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Democrats in the Senate Finance Committee have been working to find $12 billion to fund the transportation bill for the next two years. All their proposals have met with rejection from the committee’s Republicans. Here’s why: The Republicans have been holding out for a funding mix that would include their favorite Christmas presents — oil drilling and attacks on conservation.

Orrin Hatch, top Republican on the Senate Finance Committee, has some ideas about how to fund the transportation bill. Photo: Mediaite

Seven of the 11 GOP members of the Finance Committee sent a letter to Chair Max Baucus late last week with their suggestions. Here they are:

• $3.5 billion rescission from the Advanced Vehicle Technology Manufacturing Loan Program
• $3 billion transfer from the Leaking Underground Storage Tank Trust Fund
• reclaiming $2.5 billion in transfers over the next 10 years from the Highway Trust Fund to the Land and Water Conservation Fund
• expanded oil and gas production in Alaska and the Outer Continental Shelf ($5.2 billion over 10 years)
• rescission of other unspent federal funds

The GOP members say the first three rescissions wouldn’t be felt much, especially for the programs that routinely bring in more than they spend out.

And then, of course, there’s the oil drilling. They’ve been trying to sneak Alaska oil drilling into just about everything these days, it seems — and here it is, showing up in this proposal to find $12 billion. Despite the fact that it could take years to earn a dime from oil drilling, the GOP acts like it’s the money spigot for everything the government wants to spend — if only the Democrats would stop being so sanctimonious about caribou babies.

So there you have it: spending cuts and oil drilling, the cure for all that ails the country (and, in this case, the solution for the transportation funding shortfall).

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LaHood is spending his birthday defending the administration's high-speed rail plan. Photo: Christian Science Monitor

It’s Transportation Secretary Ray LaHood’s birthday, and he’s spending it testifying before the House Transportation Committee. The hearing is on “Mistakes & Lessons Learned” from the high-speed rail program, but — no surprise here — LaHood and House Republicans have differing ideas about what “mistakes” have been made.

Here are some highlights.

Chair John Mica said he’s a “strong, committed advocate to high-speed rail service in the United States” but he’s been “very disappointed” in the progress so far. “We have hit an impasse,” he said.

Mica pointed to the ballooning cost estimates for HSR in California and reiterated his long-held position that it’s the wrong place to build high-speed rail. LaHood agreed that “this is an expensive project, but all of the money is going to American workers to build American infrastructure.” Mica stood firm that the Northeast Corridor, not California, is the place to build.

“We’re taking our cues from you,” LaHood said. “We’re investing in the Northeast Corridor.” Mica said they’re still waiting for the money to be awarded.

Rep. Bill Shuster, who chairs the rail subcommittee, said the president’s vision to bring high-speed rail access to 80 percent of the American people isn’t realistic. He said there’s no money for it — and no need. “I don’t hear people all around the country clamoring for high-speed rail,” he said.

When LaHood said that the HSR vision isn’t “Ray LaHood’s vision” — it comes from the states themselves — Shuster said yes, but his daughter wants a luxury SUV and he don’t have the money for it, so she’s not getting it. “I’m glad you didn’t think that about the Keystone Line,” LaHood shot back. He said Shuster asked for the money for that line and the DOT gave it. “Right,” Shuster said, I believe in rail investment “where it makes sense.” But, Shuster noted, he didn’t ask for help funding rail improvements between Harrisburg and Pittsburgh – and that line goes right through his district. But it’s not a strategic investment priority for the country.

Shuster suggested actually taking money from the California project and putting it toward the NEC — not likely to be a popular suggestion, when federal funding is already just $3.6 billion of California’s $98.5 billion total bill.

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Just this morning, Politico was reporting that the House would introduce the legislative text of its transportation proposal on Monday, but just a few short hours ago, House Transportation Committee Chair John Mica gave a speech at the University of Virginia in which he said there would be no movement on the bill until next year. He also sent some encouraging signals that his committee won’t draft a bill that’s all about highways.

Committee staffers say that “these things hinge on when we can get floor action,” and leadership isn’t promising to bring the bill to the floor until January. Congress is taking a long holiday break this year, not coming back into session until January 17, after which it will immediately be interrupted by party conferences [PDF]. Unless this calendar changes, there won’t be significant time to devote to consideration of a major bill until February.

Attention has shifted in recent days from the House T&I Committee to Natural Resources, where lawmakers have considered three bills to open up oil drilling, with the idea that the revenues from that drilling would somehow fund infrastructure. Of the three bills, only one says anything at all about infrastructure, and that one doesn’t say much.

