Published: October 19, 2009 08:36 pm      

GUEST COLUMN: Federal rescissions: Eating soup with a fork

If you’ve ever tried to eat soup with a fork, you know what it’s like to work in government: everyone can see the needs, but only a fraction of those needs can be met with available resources.

Case in point with the recent federal rescission of $742 million from the Texas Department of Transportation.

This means that $742 million that Texas was told it could count on to spend on future transportation projects won’t be coming.

This doesn’t mean TxDOT failed to plan, or that Texas had to write a check.

The money simply wasn’t there to be spent.

In fact, using checks as an analogy, a rescission would be like the federal government handing TxDOT a post-dated check to pay off a future debt, then asking for its return before the deposit date arrived because the check would bounce if deposited.

So how does something like this happen?

First, the current federal transportation bill, called SAFTEA-LU, actually had the rescissions written into it in the event of a funding shortfall.

Unfortunately, that shortfall showed up with a vengeance.

Between the bill’s optimistic forecasting of fuel tax receipts over its six-year life, and the economic crisis that drove fuel purchases down to 1940’s levels, the difference in what the bill promised and what it can actually afford is in the tens-of-billions.

Since the money isn’t there to be spent, what hasn’t been spent yet is simply wiped away just like the post-dated check being torn up.

This left many states in a lurch, particularly since the federal government only pays out in reimbursements, meaning states have to spend the money first and have the federal trust fund pay them back.

“Obligated” money, or money dedicated to be spent on a particular project, will continue to be paid so current projects can be completed, and a few others begun.

But if nothing changes in the next 12-18 months, after all the projects with obligated money have broken ground, there will be a slowdown in developing future projects.

In fact, there hasn’t been any money for quite some time. Only emergency transfers from other federal, non-transportation accounts have kept the trust fund from defaulting on its obligations.

It’s too early to tell if any of the delayed projects will be here in the Tyler District.

In the meantime, SAFTEA-LU remains in effect, even though it expired in September.

It was continued on a temporary basis while Congress tends to other business like health care.

This is a mixed blessing.

Federal transportation bills are funded through taxes on per-gallon sales of motor fuels, ie. gasoline and Diesel fuel.

The retail price for each gallon sold includes both federal and state taxes.

The state taxes, about 20 cents per gallon, stay here in Texas and, after helping to pay for public education and other priorities, are used to fund TxDOT at an average rate of 45 cents on the dollar.

The federal taxes, just under 19 cents per gallon, are sent to Washington, D.C. and put into the Federal Highway Trust Fund.

The current federal transportation bill, among other things, dictates how much each state will receive in funding from the trust fund over the four years the bill is active.

This, of course, assumes that the bill is fully funded.

Under SAFTEA-LU, Texas gets back approximately 70 cents for every dollar it sends to Washington.

As I mentioned earlier, the federal money only makes its way back to the states in the form of reimbursements.

Why?

Reimbursements are how the federal government enforces its transportation agenda.

The reimbursement model ensures that states are using the money properly according to the transportation goals outlined in the current federal transportation bill.

If states don’t follow strict guidelines during the design, construction and maintenance of its highways, not to mention other areas such as public transit and environmental processes, the federal government can simply withhold its reimbursements.

The most common form of punitive withholding comes when certain states don’t meet their federal clean air guidelines.

The rescissions enacted on Texas under the current transportation bill have nothing to do with punishment.

But it can certainly feel that way.

In this case, the federal transportation bill overpromised and under-delivered.

In the meantime, since SAFTEA-LU is still in effect, so are its shortfalls, and so are its 70-cents-on-the-dollar returns to Texas.

It’s likely that the debate on the next federal transportation bill will include some discussion of new revenue sources such as tolling, a tax on vehicle-miles-traveled as opposed to taxes on per-gallon sales, or an increase in the federal motor fuels tax rate to help make sure the next federal transportation bill is fully funded.

But that debate is probably a year a way at least, and the bill even further down the road.

This much is certain, however: our needs aren’t going away.

Texas is growing.

East Texas is growing.

Our current roadways aren’t getting any younger, and the tax strategies used to fund their continued operation and expansion aren’t keeping up with today’s demands, let alone tomorrow’s.

We need to be working together, both as a state and a nation, to ensure that all the money spent getting us here isn’t wasted because we didn’t act.

Randy C. Hopmann, P.E., is the District Engineer for the Tyler District of the Texas Department of Transportation.