many programs will see structural or procedural changes that threaten to undermine their effectiveness. For example, the Jobs Access and Reverse Commute (JARC) program provided discretionary grants under TEA-21, but SAFETEA-LU allocates JARC funding based on a formula. The result is likely to spread limited dollars too thinly in many places to make a real impact. Similarly, new eligibilities in the Congestion Mitigation and Air Quality (CMAQ) program serve not to improve flexibility but rather to divert already scarce resources to combat air pollution.

Perhaps the most troubling aspect of the new law is the explosion of project earmarks. TEA-21 contained 1,849 earmarks, but SAFETEA-LU has 5,145, a nearly three-fold increase. The desire among members of Congress to secure funding for specific local projects is obvious and, in some ways, understandable. However, the dramatic increase in the number of earmarks drains vital resources away from core programs that provide the greatest flexibility and allow local officials to implement the full vision outlined in plans.

Earmarks in SAFETEA-LU amount to $14.8 billion. However, the amount of funding siphoned off by earmarks is even greater than most realize. Usually, earmark funding is insufficient to complete a project. States and municipalities must use other core program dollars to make up the difference.

Given the relatively limited scope of policy changes in this reauthorization, one might wonder why the process took so long. The short answer is money. For more than two years, most leaders in Congress wanted to increase spending for transportation but couldn't find the revenue or the political will to raise taxes. Of course, the funding situation was further complicated by the demands of many states to increase the minimum rate of return and by administration officials to scale back spending.

As we look toward the next reauthorization in 2009, funding issues are likely to loom larger than ever. In fact, we may be entering a period of deeply rooted challenges to the federal transportation aid system. Part of the genius of ISTEA and TEA-21 was the concept of flexible yet guaranteed funding. Transportation aid was guaranteed because the revenue was derived directly from gasoline taxes paid into a trust fund that was protected from other spending.

Throughout the most of the TEA-21 period, this system produced annual surpluses beyond funding targets established in the law. However, as TEA-21 wound down and debate over SAFETEA began in earnest, the situation changed. A slowing economy, instability in the Middle East, and higher gas prices caused gas tax revenue to slow. Much of the difficulty in passing SAFETEA-LU was related to finding ways to boost trust fund balances without raising the gas tax.

At this writing, much of the nation still sees gas prices near or above $3 per gallon. Some of this increase is related to supply chain disruptions in the wake of Hurricane Katrina. However, energy experts agree that thanks to a variety of factors, including explosive growth in China and India, we are likely at the end of the era of cheap oil. Prices are simply unlikely to drop dramatically.

This systemic increase in gasoline prices makes raising gas taxes even more politically perilous. The problem isn't just a federal one. Most states also rely on gas taxes for transportation funding. These trust funds present their own set of challenges. State gas tax rates have lagged far behind the growth in inflation. Too often, the funds are restricted to highway spending, leaving a transit funding gap that is difficult to fill. And, in some states, transportation trust funds have been convenient plugs for budget gaps in recent years. These obstacles, combined with the political difficulty of raising taxes, make state trust funds alone unlikely to solve the funding problem.

All these factors add up to a dim fiscal future for transportation projects. About the only thing that is growing is citizen demand for new projects, increased efficiency, and improved maintenance. A portent can be glimpsed in SAFETEA-LU provisions for so-called innovative finance.

These new provisions are aimed at finding non-federal trust fund mechanisms for closing the gap between needed investment and available resources. SAFETEA-LU makes a variety of changes intended to promote tolling and continues the Value Pricing Pilot Program with funding at $59 million. This program supports the implementation of variable pricing programs nationwide with one-third of the funding set aside for non-toll projects. The Express Lanes Demonstration Program is among the bill's new initiatives. It allows for up to 15 demonstration projects that permit tolling to manage high levels of congestion mostly through high occupancy toll lanes.

The new law seeks to promote new private sector investment in transportation projects by expanding authority for private activity bonds for highway and freight facilities. In addition to tolling and bonds, SAFETEA-LU establishes a new revolving loan fund. In the future, we're also likely to see more states follow the lead of Texas and Virginia by experimenting with privately funded public infrastructure.

These methods are not necessarily bad for the system, but they do raise some difficult questions. Some experts believe that "demand pricing" for special lanes is a key to solving both congestion and infrastructure funding woes. But others worry about the rise of "Lexus lanes" that place what amounts to a regressive tax on low- and moderate-income families. Although supportive of tolling in general, many environmentalists worry that tolls might become tied exclusively to new construction or highway maintenance rather than new transit or enhancement projects. A further concern is whether existing planning and environmental reviews would apply to privately funded roads.

