Vol. 14, No. 5; September/October 2003

Toll Revenue Bonds: An Answer to the Funding Dilemma?
How to raise the level of federal funding to meet the projected needs of the surface transportation program over the next six years is a dilemma whose solution continues to elude congressional authorizers. Fiscally, the simplest action would be to boost the gas tax or to index the fuel tax to inflation, but both moves face determined opposition from the Administration, from congressional leadership and from the congressional tax-writing committees. Other funding mechanisms could increase the surface transportation program by some $40 billion, to an estimated $250 billion over six years -- meeting the Administration proposal of $247 billion, but still considerably short of the $375 billion goal set by the House authorizers, the $311 billion goal set by their Senate counterparts, or even the $280 million target set by the FY 2004 Congressional Budget Resolution. There exists, however, another way of increasing revenue for transportation, an option whose potential is only now beginning to be recognized. That option is toll revenue bonding. Revenue bonds backed by tolls collected on newly built facilities could be used to finance construction of significant new highway capacity. It is not inconceivable that the sale of such bonds could permit the surface transportation program to grow to the levels advocated by the congressional transportation leaders.

The Fiscal Year 2004 House Transportation Appropriations Bill
The Fiscal Year 2004 Transportation Appropriations bill emerged from the House Appropriations Committee in late July with many of the controversial provisions proposed by the Transportation Appropriations Subcommittee eliminated in the full committee mark-up. The Committee reserved its sharpest comments for a critique of Amtrak. "The only actions that can change the abysmal situation at Amtrak is to completely change how Amtrak operates and how intercity passenger rail [service] is managed" the Committee wrote in its report. Its call for a "fundamental system change" coincides with the release of the Administration's long-awaited plan for Amtrak's restructuring, the Passenger Rail Investment Reform Act of 2003 (see companion Brief, "Reinventing Amtrak"). The final transportation appropriation levels for FY 2004 will not be known until the Senate comes up with its own bill and the differences are resolved in a House-Senate conference.

Bus Rapid Transit Comes of Age
More than four years ago we drew our readers' attention to the concept of Bus Rapid Transit (BRT) ("Bus Rapid Transit -- Can It Work in the U.S.?" March /April 1999). At that time, the BRT was little more than a curiosity, best known for its success abroad -- in Curitiba, Brazil and Ottawa, Canada. Since then, BRT has become a subject of intense interest among transportation officials throughout the country, thanks in part to a vigorous endorsement by the Federal Transit Administration. Today, according to the General Accounting Office, 12 U.S. cities are in various stages of implementing BRT projects.

The number of potential new starts projects is expanding rapidly. As of June 2003, there were 17 projects in final design and 39 projects in preliminary engineering with an estimated cost of $50.18 billion, and 130 investment planning studies representing a potential investment of $24 billion (House Appropriations Committee report, FY 2004 Transportation and Treasury Appropriations Bill, July 24, 2003) Clearly, federal resources can only fund a tiny fraction of these projects and competition for federal support will be fierce. By opting for the less costly BRT systems, local jurisdictions can increase their chances of obtaining federal funds as well as reduce the local fiscal burden.

Reinventing Amtrak - Commentary
The long awaited Administration proposal to overhaul Amtrak was unveiled on July 28 to a dissonant chorus of praise and criticism. The Chicago Tribune called the plan "refreshingly bold" while the Pittsburgh Post-Gazette blasted it as "a thinly veiled death sentence for national passenger rail service." The Administration's plan, which calls upon the states to assume primary responsibility for intercity rail service, raises a fundamental question that has seldom been raised during Amtrak's 30-year existence: What constitutes a "national passenger rail system?" Should such a system be a continent-wide coast-to-coast network of interconnected long-distance train routes, as envisioned by many Amtrak supporters? Or should it rather be a system of regional rail services? In our view, the answer is self-evident. A coast-to-coast interconnected rail system is neither justified nor needed. Ours is a vast country and there simply is not enough demand for long distance rail travel to make a continent-wide rail network economically feasible. Instead, what is needed is rail services connecting major population centers in heavily traveled corridors. When viewed in this light, it becomes clearer why responsibility for intercity rail services -- like for commuter rail services -- should properly be vested in regional authorities or state governments, as recommended by the Bush Administration.

Managing Change in State DOTs
Managing change has become a key preoccupation of state DOT chief executives. Growing traffic congestion, technological innovation, budgetary constraints, high personnel turnover and homeland security considerations have created a new policy environment requiring changes in agency roles, priorities and organization. How state DOT leadership is responding to the new challenges is the subject of a new report prepared for the American Association of State Highway and Transportation Officials (AASHTO) by Stephen Lockwood of Parsons Brinckerhoff.

INNOVATION BRIEFS
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