#InvestNow: The Cost of Short-Term Funding Fixes
In August, Voices for Public Transit covered a webinar with U.S. Department of Transportation Secretary Anthony Foxx where he discussed what it will take to evolve our nation’s transportation system into the truly interconnected, 21st-century system we need.
Over the coming weeks, Voices for Public Transit will be taking a closer look at why we believe it’s important to Invest Now in long-term public transportation funding. This series will provide specific examples of why Congress needs to set public transportation on a new and better course.
We encourage you to share these blogs with others—and to highlight them on social media with the hashtag #InvestNow.
Our first topic in this series? What is the cost of Congress’s short-term funding fixes. In practical terms, because Congress has not been willing to pass comprehensive, long-term transportation funding in decades, American public transportation has been living paycheck to paycheck. Lack of funding certainty means states cannot confidently plan for the future. When funding is only guaranteed for a few months at a time, the risk of committing to new projects that require years of development can become too great—or can ultimately increase the cost of projects well beyond original projections.
This means that our local public transportation infrastructure is not keeping up with the needs of local communities. And that we are missing out on an opportunity to invest and grow our communities with transportation improvements and expansions.
Short-Term Funding Fixes Lead to Project Delays and Cancelations
During this summer’s Highway Trust Fund crisis, U.S. Secretary of Transportation Anthony Foxx and a bipartisan group of 11 of his predecessors—spanning seven administrations—sent an open letter to Congress calling for “a much larger and longer-term investment” in American transportation. In the letter, they highlighted several costly consequences of short term measures, noting that “the unpredictability about when, or if, funding will come has caused states to delay or cancel projects altogether.”
In fact, in the weeks leading up to this summer’s near insolvency of the Highway Trust Fund, several state departments of transportation planned to scale back or delay transportation projects, including public transportation improvements. In Oregon, for instance, new transportation projects were put on hold until at least summer of 2015.
The lack of sufficient and reliable funding has left America’s transportation infrastructure—roads, bridges, and public transportation—struggling to reach a state of good repair. According to a recent report from the National Economic Council and the President’s Council of Economic Advisers, 65 percent of American roads are in less than good condition, 25 percent of bridges require significant repair, and 45 percent of Americans lack access to public transit. Poor infrastructure and lack of public transportation adds to commute times, and Americans spend 5.5 billion hours in traffic every year. This translates into a cost for American families of $120 billion in extra fuel and lost time.
Bond Rating Costs
Delaying repairs and improvements to public transportation adds to overall costs—as conditions of equipment and infrastructure worsen. Inconsistent and short-term federal funding also directly costs states—and taxpayers—in the form of higher financing costs for projects.
States and municipalities often fund transportation projects by issuing bonds. Bonds enable state governments to raise money for projects that will be paid for over several years. In many instances, bond obligations are paid with dollars provided by the U.S. Department of Transportation. Previously, the reliability of federal transportation funding helped make the bonds highly secure, which meant that interest rates on the bonds remained low.
But because of uncertainty about federal transportation funding, that security has eroded—and state transportation bond ratings have slipped. As a result, states—and therefore taxpayers—face increased interest costs when they issue new transportation bonds that cover an infrastructure project. Congress’s failure to pass a long-term transportation bill results in increased cost of our transportation infrastructure.
We have a right to be frustrated about Congress’s inaction when it comes to addressing America’s transportation needs. We need to be sure Congress gets the message to INVEST NOW long before next May, when our current short-term funding extension runs out.
Please share this blog with your friends and family using the hashtag #InvestNow—and post it on the Facebook pages of your U.S. Representative and Senators, too. If you use twitter, tweet a link to the blog at your members of Congress too.