During his speech, Mica also reportedly called himself a “knuckle dragging conservative” but said you can’t “pave over the entire country” and said he has no plans to “do away” with Transportation Enhancements funding of bicycle and pedestrian projects (though his original proposal did eliminate dedicated funding for it).

UPDATE 12:00: Leaders did not introduce a bill, but outlined their plan in rather vague terms. More to come.

At 11:15 this morning, House Speaker John Boehner, House Transportation Chair John Mica, Natural Resources Chair Doc Hastings (R-WA) and Rep. Steve Stivers (R-OH) will take the podium to unveil their transportation and energy bill. It’s likely to take the basic outline of the bill Mica announced in the summer, add enough money (about $15 billion a year) to maintain current spending levels (though not necessarily accounting for inflation, as Sen. Barbara Boxer’s bill does) and give some sense, at least, of how they’ll pay for that extra $15 billion.

According to Transportation Nation‘s Todd Zwillich, the leaders will introduce a five-year bill — not a six-year bill, which Mica had militantly supported, but still much longer than the two-year life span of the Senate bill. Industry officials from trucking, construction, and other sectors have generally supported the longer time horizon in the House bill and the more robust funding levels in the Senate bill. If the House matches those funding levels, that could swing industry support squarely over to the House bill. The major roadblock, of course, is the controversial and unproven way the GOP plans to pay for it.

Democrats will surely balk at the plan to raise transportation money by expanding energy production, but the fossil fuel industry is sure to throw its full weight behind it.

Stivers’ presence at the press conference settles speculation as to which oil-drilling-for-infrastructure-money bill the Republicans would choose. It seems Stivers’ bill has won out. A Natural Resources subcommittee will hold a hearing on his bill tomorrow.

The plan the GOP leaders announce this morning will set their agenda for the rest of the year. Boehner has already said he wants the bill passed by the end of the year.

“I want to congratulate you on your Committee’s approval of the ‘Moving Ahead for Progress in the 21st Century Act,” begins House Transportation Committee Chair John Mica’s letter yesterday to Sen. Barbara Boxer (D-CA), chair of the Environment and Public Works Committee.

Rep. John Mica says Boxer's bill will bankrupt the Highway Trust Fund. Photo: Alex Wong/Getty Images

From there, the letter changes tone:

However, I am concerned that the Senate two-year proposal does not address the fundamental problem of the long-term insolvency of our Highway Trust Fund. Your proposal will essentially bankrupt the Highway Trust Fund and make it impossible to provide any funding for fiscal year 2014.

The letter continues the debate between Mica and Boxer over how to supplement revenue from the national gas tax to fund transportation spending. It’s Mica’s response to a letter he received from Boxer three weeks ago, in which she questioned whether or not his plan truly maintained current funding levels.

Mica agrees with Boxer that current funding levels should be maintained (though her bill calls for current spending plus inflation, which Mica hasn’t bought into yet). But he has a problem with the fact that the Senate hasn’t identified the new sources of revenue necessary to do that. (He says he’s working on that himself.)

Mica attached a CBO report showing Highway Trust Fund deficits beginning in 2014 under Boxer’s scenario. Boxer has said that with the additional $12 billion from some other, yet-unidentified source, her bill will keep the HTF afloat. Current levels of spending, funded only with Trust Fund receipts, would start creating deficits even sooner – the Highway Account would run into red ink this fiscal year and the Transit Account in the next fiscal year.

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Speaking at a press conference today, Mica backed off plans to privatize Amtrak service in the Northeast. He was joined by New York State Sen. Malcolm Smith and Reps. Carolyn Maloney and Jerry Nadler. Photo: Noah Kazis.

House Transportation Committee Chairman John Mica backed off his controversial plan to privatize passenger rail on the Northeast Corridor today, announcing at a press conference that reforming Amtrak would suffice.

Mica stood with New York Representatives Carolyn Maloney and Jerry Nadler at a conference held by the US High Speed Rail Association to announce further support for true high-speed rail along the Northeast Corridor. Mica has previously singled out the Boston-to-Washington corridor as the only proper location for high-speed rail (in contrast to the Obama Administration’s nationwide approach). Today, he urged that if any more high-speed rail funds are returned to the federal government, they be disbursed to the northeast. “Any further money for high-speed rail needs to go solely to the Northeast Corridor,” he said.

Mica said his goal was to see travel times as fast as in Amtrak’s ambitious proposal, but within a decade, instead of the 30-year timeline Amtrak set out.

