Political Roundup

The Aftermath
Webster’s Dictionary includes several definitions for “blowout”, among which are; “a big party” and “a game or contest in which the winner defeats the loser by a large amount.” For Republicans both meanings easily apply to the results of last week’s midterm election. The numbers don’t lie. By anyone’s definition the outcome was a drubbing.

The GOP increased their edge in the House of Representatives adding 12 seats giving them an overall advantage of 24, their largest such majority since 1931. In addition, Republicans catapulted to the majority in the Senate for the first time since 2007 and currently hold 52 seats, and with a hotly contested race for Mary Landrieu’s Louisiana seat headed to a December runoff, and results still pending in Alaska the total could grow to 54. Just as telling where the results from the states. It wasn’t just that Republicans won 24 of 36 races or that governors increased in numbers by a net of three but the fact that these gains were made in traditionally Democratic-leaning states including Illinois, Maryland and Massachusetts. As if that wasn’t enough, Republicans also now control 69 out of 98 state legislative chambers, which is also the highest GOP total in history. Even though the smart money clearly favored Republican gains going into election night, only the most optimistic of partisans could have predicted this kind of rout.

The question now is what does the electoral domination by Republicans mean for business in Congress for the next two years. Those interested in transportation issues are hoping it is not “gridlock as usual” as there is a full slate of issues that need attention, including the impending insolvency of the Highway Trust Fund and reauthorization of a comprehensive long term transportation bill. President Obama hosted Republican leadership at the White House on the Friday after the election, and in terms of committing to a new atmosphere of cooperation, at least everyone is saying the right things…so far.

The change of control in the Senate means that Mitch McConnell (R-KY) has achieved his career goal of becoming Senate Majority Leader. In his previous job in the minority, McConnell’s actions closely followed his stated effort of working to keep President Obama’s career arc to that of a one term President. But McConnell’s reputation is also that of a shrewd dealmaker and he has already offered that “there will be no government shutdowns and no default on the national debt.” At the same time, McConnell does not control the House where Speaker John Boehner (R-OH) presides over a larger but more divisive and more polarized majority that may struggle to find a unified voice. Suffice it to say that Republican control of both the House and Senate does not automatically mean smooth sailing.

President Obama is also facing his last two years in office in what normally is a period of time that observers point to as a President’s “legacy” moment as he tries to put the finishing touches on his eight years in office. If he is viewed as trying to cooperate too much with Republicans it could alienate his own Democratic supporters in Congress—a group by the way that barely mentioned his name on the campaign trail this time around. It also remains to be seen if the Senate Democrats plan to aggressively assume the role of obstructionists. McConnell has stated he will respect the prerogatives of the minority party to debate and amend bills. While his effort to shake the label of the “party of no” could foster compromise and bipartisanship, it also will give Democrats the opportunity to force floor votes that could prove especially difficult for the 24 Republican Senators running for reelection in 2016. So keep in mind that what passes in the House would likely look far different from what is able to get through the Senate. The likely scenario will be one where the House must decide just how far they will compromise in order to actually pass legislation. This caveat will most certainly apply to any effort to pass any transportation reauthorization bill.

New Look Congress
With the change in Senate control several new chairmen will be taking over committees of interest and jurisdiction over transportation in the 114th Congress. The Senate Environment and Public Works Committee will be chaired by Jim Inhofe (R-OK) as Barbara Boxer (D-CA) assumes the role of ranking member. The two have always had a cordial relationship and have maintained a strong bi-partisan ethic despite their significant ideological differences, most recently demonstrated by working together successfully to produce the Moving Ahead for Progress in the 21st Century Act (MAP-21) last Congress.

In the House, Bill Shuster (R-PA) will continue as Chairman of the House Transportation and Infrastructure Committee (House T&I), but amidst the carnage the House lost a key advocate for transportation with the defeat of Nick Rahall (D-WV), the committee’s top Democrat who served for four decades, and who was victimized by the rapidly changing political environment in his district. Ironically, four years ago the committee also lost their top Democrat when Jim Oberstar was swept out during the most recent big Republican win. With Rahall out the likely new ranking Democrat is Peter DeFazio (D-OR), although at least one other caucus member has already expressed interest in challenging him.

