A View from the Top

Federal Agencies Partner to Build Consensus and Facilitate Progress as Budgets Tighten.

Think globally, act locally, is the mantra that has driven the environmental movement for several decades. The concept is simple: what can you do at the local level that will affect the greater good? It’s a concept the Federal Highway Administration (FHWA) is taking to heart as it seeks to support both federal and state transportation projects in meeting efficiency, effectiveness, and deliverability throughout the United States, the District of Columbia, and five U.S. territories (American Samoa, Guam, the Northern Marianas, Puerto Rico, and the Virgin Islands). Striking a balance between easing the movement of people and goods throughout the nation by connecting states with new highways, railways, and ports while keeping pace with steadily decreasing funding at both the local and federal levels is no easy task.

The FHWA’s available funding comes through the Federal Highway Trust Fund (HTF). Created in 1956 to help finance the development of interstate highways and later mass transit projects, the HTF is predominantly funded by a federal fuel and diesel tax. Some additional monies are generated from truck-related taxes on tires and highway usage. The upside of this arrangement is the FHWA has significant input into where transportation projects will get built. The downside, unfortunately, is a major shortfall in available funding.

In 2005, the United States Congress passed the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which established the current five-year, $286.4 billion budget for funding transportation infrastructure. However, with a constant demand for new and improved transportation infrastructure and steadily rising construction material cost, unless Congress takes definitive action, the HTF will not be able to support the current program through 2010 as originally anticipated. In fact, the Federal-Aid Program will be reduced by $16 billion for fiscal year 2009. The funding crisis, believed to be a product of hybrid vehicles requiring less fuel, cars getting better gas mileage, and Congress simply underestimating the need, has been intensified by local interests and earmarked projects, hampering the effective use of federal funds.

Earmarked projects (projects allocated by Congress for development) have resulted in an inequitable distribution of monies from the HTF to states. The distribution of funding based on considerations such as interstate lane-miles and population, falls short as earmarked projects become the primary focus at the local level, obligating states to take up the funding slack until completion, essentially reducing remaining funds for maintenance and development of other necessary infrastructure. Many of these earmarked projects have received intense scrutiny such as Alaska’s Bridge to Nowhere making the biggest headlines with $320 million allocated in three different earmarks to build a bridge from the town of Ketchikan (population 8,900) to the Island of Gravina (population 50) where the airport resides. Many feel that only a few constituents will reap the benefits of these appropriations at the expense of other states that could benefit from wider reaching bridge and roadway repair and maintenance.

Federal Solutions: Making up the Difference

With congestion throughout the United States continuing to grow, costs rising and funding at a premium, the five-year SAFETEA-LU budget did establish some programs supporting public-private partnerships (P3s) to offer more economical and efficient delivery options for transportation projects.

As a way of stimulating use of these newly authorized P3 programs, in 2006, the United States Department of Transportation (USDOT) requested that its state partners submit multi-state applications for designation of interstate segments as “Corridors of the Future.” For example, the Virginia, North Carolina, South Carolina, Georgia, and Florida Departments of Transportation teamed to successfully apply and were selected for funding for a “Corridors of the Future” project. One of only six projects selected throughout the country, the I-95 corridor from Washington D.C. to Miami, Florida, will receive $21 million in funding for “congestion reduction and mobility improvements.” A key component to this award was the willingness of the I-95 corridor partners to include private sector investment in future corridor expansion and improvement projects.

Other discretionary programs within the SAFETEA-LU budget include the Highways for LIFE Technology Partnership Program, introduced in March 2007, to bring about innovation in highway projects through the use of state-of-the-art technologies, elevated performance standards, and new business practices in highway construction. Grants are awarded to partner organizations and companies with the goal of achieving at least one of the following:

• Improve project or work zone safety (including worker or user safety)
  
  
• Reduce construction congestion
  
  
• Accelerate construction or improve quality

It is the intent of the program to enhance existing highway systems or introduce proven innovations from other disciplines that could be adapted to the highway industry.

More recently, to combat the financial shortfall, the FHWA has issued some revisions to the Code of Federal Regulations to allow states and agencies to issue design-build request-for-proposal documents, award long-term concession contracts, and issue notices-to-proceed for preliminary design work prior to the conclusion of the National Environmental Policy Act (NEPA) process. The rule change further levies more support for P3 relationships.

In an August 16, 2007, U.S. Department of Transportation press release, FHWA Administrator, J. Richard Capka, discussed the benefits for tax payers in the rule changes. Capka commented, “Innovative contracting leads to speedier project delivery. The new rule will help to mainstream the approach and reduce the costs for states wishing to enter into public-private partnerships.”

Some say the obvious answer to funding shortfalls would be to eliminate local earmarks while focusing on other options, like partnerships, to complete larger transportation projects benefiting the most tax payers. But it is not that simple as Susan Binder, the FHWA’s Director of the Office of Legislation and Strategic Planning pointed out in a recent interview.

“Unfortunately, the transportation industry goes beyond political boundaries, and your trip from A to Z does not start with a single mile marker,” Binder said. “We need to develop all aspects of the nation’s transportation infrastructure by rethinking in a modern economy and using innovative financing to help us get this done.”

If federal and local transportation agencies are to address the growing demand to reduce congestion through new or enhanced infrastructure, it is clear that a consensus must be reached—or at least sought—when funding transportation projects in the U.S. Public-private partnerships offer one method for reaching that elusive goal.