Chapter 3: Federal Transportation Policy:
ISTEA and TEA-21
Overview
The Intermodal Surface Transportation Efficiency Act (ISTEA) was passed in 1991 and dramatically changed transportation policy in the United States. It required state Departments of Transportation to consider more than expanded highways and additional roads as solutions to America’s mobility problems. For the first time, participation by the public in the planning process was mandated. It set aside small amounts of money to build Transportation Enhancements like bicycle and pedestrian facilities as well as a new fund called the Congestion Mitigation and Air Quality program to help cities clean up their air pollution problems. It focused on mobility of people and goods by encouraging multiple modes of transportation that are linked together.
ISTEA expired on September 30, 1997 but was extended for six months while Congress worked on a new highway bill. The 800 page Transportation Equity Act for the 21st Century (TEA-21) legislation was passed on June 9, 1998 and a corrections bill passed on July 22, 1998 as the TEA-21 Restoration Act.123 Most of the groundbreaking reforms from ISTEA remained intact.124 The new bill requires transportation agencies to publish a list of projects for which federal funds were obligated in the preceding year. The US Department of Transportation must consult with bicycle advocates to develop guidance on the various approaches to accommodate bicycle and pedestrian transportation. TEA-21 expands support for walking and bicycling established by ISTEA and requires their routine consideration in development of statewide and metropolitan plans.
The federal Highway Trust Fund (HTF) was established in 1956 as a mechanism to fund construction of the 44,000 miles of the Interstate Highway System. The Highway Revenue Act provided that revenues from certain highway user taxes, primarily the federal gas tax and a variety of tire and truck sales taxes, would be credited to the HTF to finance the highway program in the Federal-Aid Highway Act of 1956. In the early 1980s, Congress decided that some revenues should be used to fund transit. The federal gasoline tax was 18.3 cents in 1998. Of this, 2.86 cents per gallon flowed to the Transit Account, and 15.44 cents went to the Highway Account. Each penny of the federal motor fuel tax results in about $1.4 billion annually.125
Roughly $20 billion per year was authorized under ISTEA. Most of the funding in ISTEA was earmarked for highways, but some funds were transferred to the Surface Transportation Program (STP). The funds were distributed to the states and in turn each state decided how to spend the monies. Funds designated for Interstate Maintenance (rehabilitation, restoration, resurfacing, and reconstruction that added new single occupancy lanes) can not be transferred to another program. This limitation on transferring funds to add new road capacity was carried over in TEA-21. Over the life of ISTEA, $2.1 billion has been flexed; some went to the General Fund for debt reduction.126 In 1995 a record amount, $800 million, was "flexed" to transit projects from other funding areas. In contrast, only $6 million was transferred in 1991.127
TEA-21
Under TEA-21, all gasoline taxes were earmarked for transportation and none can be used for national debt reduction. The bill authorized $217 billion over 6 years, a 40 percent increase over ISTEA, but this amount will fluctuate depending on the amount that goes into the HTF and only $198 billion is guaranteed.128 Ohio will receive a 37 percent increase in funding, which means it will get back 91 percent of the money it sends to Washington D.C.129 Federal funding makes up about one-fourth of total public sector spending on transportation. Total federal, state, and local spending on surface transportation equals nearly $100 billion per year so an extra $6 billion a year of which 20 percent goes to transit is not unreasonable.130 The total amount guaranteed for highways was $162 billion and transit $36 billion.131 The proportion of funds for new highways decreased by 54 percent to 3.7 percent of total funds. There was a slight increase in guaranteed funding for transit from 17.3 percent in ISTEA to 18.1 percent in TEA-21.132
Ohio received $715 million in 1998 from TEA-21. ODOT expects to receive about $880 million in 1999, which will reach $950 million by the end of 2003. A total of $65 million was designated for detailed engineering studies of a proposed 40-mile light-rail system linking Kings Island Amusement Park, downtown Cincinnati, and the Greater Cincinnati- Northern Kentucky International Airport. Under ISTEA, Ohio received $640 million annually in federal funding between 1991 and 1997.133