Rahall’s exit is by no means the only significant departure from the House T&I. The retirement of longtime member Tom Petri (R-WI) has created a vacancy at the top of the Subcommittee on Highways and Transit. Additionally, Tim Bishop (D-NY) was not reelected and was a vocal advocate for increased funding for water development infrastructure. Any new subcommittee chairs or other new additions to the committee will be announced in January at the beginning of the 114th Congress. Whatever lineup emerges it is going to be faced with a myriad of transportation related measures, including the reauthorization of the Federal Aviation Administration, Coast Guard, passenger rail safety programs, the Water Resources Development Act, the Pipeline Safety and Hazardous Materials Safety Administration, and of course reauthorization of a comprehensive surface transportation bill.

The current short term extension for the federal surface transportation authorization expires on May 31, 2015. You may recall that Congress approved a $10 billion transfer from general funds (funds not in the Highway Trust Fund) in order to maintain the current transportation funding levels. It is important to note that the Highway Trust Fund will likely face insolvency around the same time as the federal surface transportation authorization expires.

The Senate Finance Committee, whose role will be financing any new transportation bill is likely to be chaired by Orrin Hatch (R-UT) who has stated his opposition to “one size fits all” federal transportation policies as well as increasing the gas tax. Ron Wyden (D-OR) is poised to be the ranking Democrat. Traditionally, Republican control in Congress means a focus on belt-tightening when it comes to funding, as well as more emphasis on promoting state efforts to finance transportation infrastructure. It will be worth closely watching any signals from Senator Hatch regarding his views on finding offsets for the funding of a transportation bill. The same goes for the House Ways and Means Committee which also has a noteworthy change with the retirement of Dave Camp (R-MI), likely opening the chairmanship to former Vice Presidential nominee, Paul Ryan (R-WI).

The Lame Duck
Before we can proceed to the new Congress the present one is currently scheduled to return on November 12th to address business in the lame-duck session. There have been some who suggest that this may provide Congress with the opportunity to address the long term funding needs for transportation but that is extremely unlikely. One item that lawmakers must address one way or another in the lame-duck is the Omnibus Appropriations for FY 2015 which is functioning under a Continuing Resolution that expires December 11th. If the House and Senate are capable of working together on anything during the lame duck it could be to pass the Omnibus which would provide a “clean slate” for Republicans beginning next year (and ensuring the Congress finishes its work well before Christmas).

But like most things associated with Congress, there are certain to be challenges ahead. The more conservative members of the Republican caucus are already making noise that they prefer a short term Continuing Resolution that will extend the Omnibus only as far as early January. This allows House Republicans to work with their newly elected colleagues in the Senate and hit the legislative “reset” button to rework spending levels for their priorities in appropriations. For example, if your priority was trying to increase defense spending but lower the existing funding levels for the Affordable Care Act you might be a stronger advocate of a one-month extension.

Key Dates for Lame Duck and New Congress
November 12: Lame duck session begins
November 13: House GOP, Senate GOP and Senate Dem leadership elections
November 18: House Dem leadership elections
December 6: Runoff election for Louisiana Senate seat
December 11: Continuing resolution expires
December 12: Target date for sine die adjournment

Propspects for a Long Term Bill
The experts are currently putting cost estimates for financing a six-year transportation bill at roughly $100 billion. This takes into account the current spending levels of about $330 billion minus the Congressional Budget Office projections that revenue to the Highway Trust Fund would come in at $230 billion over the six-year period. This is a daunting figure given the current budgetary environment. Even more daunting is the willingness to come up with an effective way to pay the tab.

