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Vol. 15, No. 2; March/April 2004

The Reauthorization Conundrum
As the month of February draws to an end, the status of the surface transportation reauthorization remains very fluid. But there is good reason to believe that a confrontation between the White House and Congress can be avoided-neither the White House nor congressional leadership have much to gain from a prolonged stalemate. The threat of a presidential veto of anything as high as $318 billion remains real and the prospect of it being upheld is judged by most observers as highly likely - at least in the House, where Rep. Christopher Cox (R-CA), chairman of the House Republican Policy Committee, has been gathering signatures from House members pledging to vote to sustain a White House veto.

While the precise outcome of the ongoing negotiations as to the level of funding and length of term of the reauthorization is hard to predict, it would seem that there is enough good will and self-interest on all sides to negotiate a compromise and enact a multi-year surface transportation legislation during the current session of Congress.
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The Future of the Reauthorization Measure Remains Clouded
The future of the reauthorization of the surface transportation legislation remains clouded. Even though the Senate has passed its version of the bill, the $318 billion measure faces a potential Presidential veto. Meanwhile, House transportation leaders are still struggling to devise a credible financing plan for their $375 billion proposal. With the Highway Trust Fund expected to generate only $228 billion in tax receipts over the six-year period of the reauthorization, House lawmakers face a daunting task of closing a $147 billion funding gap. By approving another four-month extension of the current law and extending the deadline to June 20, they hope to gain additional time in which to seek a politically acceptable solution. Most observers believe any such solution will require a substantial retreat from their initial funding target, possibly to as low as $290 billion. At the same time, Senate leaders may be expected to seek an accommodation with the President who is under pressure from his conservative base to rein in spending.
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The Administration's FY 2005 Budget Request
With the White House under considerable election-year pressure to restrain spending and reduce the federal budget deficit, the Administration's FY 2005 budget request for surface transportation remains essentially flat in relation to the FY 2004 enacted funding levels. The U.S. Department of Transportation is recommending $33.64 billion in Federal-Aid highway obligation limitation and $7.26 billion in federal transit program spending, amounts identical to those approved for FY 2004. Amtrak would receive $900 million, $318 million less than in FY 2004 and half of the amount requested by Amtrak President David L. Gunn. The only exceptions to holding current spending levels constant are the safety-related programs which the Department considers as a top strategic priority. The FY 2005 budget request contains a 130 percent increase in funding for the National Highway Traffic Safety Administration (to $689 million from FY 2004 level of $299 million); and a 25 percent increase for the Federal Motor Carrier Safety Administration (to $455 million from $364 million in FY 2004).

In a rush to criticize the budget request for its failure to provide increased funding, interest groups have ignored its many innovative features. In addition to elevating safety as a new key strategic objective, the program budget expands the deployment of intelligent transportation systems technology, targets "ready-to-go" highway projects that address traffic bottlenecks, and begins to focus resources on improving global freight connectivity and eliminating bottlenecks in major freight corridors. The FY 2005 program plan also takes steps to raise the profile of transportation system management and operations, streamlines the environmental review process and enhances the overall readiness of the Department to respond to acts of terrorism. Two of the issues raised by the Budget request are further discussed below.
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Traffic Congestion: Why It's Getting Worse and What Can Be Done About It
"Peak hour traffic congestion in large and growing metropolitan regions around the world is here to stay. In fact, it is almost certain to get worse during, at least the next few decades, because of rising population and matter what public and private policies are adopted to combat congestion." So concludes Anthony Downs, distinguished urban analyst and senior fellow at the Brookings Institution in a new restatement of his provocative thesis first enunciated five years ago. The U.S. Department of Transportation seems to concur in Downs' assessment. It estimates that the fraction of urban travel occurring in congested conditions will rise by two percentage points from 2003 to 2005.

While we largely agree with Tony Downs' conclusion that we have no choice but to learn to live with traffic congestion , we think he is too dismissive of the role that variable pricing could play in improving travel conditions. Toll lanes are increasingly seen not as "just another tax" or as an unfair subsidy to the wealthy but as an option offering a premium level of service to those who are willing to pay for faster and more reliable travel. While priced facilities may not be able to reduce overall congestion on the nation's highways, they do offer motorists a means to avoid congestion. That is why state and federal government are beginning to facilitate road pricing and removing barriers to tolling. However, we think Mr. Downs' conclusions are fundamentally sound. Road congestion does indeed seem to be an inescapable condition of life in large cities. It is a price that people appear willing to pay for the opportunity to enjoy the unique economic, social and cultural advantages of living in a metropolitan area.

News From Abroad
The Shanghai Maglev Line
Germany's ambitious truck tolling system has hit a snag
Edinburg and Stockholm move toward a city-center charging system


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