As bills stall, potholes are ahead

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The transportation bill fight so far has been treated as an exercise in Washington dysfunction. But if nothing happens before March 31, the consequences are very real: stalled construction projects, unfilled potholes, idled buses and — in theory — lower gas prices.

With long-term transportation bills stalled in the House and Senate, there is increased recognition that a ninth extension of a law that originally expired in 2009 is inevitable. So what if the presumably simple task of passing a stopgap becomes another partisan fight and Congress fails?

Immediately, most of the 18.4-cents-per-gallon federal gas tax will expire, potentially saving Americans at the pump as gasoline prices skyrocket but draining the already-shaky Highway Trust Fund $110 million a day. The government will still collect 4.3 cents per gallon, but that money will pile up and can’t be disbursed to cash-strapped states, according to an administration official.

The construction industry will also take a big hit, just as the spring construction season starts. That means decaying roads, unfilled potholes and barren construction sites, as well as continuing economic hardship for industry workers.

Already, the construction industry is seeing higher numbers of unemployment compared with other professions. Nationally, the unemployment rate in the construction sector neared 18 percent in January, according to the Bureau of Labor Statistics.

“The building and construction trades are looking at 15, 20, 30, 40 percent unemployment depending on the trade and the location,” said Rep. Earl Blumenauer (D-Ore.).

“If they can’t get an extension done, then construction comes to a screeching halt,” said Janet Kavinoky, the U.S. Chamber of Commerce’s top transportation lobbyist.

Those projects are funded by states, which submit bills to the feds for reimbursement. But states have budget crunches of their own.

“Most states couldn’t cover the cash flow if they lost federal funding for more than a few days,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials, the voice of all 50 state departments of transportation. “They’re on very tight budgets, and they’re in no position to backfill with state dollars.”

Stopping and resuming projects is a costly affair: Construction firms can charge states a “demobilization” fee for halting work and a “mobilization” charge when they resume.

“It would cost millions, if not billions, in wasted wheel-spinning just to shut down and then ramp up projects that were under way,” Horsley said.

Fiscal conservatives complain the current transportation law allows for more spending than it takes in, and it has required $35 billion in general fund transfers the past few years to stay afloat. But it would cost even more if the federal program they criticize expires — with no authority to spend trust fund dollars, the government could be on the hook for about $50 billion in preapproved projects.

“That’s a huge bill that would be transferred from the Highway Trust Fund to the federal deficit,” Horsley said.

There is recent precedent for such a scenario: Last summer, the Federal Aviation Administration entered a two-week partial shutdown that put thousands of construction workers out of work and cost the government hundreds of millions of dollars in uncollected passenger taxes. It also made Congress look out of touch with the day-to-day transportation needs of the country.

“They only need to look back at what happened with the FAA,” Kavinoky said. “It really needs to be a foregone conclusion that there needs to be an extension.”

During that stretch, most airlines kept their fares steady and pocketed money that would have gone to the government. If the federal government stopped collecting the gas tax, gasoline stations could do the same thing. Gas prices this weekend hit a national average of $3.76 per gallon, AAA reports.

But stations would be torn between two options, an administration official explained. The uncertainty created by the expiration could lead them to continue collecting the tax, fearing retroactive collection by the feds. But because consumers aren’t brand loyal, if one gas station began charging a lower rate because of the reduced taxation at the pump, other nearby stations would be forced to do so, too.

Rep. Steve LaTourette (R-Ohio), who has served as a conduit between House leaders and Republicans unhappy with various versions of a House transportation bill, said a shutdown is possible if things play out similarly to the FAA extension. Last summer, the House included several minor program changes in a stopgap traditionally free of policy changes. The shutdown followed soon afterward.

“Everyone knew what the issues were, but nobody wanted to deal with it. If you horse around like that, then, yeah, there might be a problem with the extension,” he said. “I’ve seen things that haven’t been clean, and we talked about the FAA bill, so I hope that’s not the case.”

Bicameral delays have effectively doubled the amount of work for Congress. Now, instead of focusing on a multiyear fix for transportation, members also have to put together a short-term extension that can head toward easy passage. Members of both parties have said they will be likely to support a clean extension but only if progress on a longer-term fix is evident.

Senate Majority Leader Harry Reid (D-Nev.) said it will be “easy to do” an extension, adding that it would be better than nothing but not a solution to the current impasse.

“If we extend for two months, try getting a two-month contract to do I-15,” Reid said of the interstate connecting California and Nevada during a conference call with reporters.

The backlash from states, motorists and construction firms indicates a shutdown is unlikely, experts say.

“That would amount to an election-year political suicide,” said Matt Jeanneret, a senior vice president at the American Road and Transportation Builders Association, the country’s oldest representative of transportation construction firms. “That would defy common sense in an election year. But stranger things have happened.”