Last summer Senators Chris Murphy (D-CT) and Bob Corker (R-TN) introduced a bill to raise the gas tax and the diesel tax by 12 cents each, phased in over two years and index the tax for inflation. This proposal is estimated to generate nearly $150 billion, which would easily plug the funding gap for a long term bill. But the reality is the political will is simply not sufficient to embrace the idea—at least in Congress.

The landscape in the 50 states may be different.Newly reelected Iowa Governor Terry Branstad has said that the timing is right to increase the state’s gas tax. “The discussion will start now,” he said following his reelection, also indicating that any effort to raise the tax will have to be bi-partisan to avoid engaging in the politics of blame. Whether or not Branstad succeeds the news reflects realities occurring in the states due to overwhelming inaction by the federal government. Either through public-private partnerships, bond referendums, expanded tolling or sales taxes, states are on the cutting edge in seeking new ways to find stable revenue streams. With the ongoing budgetary constraints that continue to grip Capitol Hill, the trend of state innovations is not going to change anytime soon.

Despite the fact we’ve just put the final touches on the 2014 midterms discussion is already starting about the 2016 Presidential cycle. In term of transportation this probably means that there is a small window of opportunity for a long term bill. With the focus on the expiration of the current extension in May of next year, lawmakers and congressional staff will be working on a long term proposal to coincide with that deadline as well as the impending insolvency of the Highway Trust Fund. The later it gets in 2015, the harder it’s going to be for Congress to deliver a multi-year bill. By the fall any feelings of compromise and cooperation will likely have given way to the pressure of the reelection cycle, and by then the Iowa Caucus will only be a few months away. When the leaves start to turn next year, you will probably hear the sound of that old can kicking down the road.

Some State Bonds and Ballot Measure of Note in 2014
To be sure, a mixed bag of results

✔ San Francisco voters approved a $500 million bond measure to be used for redesigned streets, more bike and transit-only lanes, updated traffic signals, improved maintenance facilities, and new elevators and escalators at Metro stations.

✘ Alameda County approved a 30-year tax measure that would extend an existing half-cent sales tax and tack on another half cent. The measure would generate $7.8 billion in revenue.

✘ Alachua County, Florida voters rejected a 1 cent sales tax increase that would have raised a projected $240 million over eight years for road building and transit projects.

✔ Cobb County, Georgia did vote for a 1 percent sales tax devoted primarily to road and water infrastructure improvements.

✔ Clayton County, Georgia approved a 1 percent sales tax to allow the county to join the Atlanta-area MARTA system.

✔ Wichita voters opposed a 1% sales tax imposed over five years providing $250 million for water infrastructure, $40 million for mass transit, and $28 million for street repair and maintenance.

✘ Constitutional Amendment 4, which would allow public funds to capitalize a state infrastructure bank, was defeated.

✔ Constitutional Amendment was approved by Maryland voters creating a “lockbox” amendment to the state’s constitution that bans diversions from the state's $4.6 billion Transportation Trust Fund without the governor declaring a fiscal emergency and approval from a three-fifths' supermajority of both General Assembly chambers.

✘ Question 1: Eliminating Gas Tax Indexing—voters overturned a 2013 law that indexed the state’s gasoline tax to inflation intended to preserve its purchasing power as of January 1, 2015.

✘ Voters rejected a .25% sales tax over 25 years to finance capital improvements

✘ Voters rejected a .125% sales tax over 25 years to finance public transportation

✔ Voters approved $35 million in bonds to fund enhancements and renovations to mass transit hub infrastructure throughout the state.

✔ Proposition 1: a measure to capture half of the state's oil and gas tax revenue was approved. Funding would go into the rainy day funds to be used for road improvements.

✘ Transportation Bond in Austin would have provided approval for $1 billion light rail project as well as $400 million for road improvements but was defeated.

✔ Seattle voted in favor of a $45 million per year revenue plan to preserve existing mass transit service.

✔ Question 1: Wisconsin voters approved a referendum creating a clause in the state constitution stating that says money generated from using roads, airports, and harbors must be used exclusively for transportation.