A 316-mile stretch of Texas running from north of Dallas to east of San Antonio may offer some clues. The "Trans-Texas Corridor 35" is the first part of a massive, $184 billion transportation plan that relies on tolls and the private sector. Private companies would contract with the state to build the corridor and would receive the toll revenue in exchange.

Advocates of the Trans-Texas Corridor see it as the next generation of the interstate highway system and the evolution of infrastructure financing. Others see it as a potential disaster that will lead to more sprawl, less public involvement, and serious environmental problems. APA's 2006 National Planning Conference in San Antonio will offer a first-hand look at the project and its implications for Texas and the rest of the nation.

After the long debate over SAFETEA-LU, it is tempting to consider federal transportation policy to be a settled issue, at least until 2009. That would be a mistake. The real value of SAFETEA-LU will be realized, or lost, in its implementation. We must be as engaged and vigilant in making the law work as we were in getting it enacted.

Here are five things we — both as an organization and as individual citizens — must commit to doing now that SAFETEA-LU is law:

Get involved in the regulatory process

The many new programs and policy changes that affect existing programs contained in SAFETEA-LU must now be put into practice by the U.S. Department of Transportation, Federal Highway Administration, and Federal Transit Administration. In the coming months, planners can expect to see a wide array of new rules and guidance on SAFETEA-LU programs and processes We must work to ensure that not only are planners aware of important changes but also that DOT is aware of our interests and concerns. Initial guidance on some planning issues already has been issued with more on the way.

APA is committed to helping shape new rules that govern planning, transit, and other transportation programs. Developments in the regulatory process will be closely covered on our website and in our policy products, such as our biweekly electronic newsletter From Washington. As we formulate our comments, I urge you to participate in the process by letting us know your thoughts and concerns. APA's website will post all planning-related draft regulations and you can send your comments to us at govtaffairs@planning.org.

Learn about new programs, provisions, and resources

Changes in the federal transportation program mean that there may be new avenues for planners and citizens to improve their communities. The real value of SAFETEA-LU is in the outcomes for people and neighborhoods. To get the best possible outcomes, we need to really understand how the program works and where we can turn for resources to turn our plans into reality.

APA has drafted an overview of key provisions in the new law and plans to develop more detailed analyses of important programs. Additionally, APA is partnering with our allies at the Surface Transportation Policy Project on a forthcoming guidebook to SAFETEA-LU, and we are planning to hold a variety of workshops and conference sessions on the subject.

Pressure state DOTs and MPOs to innovate

Transportation leaders in DOTs and MPOs now have a chance to use expanded federal dollars and new program resources to improve state and regional transportation planning. Business as usual isn't sufficient; we must work constantly to encourage them to innovate. Citizens want results, and while the challenge to transportation officials is great, there is an equally great opportunity to improve the way we plan, build, and manage our transportation system.

Look for local reform opportunities and help realize them

It is easy to believe that transportation solutions, or problems, begin and end with decisions made in Washington. SAFETEA-LU is important, but in recent years, local citizens and communities choosing new paths made some of the most exciting advances. As advocates for progressive transportation policy, we must work to support state and local initiatives for things like context sensitive solutions, transit oriented development, and "complete streets" policies for pedestrians and bicyclists.

Planners are uniquely situated to help realize local and state reform. We can bring special expertise in the practice of transportation policy along with proven techniques for citizen engagement. New coalitions are sprouting across the nation to improve transportation and we can be an integral part of this movement.

Follow the money

Accountability must be our watchword. The funding flexibility inherent in federal programs is vital, but we must ensure that fiscal constraints don't unduly tilt the playing field toward old ways of doing business. We must monitor closely how scarce resources are allocated and we must advocate for a fair share of these resources to flow to worthy transit and enhancement projects.

Reauthorization of SAFETEA-LU in 2009 will undoubtedly present many new challenges but these challenges may also prompt deeper reform. When ISTEA was adopted in 1991, it was clear to politicians on both sides of the aisle that the old interstate-focused system had to change.

The passage of ISTEA was a landmark in recent domestic policy history. The central ISTEA concepts of intermodalism, flexibility, and choice remain vital, but perhaps "TEA-4" will do more than extend existing policy. Perhaps planners and citizens can lead an effort to build on the legacy of ISTEA by achieving further, fundamental reform that uses transportation to build communities of lasting value.

We can do this through effective implementation of SAFETEA-LU, ongoing advocacy, and careful thinking about new directions in transportation policy. 2009 may seem far in the future, but now is the time for APA members to begin thinking about and promoting a new vision for transportation and the communities it serves.