The highway trust fund—will rail be included? - NRC News

Railway Track and Structures, Jan, 2003 by Larry Laurello

The year 2003 may be the biggest federal transportation funding year in history. We've asked Ray Chambers, president of the NRC, to provide his forecast on some of the problems and solutions that may make the TEA-21 Reauthorization Act, also called "TEA-3," further the rail construction industry. His report follows:

The highway-transit trust fund expires and must be reauthorized for its next six-year cycle. The airport trust fund and Amtrak must also be reauthorized. The highway-transit fund is now $32 billion a year. Transportation analysts believe $80 billion a year is needed to stay even.

There is bipartisan momentum in the House and Senate to increase gas tax revenues to produce $50 billion a year as a part of TEA-3. Clearly, there will also be heavy conservative opposition to gas tax increases that will be necessary to up highway and transit spending. Other funding being investigated includes low-cost, repayable financing to communities and states. Various interests are trying to increase spending in all categories.

In the House, committee leaders have introduced legislation to pump about $70 billion in low-cost, repayable financing into intercity passenger corridors. These funds would be run through the states. The highway and transit trust funds will be the most competitive. Will railroads, beyond transit, be a part of this? Unfortunately, the railroad industry is fragmented and has no coordinated program. While transit will certainly be in the game, freight railroads are in danger of being left in the cold. This would be a tragedy.

What to do? First, we must establish that freight railroads play a public role and deserve access to federal trust funding. Today, vehicle congestion and heavy freight volumes are overburdening roads and impeding access to terminals. Highway congestion costs our economy an estimated $78 billion annually. By 2020 truck traffic will increase by 200 billion vehicle miles. Highway emissions are a growing contributor to a host of environmental problems. Highway capacity enhancements alone cannot address the issues of accelerating freight transport.

Last May, in testimony before the House Highways and Transit Subcommittee, NRC became the first railroad organization to call for freight transport to have its own major program as a part of TEA-3. At the hearing on highway congestion, Chairman Thomas E. Petri (R-Wis.) took special note of the NRC call for a National Freight Mobility Program and repeated our suggestion that, "more coordinated freight flows through the highway and rail network will go a long way toward increasing highway efficiency and relieving highway congestion."

We propose the TEA-21 Reauthorization Act include a national commitment to boost truck-rail synergies and promote efficient freight flows to meet highway goals. If carefully done, such a process will permit intelligently-designed enhancement of rail capacity, intermodal connectors and specified highway improvements. These more-efficient flows will reduce congestion and highway wear. Additional benefits will include lower highway maintenance costs, a reduction in accidents and lower emissions.

We are confident that a national freight mobility program can be designed to dovetail with existing transportation, clean air and energy goals.

Freight mobility will mean significant enhancements in both the rail and highway network. This raises tricky issues on funding since freight railroads have been largely outside federal trust fund investments. But it is time to tear down the historic barriers to funding. It is time for rail and highway to work together toward a true national freight program.

How should we fund this National Freight Mobility Program? There are many potential sources. The Congestion Mitigation and Air Quality fund should be expanded with widespread and specific eligibility for freight mobility projects- both highway and rail.

The Borders and Corridors program should be expanded into a Freight Corridors Program. There should be a special fund directed to shortline and regional railroads. Qualified freight improvement projects should be fully eligible for repayable financing programs such as TIFIA.

Congressman William Lipinski (D-Ill.) has called for a $5-billion-per-year rail trust financed largely from expanded gasoline tax. He is looking at a major railroad reconstruction program in the Chicago Hub. He is a serous senior legislator. The industry should pay close attention.

Bond financing is another option. The American Association of State Highway and Transportation Officials recently called for $59.5 billion in tax credit bonds to be issued by a Transportation Finance Corporation. This tracks the funding concept being developed in RIDE-21 for rail passenger projects and could be an excellent source of funding for highway-rail freight mobility projects, as well as passenger projects. A Freight Mobility Finance Corporation is a variation on the finance corporation theme. An FMFC funded through a Lipinski rail trust fund and bond financing could revolutionize our national supply chain.