New Congress and President-elect Obama Begin Negotiations on Economic Recovery Legislation; Oberstar Proposes $12 billion for Public Transportation and $3.4 billion for High-speed Rail

The 111th Congress convened this week, and President-elect Barack Obama met with House and Senate leaders on Monday to discuss options for economic recovery legislation. The President-elect continues to express support for infrastructure investment in a stimulus bill, but this week Obama also emphasized tax cuts as a means to help the U.S. economy. The incoming Administration is reportedly considering a stimulus plan valued at approximately $775 billion, a considerably larger package than the $61 billion stimulus bill passed by the U.S. House of Representatives in September. With regard to infrastructure, the President-elect released a preliminary plan that calls for $25 billion in immediate investment in a variety of infrastructure activities and $60 billion in new transportation investment under a proposed National Infrastructure Reinvestment Bank, an element of the Obama-Biden campaign platform.
The Obama principles will likely be reworked significantly as Congress develops legislative proposals, and specific funding levels for public transportation are expected to be included. APTA has identified $47.8 billion in transit needs that could be met in a two-year stimulus bill, and the APTA economic stimulus survey has indentified more than $12 billion of “ready-to-go” projects that could be advanced in fewer than 90 days. According to U.S. Department of Transportation estimates, if $47.8 billion were invested in public transportation immediately, more than 1.3 million green jobs could be supported in the next two years. The President-elect and several key members of Congress have stated that infrastructure spending will not be earmarked, indicating that formula funding will likely be a large component of any public transportation or highway spending in a stimulus bill, but some proposals have included funding for new starts/small starts and it is not yet clear how those funds would be distributed.
In anticipation of the next stimulus bill, Chairman James L. Oberstar of the House Transportation and Infrastructure Committee unveiled an $85 billion infrastructure proposal on December 18. Under the Chairman’s proposal funding would be made available for “ready-to-go” projects at the following levels: $12.5 billion for public transportation, $30.5 billion for highway infrastructure, $3.4 billion for high-speed and intercity rail, $1.5 billion for Amtrak, and remaining funds would be provided for aviation, federal buildings, projects of the Army Corps of Engineers and other infrastructure investment. While limited details are available, grant recipients would be needed to obligate funds or execute contracts very quickly with some of the new funding and funds could be reapportioned if they are not spent within certain timeframes. Chairman Oberstar has stated that the Federal Transit Administration and the other U.S. DOT modal administrations would be asked to expedite the grant making process to facilitate quick investments.

For public transportation investment, Chairman Oberstar’s proposal bears strong resemblance to the stimulus bill, H.R. 7110 that passed the House in the last Congress, but which was not inacted into law. $7.5 billion would be available for capital grants under the urban and rural formula programs and $2 billion would be available for transit energy grants to assist transit systems with operating and capital expenses related to increased fuel costs, service expansion and the prevention of fare increases. Chairman Oberstar has also proposed $2.5 billion in supplemental funding for the New Starts and Small Starts programs, an element not included in the prior House stimulus bill. The proposal also has a new recommendation of $3.4 billion for competitive high-speed rail grants under a program authorized by the Amtrak/Rail Safety legislation (Passenger Rail Investment and Improvement Act of 2008, Division B of P.L. 110-432).
While the Oberstar proposal would provide valuable new investment, the final version of stimulus legislation could be more or less favorable to transit as House and Senate Democratic leaders and the incoming Obama administration begin to formulate legislative details. At present, funding levels have not been set by Congressional leaders for either a Senate or House proposal. It is essential that APTA members continue to contact their Representatives and Senators to make the case for transit investment in economic recovery legislation. APTA staff will continue to discuss stimulus proposals with Congressional staff and transition officials for the incoming Administration in the coming weeks. Congressional leaders now expect a stimulus bill to be completed before the President’s Day recess which is scheduled to begin on Friday, February 13. Final action on the unfinished Fiscal Year 2009 appropriations bills, including the Transportation Appropriations bill, could be delayed until late February or March until economic recovery legislation is enacted.

ACTION ALERT
• Call your Senators and Representatives and urge them to support public transportation investment in stimulus legislation.
• Point out that if $47.8 billion were invested in public transportation immediately, more than 1.3 million green jobs could be supported in the next two years.
• Discuss your transit system’s needs for assistance. Explain how shortfalls in state and local transit revenues affect your ability to serve your riders and remind them about ridership gains at both the local and national level.
• Cite specific examples of “ready-to-go” transit projects in your area.
• Explain that public transportation and all forms of intercity rail are integral elements of our nation’s surface transportation system and that they can advance national goals and help produce “green” jobs.