Given Mica’s previous support for privatizing the Northeast Corridor, today’s announcement raises questions about how a revitalized push for high-speed rail along the route would be structured. Amtrak will be involved, Mica promised. “If there wasn’t an Amtrak, we’d have to create an Amtrak,” Mica said twice today. “It just needs reform.” He stated that he is no longer asking for the route to be taken away from Amtrak and that he is willing to compromise with other members of Congress and Amtrak leadership.

Even so, Mica still referred to Amtrak as a “Soviet-style train system.” It’s clear that ideological divisions linger.

Nadler, an opponent of privatization, added that there is now widespread agreement that private capital needs to be included in plans for the Northeast — Amtrak itself is seeking private investment — and also agreement that Amtrak will continue to serve the corridor. “If we all agree that Amtrak has to be the main vehicle,” said Nadler, “we have a lot of room to talk and to compromise.” Read more…

There’s been a lot of adulation heaped upon the TIFIA loan program lately. Both houses of Congress are ready to increase funding for the program nine times over, from $100 million to $1 billion a year – despite warnings from outside groups that there may not be enough eligible projects to use up all that money.

The Staten Island Ferry has gotten some TIFIA funding. Some say an expanded TIFIA would do everything an infrastructure bank would do, but others say it wouldn't allow for large-scale community planning. Photo: SI Ferry

The TIFIA program has been around since 1998 but money pressures have led to a steep uptick in applications over the past few years. Some have criticized it for its lack of transparency in decision-making and suggested that it might be more effective housed outside of USDOT and functioning independently.

“Is TIFIA the first perfect federal program?”

Nevertheless, Congressional Republicans have thrown their full support behind the program, mainly as a counterweight to the president’s proposed infrastructure bank. Consistent with their desire to limit the growth of the federal bureaucracy, they resist the idea of creating an entirely new entity, even though the bank would be independent from the government, a la the Export-Import Bank.

There are two competing infrastructure bank bills in the Senate and a new one introduced earlier this week in the House. The Senate is planning to vote next week on a bill to spend $50 billion on infrastructure with another $10 billion in seed money for a bank – pieces of President Obama’s jobs bill, which has been dismembered for separate votes. Next week’s bill isn’t expected to pass. Indeed, many members think TIFIA is the way to go.

At a House Transportation Committee hearing earlier this month, nearly every Republican present spoke out in favor of expanding TIFIA instead of creating a new bank. Chair John Mica asked why a bank was needed when “we have a successful example” in TIFIA.

One of the things that the infrastructure bank can do is enter into long-term relationships with people who have decade-plus-long plans. They’re trying to finance a plan. What Washington knows how to do is finance a segment of a project. The current TIFIA process does not allow us to do that.

- Roy Kienitz

Highways and Transit Subcommittee Chair John Duncan (R-TN) went as far as to ask, “Is TIFIA the first perfect federal program?” He noted, “Everyone has had glowing comments about TIFIA, and it’s a program that I support as well.”

Geoffrey Yarema of Nossaman LLP (a law firm specializing in public-private partnerships for infrastructure projects) told Duncan TIFIA wasn’t perfect but that it did have 12 years of solid experience. He suggested it be “right-sized” by adding staff and he wants to “change it from a discretionary decision-making process that has the potential for being politicized – and some would say the reality of being politicized – to a first-come-first-served program.”

That change, however, would eliminate the part of TIFIA reformers like most: The fact that it has the power to encourage innovation and goal-oriented, performance-based strategic transportation planning.

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House Transportation Committee Chair John Mica (R-FL) said this morning that getting permission from Republican leadership to find more revenues to fund the transportation bill was a “major breakthrough” but still won’t say where the money will come from.

Rep. John Mica won't be specific about where additional transportation funding could come from. Photo: 13 News

Mica told an audience at a Washington Post-sponsored forum on transportation that passing yet another extension of the surface transportation reauthorization persuaded leadership that there would not be consensus on a long-term bill until the spending levels were raised. “There wont be a gas tax increase,” Mica said, “but our leadership has asked us to look for other sources of revenue, and we’re on that mission now.”

“Speaker Boehner has really opened the door to us to look for any responsible means” to fund the bill, Mica said, adding that a gas tax increase is still off the table. “There’s also the possibility of doing away with it; adopting something else.” He wouldn’t specify what the replacement fee could be.

Nor would he say what he thinks of a Republican proposal to fund the bill with revenues from new oil drilling except to say, “We’re looking at it. We have some scoring issues. And then we have to make sure we have the votes.”

