On Friday, March 30, 2012, President Obama signed into law H.R. 4281, the "Surface Transportation Extension Act of 2012," which provides funding for programs funded from the Highway Trust Fund (HTF) for the period April 1, 2012, through June 30, 2012; and extends the authority to make expenditures from the HTF for HTF-financed programs through June 30, 2012.

The short term extension became necessary after the Senate passed it's long-term reauthorization with strong bipartisan support but the  Republican-controlled House failed to pass a bill.

The House bill, known as The American Energy and Infrastructure Jobs Act of 2012 (H.R. 7) is the love child of Republican representatives who love fossil fuels and those who hate public transit (and presumably, the people who depend on it for getting around).  The bill is so bad that moderate Republicans can’t bring themselves to vote for it, which is forcing the House leadership to struggle in the shadows to find more votes.

But even if remains nothing more than a proposal, the legislation is causing real problems for state and local transportation officials and public transit authorities that have systems to run and budgets to manage. 

Financing roads, bridges and public transit systems involves long-range planning and multi-year budgets, so authorities have to factor the possibility the bill may pass into their thinking today.

Transit authorities of any size issue bonds to finance projects.  A big part of the credit support for those bonds is the flow of federal funds they count on each year.  Several agencies are reporting that their cost of bond financing has now gone up because of the mere possibility that the House bill could pass.

Finally, even if the House bill does not pass, its proponents can be expected to prevent enactment of the Senate sponsored version of the transportation bill.  That means that uncertainty and indecision will remain, and that means state and local authorities will have to continue to prepare for the worst for as long as a year.

Meanwhile, a survey of media reports and letters and petitions to Congress show overwhelming opposition to the bill from business leaders, state and local transportation officials and city governments. Transit authorities are obviously also heavily against it.

H.R. 7 would end the longstanding guarantee for dedicated funding for public transportation — originally started under President Ronald Reagan almost 30 years ago — placing every public transportation system in immediate peril and leaving millions of riders already faced with service cuts and fare increases out in the cold, according to Transportation for America.

[For a separate report on the Senate version of the transportation bill, click here]

The proposal would take away the 2.86 cents out of the total 18.4 cent motor fuel tax currently directed into the transit account of the Highway Trust Fund and redirect that 2.86 cents into highway spending. Transit would no longer have a guaranteed and protected funding source, instead becoming subject to yearly appropriations fights and the need to find offsets for funding — all while highway spending continues to be guaranteed with protected funds for half a decade at a time.

For Republicans, deregulation is the hallmark of the bill.  “The average federal highway project takes 15 years from concept to completion in the U.S. because of excessive regulations,” said Highways and Transit Subcommittee Chairman John J. Duncan, Jr. (R-TN). “This is far more than any other Nation. This bill will streamline the way we approach infrastructure projects by cutting red tape and reducing federal bureaucracy, all while creating millions of jobs.”

Transportation for America Director, James Corless, said the bill:

  • Unfairly punishes current and would-be users of public transportation by ending all dedicated funding for public transportation, threatening to degrade further the service and state of repair of our transit systems;
  • Leaves Americans with fewer transportation options rather than more, and deeper dependence on oil rather than less;
  • Undermines safety and public health and takes resources away from non-motorized forms of transportation;
  • Does not go far enough to ensure the state of good repair of our bridges, highways, railways and other systems;
  • And undercuts citizens’ ability to raise environmental, health and other concerns about the impact of transportation projects.