Just hours before the funding for the nation’s highway and infrastructure was set to expire, President Barack Obama on Friday signed a new five-year, $305 billion transportation bill.
The new law calls for the federal government to spend $205 billion on highway projects and $48 billion on transit projects between now and 2020. The money to pay for it all comes from an extension of the federal gas tax, as well as a package of $70 billion in offsets from other areas of the federal budget.
First Transporation Bill in More than a Decade
The new law is the first time a long-term transportation bill has been passed by both houses of Congress and signed into law in more than decade. It follows a series of short-term fixes that date back to the administration of President George W. Bush.
Obama and Republican leadership in both houses were anxious to pass a permanent bill, rather than another stopgap measure, although the bill falls short of the $478 billion proposal the president sent to Congress earlier this year.
“This bill is not perfect, but it is a commonsense compromise, and an important first step in the right direction,” Obama said during the signing ceremony on Friday. “I look forward to signing this bill right away, so that w can put Americans to work rebuilding our crumbling roads, bridges, and transit systems, reauthorize the Export-Import Bank that helps our companies compete around the world, and give local and state government and employers the certainty they need to invest and hire for the long term.”
Gas Tax Continues for Another Five Years
The new law means that drivers in the US will continue to pay the 18.4 cents per gallon federal gas tax for the next five years. The additional $70 billion from other federal funding sources was necessary to cover a $16 billion shortfall in gas tax revenues that has resulted from US cars becoming more fuel efficient.
While the federal government typically spends about $50 billion per year on highway projects, the gas tax only brings in about $34 billion annually. But lawmakers have resisted increasing the gas tax because they are afraid of angering the motoring public.
Winners and Losers
Amid the details of the 1,300-page — dubbed the Fixing America’s Surface Transportation Act, or FAST — there were winners and losers.
In the winning column are:
- Local Transit Lines — There will be more support for smart transit-oriented development projects, which will be eligible for low-interest federal financing programs. These grants can help communities make the best use of land around transit lines and stops, efficiently located jobs and affordable housing near new transit stations, and boost ridership.
- Local Governments — There will be slightly more money for local governments to invest in their high-priority projects with an increase in sub-allocated funds by 1% per year for the next five years. There also will be greater access to low-cost federal loans.
Hoping for More Cooperation
The president said he hoped the bill’s passage represents a breakthrough in the partisan gridlock that has earmarked the most recent Congress.
“As we applaud the kind of bipartisan compromise that was reached last night, we should also recognize that we still have work to do,” Obama said.