Construction Spending Depends Heavily on GROW America or ‘Devolution’

by on

In Washington, Congress is trying to find a way to close a shortfall in transportation funding that is estimated to be as high as $15 billion before the Department of Transportation runs out of money for its Highway Trust Fund, which budget analysts have said could happen in August without congressional action.

FREE Download: The Monthly MMI® Report – covering the metals markets of the Construction sector.

Construction lobbying organizations are putting on a full-court press for a new transportation bill before that happens. What’s funny is that competing visions for how to “decentralize” government infrastructure spending are now battling for Congress’s attention and passage on the Hill.

GROW America

Transportation Secretary Anthony Foxx said Thursday that President Obama’s proposed $302 billion “GROW America” transportation bill would give more control over infrastructure funding to cities and local governments. In a blog post on the Transportation Department’s website, Foxx said:

“Today, 65 percent of America’s population live in metropolitan areas — and 95 percent of all the transit miles traveled are traveled there. Metropolitan regions are the engines of our economy,” Foxx wrote. “Yet only eight percent of core federal-aid highway funds are under local control. We need to fix that, and Grow America will.”

Wow, local control. That sounds like something conservative groups have wanted for generations as they have been critical of the federal government and Congress controlling highway spending almost since the Eisenhower Interstate System was created.

The source for transportation funding is revenue that is collected by the federal gas tax. The tax brings in about $34 billion per year and the current level of transportation spending infrastructure advocates want lawmakers to maintain is about $50 billion annually, a pretty serious shortfall. That’s why transportation advocates and lobbyists want the federal gas tax increased.

GROW America “would boost highway and road spending by about 22 percent to $199 billion, boost transit spending to $72 billion, and spend $19 billion on rail programs, for a total of $302 billion over four years,” but it does not address funding other than allowing an unspecified $150 billion one-time business tax and removing the federal ban which prevents states from collecting tolls on interstate highways.

Devolution

The opposing view takes local control far beyond just metropolitan control.

Conservative groups such as the Heritage Foundation believe the funding impasse is an opportunity for Congress to remove itself, entirely, from the process of paying for roads and bridges. Eliminating the federal transportation funding system that has been in place since the creation of the interstate highway system in the 1950s is known in transportation circles as “devolution,” but it would not be as difficult to eliminate as other federal bureaucracies that have grown over the last 50 years.

In lieu of the current gas tax system, wherein money is distributed to states and local governments based on federal formulas, devolution would transfer authority for highways and transit programs back to the states and replace current congressional appropriations with block grants.

A bill that would put devolution into practice has been introduced by Sen. Mike Lee (R-Utah) and Rep. Tom Graves (R-Ga.). The Transportation Empowerment Act would lower the gas tax that currently pays for most federal transportation projects from 18.4 cents per gallon to 3.7 cents in five years in an attempt to gradually eliminate federal funding of transportation projects.

Officials with the Associated General Contractors of America have said that public investments in highway and street construction will decline significantly – which would impact construction spending on the federal, state and local levels nationwide – unless Congress acts before July to either shore up the trust fund or attempt devolution.

Speaking of governmentdownload this FREE report detailing how federal regulations impact the future of supply management.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.