There were just four public transportation millage questions on Michigan ballots on November 4th and the final results were mixed with two winning while two went down to defeat.

In Lansing and parts of Ingham County, CATA finished with a resounding victory for their additional 0.787 mill proposal for 5 years. The final tally was “yes” 71,009 or 64% approval and “no” 39421 or 36%. CATA had said if the millage failed there would be significant evening and weekend service cuts in the future. Last year voters had rejected a similar but larger millage question.

In Kalamazoo County, a first-time countywide millage proposal failed to garner support, losing by a margin of 58% to 42%, “no” voters with 69,993 and “yes” voters at 50,635. Approximately two years ago the Kalamazoo County public transportation service and Kalamazoo Metro Transit were merged into one system.

Other results in Michigan found voters in Midland County approving millage for the County Connection by a margin of 55% to 45%, “yes” 22,093 and “no” 18,144. Neighboring Arenac County, meanwhile, rejected a county millage for public transportation service there by a 63% to 37% margin, “no” 4889 to “yes” 2901. Arenac County service is provided by an operating agreement in conjunction with Bay Metro Transit.

Flint Lawmaker In Middle Of Crossing Battle
Rep. Lee Gonzales (D-Flint), the head of the House Appropriations Transportation Subcommittee has been knee deep in transportation issues this session — not the least of which is an ongoing battle over an additional bridge from Detroit to Canada and where that bridge will be placed.
GCSIntel talked to Gonzales in depth about that issue. The following are excerpts from that conversation.
Q. Why does the state need to find an additional site for a bridge between Detroit and Windsor?
A. It’s a complicated topic. The DRIC (Detroit River International Crossing) study has been looking at how we can put together additional capacity at the Detroit River. We also have what would be called a backup plan, a “just in case” system, if there’s ever a huge accident on one of the ends. The Ambassador Bridge runs a great operation for what it is. In fact, it’s reaching an 80th anniversary next year, but based on traffic projections we need an additional crossing.
The contention is that the Ambassador Bridge believes there isn’t a need for a separate plan. They believe their twinning concept of their present construction is sufficient. The DRIC study has shown a need for a separate span. This is a bi-national project. The Canadian side is going through a major impact study and they’re saying that there’s no way to twin on that side. The Ambassador Bridge says there is enough room. DRIC is looking at it from a public policy standpoint because that’s what’s best for the people in the state of Michigan and internationally.
There was a memo signed between our federal government and theirs (Canadians) last November. The agreement recognizes a need for additional capacity and an additional need for redundancy, which is the back up bridge.
We could reflect back to the Twin Towers where they could take out two towers side by side. If there was a calamity or terrible accident where the Ambassador Bridge could not function — such as a storm or something else — we would need a back up span. We really need another six lanes to accommodate the future commercial growth over the next 20 years.
Q. Those opposed to the measure claim the numbers in the DRIC study are inflated and the need for a new bridge exaggerated. Is it reasonable to argue that the state doesn’t need multiple bridges at that location?
A. We are using a proven methodology and they (opponents) have not shown any of their own forecasts. The Ambassador Bridge has used the DRIC information in documents submitted to different levels of government. Our data is clear that there will be growth. It’s just like the stock market. It may go up and down, but there is always a steady traffic problem. We have all the documentation and, if they have their own methodology, they show it as being fixed for the next 40 years and that’s impossible.
Q. Where are we in terms of reaching an agreement?
A. I’m very earnest in working with Sen. Bill Hardiman (R-Kentwood). He’s my point person in the Senate in terms of government appropriations. I’m working with him and look forward to working with Sen. Alan Cropsey (R-Dewitt) as well as the governor, who is supporting us. We’re going to have to continue talking about reaching a solution to benefit the residents in Michigan.
Keep in mind that this is a bi-national negotiation. It’s about America’s interests, it’s about Michigan’s interests, it’s about the Providence of Ontario’s interests and it’s about Canadian interests.
Q. Will we have an agreement by the end of the year?
A. We have to have an agreement. I’m hopeful we’ll do it within the next month, hopefully. We have to make sure to look at it very objectively. We’re looking at it with all these business interests. They say they support the DRIC study.
An infrastructure decision of this magnitude needs to have this debate.
Q. In the past, Michigan has been touted as having one of the greatest supply chains in the country. What steps does the state need to take to recapture this reputation?
A. We’ve had a history of being a leader in transportation and I think this coincides with what we’re looking at. They’ve had hundreds of public hearings. That’s what it’s all about. It’s getting all the stakeholders together to think about ways to have the infrastructure that no one else in the world has.
It takes the best ideas of everyone involved. SEMCOG (Southeast Council of Michigan Governments) has made a favorable statement on the DRIC study. Any area worth its salt has to look at it regionally because that’s how we do the best planning for the economy. Michigan is attracting a lot of innovation firms, Google is an example, and all of these things tie together. That’s why we have to make all of our infrastructure [top notch] to attract these innovative firms.
We’re working in Flint to turn sewage into biofuel and in order to do this, the infrastructure has to be top notch. Later this year we’ll celebrate GM’s 100th anniversary. Flint is where GM started and that’s where we need to put our frame of mind. We have to look at how we make Michigan the most attractive state in the global economy.

