U.S. Governors Warn That Road Repairs Stalled by Congress

U.S. governors say they won’t be able to plan or build all the major highway and bridge projects the country needs as long as Congress delays action on a long-term funding plan.

Republicans and Democrats who gathered in Nashville during the weekend for a National Governors Association meeting said that at minimum Congress should approve a short-term fix before the federal highway account becomes insolvent by the end of August. Yet they want a longer solution to remove uncertainly that could stop or delay projects worth an estimated $3.6 trillion to fix crumbling roads and bridges.

The inability of Congress to agree increases pressure on states to find alternative financing for their share, governors said. It affects the work needed to create jobs and boost the economy while repairing outdated infrastructure to avoid disasters such as the 2007 Minneapolis bridge collapse that killed 13 people and injured 145.

“These sort of half-solutions, kicking the can down the road, short-term sorts of things, this is not a way to inspire business confidence or consumer confidence,” Maryland Governor Martin O’Malley, a Democrat, said in an interview. “Some of these investments are multiyear investments that require multiyear funding streams.”

Frozen Congress

While the U.S. needs the $3.6 trillion by 2020 to improve its highways, bridges and other infrastructure, spending by all levels of governments is projected to fall about $1.6 trillion short, according to a 2013 report by the American Society of Civil Engineers. States and the federal government rely heavily on gasoline and diesel-fuel taxes to pay for transportation projects. Congress hasn’t raised the gasoline levy since 1993, and the revenue it generates hasn’t kept pace with the needs and rising costs, according to the Pew Charitable Trusts.

The federal government accounted for 27 percent of highway and transit spending in fiscal 2011, compared with 38 percent from states and 35 percent from local sources, Pew said.

The existing two-year federal funding measure expires Sept. 30, and the U.S. Department of Transportation predicts that the so-called highway account will become insolvent next month. Congress is debating bills to provide about $11 billion through May 2015 for the Highway Trust Fund with talk of a long-term deal later.

No Confidence

Transportation Secretary Anthony Foxx has said that, without an agreement in Congress, federal payments to states for construction will slow starting Aug. 1, putting tens of thousands of active projects and nearly 700,000 jobs at risk. The threat has forced states including Arkansas and Kentucky to delay or prepare to halt projects.

While governors said they hope for a short-term deal, they expressed concern that Washington discord will affect future funding for infrastructure, which historically has been bipartisan.

“I don’t have confidence in anything that goes on in Washington, D.C. right now,” New Jersey Governor Chris Christie, a Republican, told reporters.

Colorado Governor John Hickenlooper, a Democrat, said in an interview that he hopes a short-term fix “will allow both sides to get together and say, ‘All right, there have got to be a few things where we don’t get into partisanship.’”

Acting Alone

As Congress delays a long-term solution, states are acting. Seven, including New Hampshire and Wyoming, have raised or adjusted fuel levies since February 2103, according to the Institute on Taxation and Economic Policy, a Washington-based research group. Others who attended the NGA meeting said they are seeking alternative funding.

Wisconsin Governor Scott Walker, a Republican, said he’s considering substituting sales tax for fuel. Democratic Governor Mark Dayton of Minnesota said transportation funding almost certainly will be a principle issue in his state’s legislative session next year. Indiana Governor Mike Pence, a Republican, touted public-private partnerships, including a deal last week for Interstate 69. Iowa Governor Terry Branstad, a Republican, said he’s also looking at options.

“We’ll probably address this -- maybe before the Congress addresses it,” Branstad said in an interview.

Impending Elections

Even so, the pressures that have kept Congress from acting also exist in states. Delaware Governor Jack Markell, a Democrat, wasn’t able to persuade his own party, which controls the legislature, to increase the fuel tax by 10 cents and borrow an additional $50 million annually for five years. Markell said that with many governors and lawmakers facing elections this year, it is difficult to act.

“I’m hopeful that when we’re not in an election year any longer, people will say, ‘As painful as this is, it’s what we have to do,’” Markell said in an interview.

Many governors said raising new funds in the $3.7 trillion municipal-bond market is not a solution without dedicated revenue, even with borrowing costs hovering close to four-decade lows.

Some states are turning to the electorate. In Missouri, voters this month will decide whether to raise the sales tax of 4.225 percent by 0.75 percentage point for 10 years to generate $534 million annually, the state transportation department said.

Governor Jay Nixon, a Democrat who opposes the measure because of tax breaks the Republican-controlled legislature approved separately, said the nation needs to set a course, much as it did under President Dwight D. Eisenhower to build the interstate highway system in the 1950s.

“We need to have a discussion as a country about how we’re going to fund roads,” Nixon said in an interview.

Vice President Joe Biden spoke to the governors July 11 and said because of “corrosive” politics that have gridlocked Washington, it will be up to states to find answers.

“You’re the ones leading in your states without much help from the United States Congress,” Biden said. “You’ve got to lead us out of this mess we’re in.”

To contact the reporter on this story: Mark Niquette in Nashville at mniquette@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Jeffrey Taylor

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