Mica said he was confident that a long-term bill would pass in March. “Don’t let anybody talk about a two-year transportation bill; that’s criminal,” he said. His counterpart in the Senate, Barbara Boxer, has proposed a two-year bill, but could be willing to go along with a longer-term bill if funding levels were raised.

Mica also reiterated his support for state infrastructure banks, saying he prefers them to a national bank. He said the way Washington works is: “the biggest gorillas get the most bananas.” Instead of having big guys compete for big loans from a big national bank, he said, “the best way to prioritize projects is to have them evolve from local level, get local and state participation, and then assist them.”

Transportation Secretary Ray LaHood also addressed the Washington Post gathering. He said he was confident that, despite current gridlock, there was enough pressure on Congress to create jobs that they’ll pass some form of transportation bill this year.

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President Obama has proposed a plan to pay for the American Jobs Act, the $447 billion bill to create 1.9 million jobs, including $50 billion for infrastructure. His “pay-for” plan includes limitations on itemized deductions for the wealthy and the elimination of some tax loopholes for oil and gas companies.

Republicans have never met a problem that couldn't be solved with a little more of this.

Republicans have a different idea, though: oil drilling. Several GOP representatives have introduced bills to expand fossil fuel extraction and use the proceeds to fund transportation infrastructure.

Somehow, whatever the problem is in Washington, Democrats want to solve it by raising taxes on the wealthy, and Republicans want to solve it with oil drilling.

When it comes to funding a quick jolt to the economy, it’s pretty clear that oil drilling won’t really cut it. “Any royalties from any new energy development wouldn’t start flowing to the Treasury for years,” said Erich Zimmermann of Taxpayers for Common Sense. “Essentially this would be like spending money now to be paid for with revenues that may or may not be realized at some future time. Sounds like a recipe for a doubling down on our current deficit mess.”

Some speculate that a GOP oil drilling plan would explain the recent news that House transportation leader John Mica, with permission from his party’s leadership, is looking to raise transportation funding levels by an extra $15 billion a year in his proposed six-year reauthorization bill. After all, they’ve said that raising the gas tax is off the table.

A plan to pay for transportation and infrastructure through oil drilling would erode the entire basis of the transportation funding system, which historically rests with the Highway Trust Fund, paid for with fuel taxes and a smattering of other fees on driving and vehicles. In fact, Congress requires that at least 90 percent of what the Highway Trust Fund spends must be generated from taxes “related to the purposes for which such outlays are or will be made.”

“Generating additional revenues from an increase in energy production, therefore, would likely violate this requirement and at the very least result in an override of the Budget Act,” Zimmermann said, “but would also call into some question the importance of the ‘user pays’ principle itself as it relates to paying for the transportation system.”

Whether or not Mica is planning on paying for his transportation bill with oil drilling is a matter of speculation at this point. But several other Republicans have already introduced bills to that effect.

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According to yet another great report from Jeff Davis at Transportation Weekly, House Republican leadership has given House Transportation Committee Chair John Mica permission to seek additional revenues to fund the transportation reauthorization at levels $15 billion higher than initially proposed.

John Mica is conspiring with top GOP leadership to lift transportation funding levels above those outlined in April by Budget Chair Paul Ryan. Photo: Christian Science Monitor.

One Republican source, quoted in Transportation Weekly, said that given the persistently high unemployment rates, the surface transportation bill may become the centerpiece of Republicans’ alternative agenda to the president’s proposed jobs bill.

The House reauthorization bill, introduced by Mica in July, followed the budget plan outlined in April by Rep. Paul Ryan, setting transportation spending at the level expected to come in through Highway Trust Fund revenues over the next six years. Transportation officials, advocates, and Democrats have decried those numbers as spelling starvation for the transportation program, especially for many innovative programs that have been introduced over the last few years.

The appropriations committee followed suit a few week ago, approving spending at those low levels. But by then, Republican leadership was reportedly having second thoughts. Jeff Davis writes:

House Republican leaders privately tried to dissuade the Appropriations Committee from moving a 2012 spending bill with the lower Trust Fund spending numbers, but it would have been awkward for the Speaker or Majority Leader to publicly criticize a Republican committee chairman for writing a bill at the budget level that 235 Republican House members voted for five months previously.

Sources say Mica and Republican leadership are seeking about $15 billion a year in additional revenues, providing a very significant boost to the spending outlined in the reauthorization proposal Mica released in July:

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