Unlike its highly partisan counterpart in the U.S. House, the Senate surface transportation bill remains uncontroversial because it emerged out of many months of compromise and bipartisan consensus building. It makes do under an austerity budget without taking on big issues such as reducing oil consumption or shifting investment to reflect the unprecedented national shift since 2004 toward less driving (confirmed by recent data revisions). The Senate bill’s signature programs stretch dollars by ensuring that repair and maintenance of existing assets isn’t neglected and that performance is finally tracked.
Three other relatively small provisions stand out as ways to deliver more bang for the buck or find revenue in common-sense places.
The first would remove privatized toll road miles from consideration when allocating federal highway funds. When a state sells off responsibility for maintaining a stretch of highway to a private company, it could no longer also ask taxpayers to pay for the upkeep. Eliminating this “double dipping” would leave more federal aid dollars allocated to other highway miles that haven’t been sold off. The provision applies only to existing publicly constructed roads that states sell off for a cash payment, typically borrowed by private companies against decades of future toll hikes they will be entitled to charge drivers. These exotic deals can only make sense if they produce long-term savings for the public. They shouldn’t need subsidies.
Another Senate measure would end the current taxpayer subsidy allowing accelerated depreciation of the value of a highway when it has been leased to a private operator. While the useful life of a road is considered to be about 45 years, current tax law creates a special provision for operators of privatized toll roads to write off this value in 15 years, essentially borrowing from the future at the expense of other taxpayers. The Senate bill would simply require private toll road financiers to write off the lost value of their investments at the rate they actually lose value. Private highway leasing deals would need to save money on their own merits rather than rely on hidden taxpayer subsidies. The measure also only applies to privatization of existing highway capacity. It would not change tax rules for public-private partnerships for the construction of new capacity.
Another tax loophole measure sponsored by Senators Levin and Conrad would save money by authorizing action against overseas banks that impede U.S. tax enforcement. The provision gives the Treasury a tool to stop off-shore financial institutions that "significantly impede U.S. tax enforcement." Under existing law, Treasury can take measures against offshore banking institutions that are set up primarily for money laundering. If foreign banks create shell companies and hidden accounts for money laundering, for example, Treasury can currently take measures such as to prohibit U.S. banks from accepting wire transfers or honoring credit cards from those foreign banks. The Senate bill would give the same tools to Treasury against foreign banks promoting illegal tax evasion, a measure the Joint Committee on Taxation estimates would raise $900 million over ten years.
Not every measure in the Senate bill promotes more effective spending as well as it could. The Senate bill wisely expands the types of transportation projects that could apply for loans from the TIFIA program. That makes sense since both the House and Senate would expand spending on this program more than eight-fold in their bills. However, both bills would also eliminate performance criteria as a basis for distributing TIFIA funds, instead doling out limited funds on a first-come-first-serve basis among eligible applicants. This would be a step backwards in terms of delivering the best performance for our transportation dollars.
If political and budgetary constraints have prevented the Senate from proposing a bold transformation in how America invests in transportation, then we should be thankful it has at least found pragmatic little ways to save money and improve performance.