The 2008 MPTA Legislative Conference will be held February 21-22 at the Radisson Hotel in downtown Lansing. The program will feature opportunities to meet personally with legislators, hear from Legislative and Administrative leaders on the state budget, receive update reports on public transportation projects in Southeast Michigan and Grand Rapids, and hear the latest from the Michigan Department of Transportation Bureau of Public Transportation. If you haven’t yet registered, please visit the conference tab on this website and submit your information. Remember to make your hotel reservations soon too – before the guaranteed rooms are all gone!

With a limited July and August work calendar, it is difficult to see how the Legislature will complete any of the remaining budget issues prior to Labor Day. The next big deadline is October 1, the start of the new fiscal year.

The Legislature proposed meeting throughout the Summer to work on the upcoming fiscal year budgets and released calendars indicating regular three-day session weeks the remainder of July and session every Wednesday throughout August. However, not much was accomplished the last few weeks of July and the House cancelled the August 1 session day signaling to us that those last few days in September are going to be very long indeed.

On the ‘08 FY budget side of things, the House has been passing their first-house budgets to the Senate. However, the Senate Majority Leader blasted the House Democrats for passing budgets predicated on a $1.5 billion tax increase for which the House has not yet acted on. Meanwhile, the Senate has yet to pass a single Senate-originated budget bill—all are on the Senate floor awaiting full-Senate action, including the 07-08 Transportation budget. This slower than usual pace also leads us to predict final resolution occurring in the waning days of September—not August. There has also been talk of continuation budgets which indicate that resolution could be put off until October or November—after the beginning of the new fiscal year!

Nothing has happened on the revenue enhancement side of things yet either. On several occasions, the Senate Majority Leader has indicated that any tax increase must be passed by the House first. Most indications are that the House Democrats will pass an income tax increase from the current rate of 3.9 percent. Each one-tenth of a percent nets approximately $180 to $200 million for the state general fund. Recent estimates peg the 07-08 FY deficit at anywhere from $1.2 billion to $1.8 billion. The income tax rate could be increased statutorily to any amount (4.6 percent is the historical high). However, any effort to create a graduated income tax would require a constitutional change and thus, a vote of the people. Rumors abound that the House Democrats will propose a retro-active tax increase and tie-bar it to a joint resolution placing a graduated income tax proposal before the voters this November. However, in order for this to appear on the November ballot, it would need to pass both Chambers in August. If a plan is placed before the voters, the February Presidential Primary would be the next opportunity. There is also much talk of expanding the sales tax base to incorporate a “luxury” tax on services such as tickets to sporting events and concerts among other things. As of yet, neither body has moved on a broad tax hike.

The Senate Appropriations Committee reported a number of bills necessary to implement pieces of the ‘07 budget agreement, including Senate Bill 656. SB 656 (S-1) amends the General Sales Tax Act permitting $10.2 million dollars to be skimmed from the CTF by redirecting it from the auto-related sales tax revenue to the State general fund. The bill implements two pieces of the agreement. First, it addresses the Governor’s Executive Order 2007-03 which redirects $5 million from the CTF to the general fund by cutting $4 million from the bus capital line and $500,000 each from the rail infrastructure loan and the freight preservation and development lines. The remaining $5.2 million reflects the agreement to transfer funds set aside within the CTF for the Soo Locks expansion matching funds to the State general fund. This portion of the agreement is contained within Public Act 17 of 2007.

(Legislative Update prepared by Bill Zaagman and Don VanSingel of Governmental Consultant Services, Inc., MPTA’s state lobbyists.)