Congress Trims Road Funding in Stimulus Bill Compromise

By Sean McNally, Senior Reporter

This story appears in the Feb. 16 print edition of Transport Topics.

Congress late last week was poised to pass a $789 billion economic stimulus package, which included less guaranteed funding for roads and bridges than industry officials had hoped for, but it also contained money for diesel engine retrofits and a tax break for buying new equipment.

“It’s a big plus,” Tim Lynch, senior vice president of federation relations and strategic planning for American Trucking Associations, said of the package, “but it could have been better.”

House and Senate negotiators agreed Feb. 11 on a compromise bill that a House transportation committee spokesman said provided “$29 billion for modernizing roads and bridges.”

The House version had dedicated $30 billion for highways and bridges, but the Senate sliced the funding to $27 billion, adding a discretionary fund of $5.5 billion for projects of regional or national significance that could be highways and bridges but also could be for rail or other surface transportation projects.

Full details of that compromise weren’t available at press time.

In a conference committee meeting of House and Senate negotiators, Rep. Jerry Lewis (R-Calif.), the highest-ranking Republican on the Appropriations Committee, criticized the deal’s cutback of guaranteed road funding.

“I can’t understand how this agreement will include highway funding at a level lower than the House level. This bill has been sold as an infrastructure and stimulus bill,” Lewis said Feb. 11. “This agreement includes $1.5 billion for . . . discretionary surface transportation grants. . . . I question why we would establish a new program, when the existing highway program serves all 50 states and can get the money out the door immediately in the areas that can use it.”

James Berard, spokesman for the House Transportation and Infrastructure Committee, said, “We didn’t get everything we wanted, but we got most of it.”

Berard said the bill had a 120-day “use it or lose it” provision, requiring that half the transportation money be allocated in the first four months, up from the 90 days Committee Chairman James Oberstar (D-Minn.) had wanted.

Meanwhile, Transportation Secretary Ray LaHood said there was pent-up demand for road construction across the country.

LaHood told state transportation officials Feb. 11 there were “more than 5,000 highway projects valued at $65 billion” that were ready to go, said Allen Biehler, president of the American Association of State Highway and Transportation Officials.

Lynch said that although the highway funding “is a relatively small percentage of the overall stimulus,” it does “represent one year of the highway program,” to be paid for out of general revenue, rather than the troubled Highway Trust Fund.

“It is unfortunate that all of the rhetoric that had been bantered about as far as the need for increased investment in the nation’s transportation infrastructure didn’t translate into higher dollar figures,” said Rod Nofziger, director of government affairs for the Owner-Operator Independent Drivers Association.

Pushing for quick passage for the stimulus, President Obama visited a road construction site Feb. 11 in the Washington suburb of Springfield, Va.

Obama said the consequences of underinvestment included the failure of the Interstate 35W bridge in Minneapolis on Aug. 1, 2007, as well as “growth held back by streets that can’t handle new business [and] money wasted on fuel that’s burned in worsening traffic.”

Speaking the next day at the Peoria, Ill., headquarters of heavy-equipment maker Caterpillar Inc., Obama said once the plan is passed, Caterpillar may rehire some of the more than 20,000 people it had recently laid off.

Obama said the stimulus would finance “rebuilding crumbling roads and bridges . . . and Caterpillar will be selling the equipment doing the work.”

Congressional aides said they expected the House and Senate to vote on the compromise stimulus bill on Feb. 13.

In the final pared-down measure, several tax cuts aimed at business were reduced.

A Senate proposal to allow companies to convert operating losses into tax refunds was limited to small businesses with less than $5 million in annual revenue.

The bill did include a $5 billion provision for accelerated depreciation of equipment purchases through 2009.

The compromise kept $300 million in funding for Environmental Protection Agency grants to retrofit older diesel engines with emissions-cutting equipment.

Several groups, including ATA and OOIDA, unsuccessfully pushed to increase funding for the program to $1.5 billion.

“We were hoping for quite a bit more, but it’s something,” Nofziger said of the diesel funding.

Frederick Smith, chief executive officer of FedEx Corp., told Bloomberg News that the overall package was “not particularly stimulative,” saying it didn’t do enough to help industry and didn’t properly address the issues with the financial markets.

“The best way” for the government to stimulate business spending, Smith said, “is to allow the buyer to get that money back quicker. Faster capital expensing is smart in the best-case economy.”

Wire services contributed to this report.