New, performance-based method of divvying up funds at risk

Introduction

Public transportation advocates are up in arms this week over the latest twist in an ongoing war between mass transit and highway funding in the stimulus package. Published reports indicate that Senator Kit Bond, a Missouri Republican, plans to propose amendments that redirect $2 billion from high speed rail and $5.5 billion from competitive transportation grants toward an increase in highway funding; Bond is said to be concerned that the original intended uses for that money likely wouldn’t stimulate the economy fast enough.

Just as important as where the money ends up, however, is how it gets spent. Under the initial $5.5 billion discretionary grant program, money would go not to the states but to the Department of Transportation for projects in the mode of its choice — highway, transit, rail, or port — based on the significance of the project’s metro, regional, or national impact. Transportation Secretary Ray LaHood would additionally need to “publish criteria on which to base the competition.”

Such a program could lay down a novel precedent heading into this fall, when Congress is set to reauthorize the bill that funds surface transportation nationwide. Members of both parties agree the country needs a new federal transportation vision, as the Government Accountability Office has written that Congress’ current approach “is not working well.”

The largest highway, transit, and safety grant programs distribute funds through formulas that are typically not linked to performance and, in many cases, have only an indirect relationship to needs. Mechanisms generally do not link programs to the federal objectives they are intended to address, in part due to the wide discretion granted to states and localities in using most federal funds. Furthermore, surface transportation programs often do not employ the best tools and approaches available, such as rigorous economic analysis for project selection and a mode-neutral approach to planning and investment.

Lawmakers might have to sacrifice the most strenuous of performance standards during the stimulus in order to focus on immediate job creation, but as LaHood made clear in his confirmation testimony, the accountability zeitgeist still looms. Such a grant program would put more money where his mouth is.

“Transportation infrastructure is a substantial part of that plan, and one of my first and most important tasks, if confirmed, will be to manage the effective use of those funds,” LaHood told the Senate Commerce committee. “But job creation cannot be the only goal for these investments. As we attend to our immediate challenges, we must keep watch on longer term results.”

Hoping that the $5.5 billion will indeed be money DOT can control, LaHood wrote on his blog that a new Transportation Investment Generating Economic Recovery (TIGER) team would be tasked with ensuring funding “goes out to states and localities as quickly as possible.”