The Basic Programs in TEA-21 include the National Highway System, Surface Transportation Program, Congestion Mitigation and Air Quality Improvement Program, and Enhancements. Figure 3-1 provides a breakdown of these programs by percentage. The National Highway System received 25 percent of TEA-21 funding which means $166 million for Ohio. Surface Transportation received $216 million, 29 percent of funding, that includes 2.9 percent for Enhancements and 2.9 percent for Safety. Another 3 percent, as a set-aside from the Surface Transportation program, went to Transportation Enhancements such as pedestrian and bike facilities, landscaping and historic preservation and mitigation of water pollution. Half of the funds were designated for local planning organizations in areas over 200,000 in population. The amount received by each area is based on the population of the area; each locality controls its dispensation. The remaining 30 percent was designated for non-urbanized (rural) areas and is programmed by the states. Bridge Rehabilitation and Replacement received 18 percent, $128 million for Ohio.134
The Congestion Mitigation and Air Quality Improvement Program received 7 percent of the funding. CMAQ provides funds to areas that are designated by the USEPA as nonattainment or maintenance for ozone or carbon monoxide, two pervasive air pollutants. Nonattainment areas are places where the federal air quality standards are being exceeded on an ongoing basis, or where exceedances have occurred in the last three years. Maintenance areas once were nonattainment areas but exceedances no longer occur on a continuing basis. Funds must be spent on projects that help reduce ozone, carbon monoxide, or particulate matter. CMAQ will receive 7 percent of TEA-21 funds, which translates to $51 million for Ohio.135
Interstate Maintenance received 21 percent ($180 million in Ohio) for resurfacing, restoring, rehabilitation, and reconstruction of interstate routes. The monies are not to be used to expand travel lanes unless it is a HOV lane or auxiliary lane.136 HOV lanes are built or designated for vehicles carrying at least two occupants.
The new highway bill also included a few new programs. The Transportation and Community and System Preservation Pilot Program (TCSP) will focus on the link between land use, community, quality of life, and transportation. It provides $120 million over 6 years to increase efficiency while decreasing impacts on the environment. It provides funding for planning, implementation, and research to investigate and address the relationship between transportation, community, and system preservation. Projects should involve the participation of non-traditional partners and ensure efficient access to jobs, services, and centers of trade.137
The goal of the Access to Jobs and Reverse Commuter Grants is to increase transportation options for low-income workers and direct transportation services to suburban employment centers. Two-thirds of new jobs are in the suburbs, while three-quarters of welfare recipients live in rural area or central cites.138 More than 50 percent of the people on public assistance in the Cleveland-Akron area rely on public transportation.139 Transit authorities can apply for grants to cover the cost of developing and implementing services to transport welfare recipients and other eligible low-income individuals to and from jobs.
The National Scenic Byways Program received $148 million over 6 years and directs USDOT to recognize "roads having outstanding scenic, historic, cultural, natural, recreational, and archaeological qualities by designating the roads as National Scenic Byways and All American Roads." For more information, contact Scenic America or Scenic Ohio. USDOT was directed to undertake a grant program for scenic byways.140
Other programs funded were:
Nationwide funding for total system preservation is approximately $9.2 billion per year, which is 26.4% of TEA-21 versus 23.8 of ISTEA. Other Ohio programs that received funding are the Appalachian Development Highway System $18 to $19.9 million annually, Metro Planning $7 million, and Highway Priority Projects $56 million ($33.2 million in 1998 to $57.4 in 2003) which includes demonstration projects. Congestion Management System will receive between $50 and $74 million annually depending on congressional appropriations.142
The Donor State Bonus, Hold Harmless, 90% of Payments, and interstate reimbursement were combined into a new program called Minimum Guarantee which received $72 million in Ohio and $5.5 billion annually nationwide. The Basic Programs received $648 million in 1998, which will rise to $777 million in 2003.143
Title III of TEA-21 delegated funds to transit from the Mass Transit Account of the Highway Trust Fund. Money was distributed according to a formula for urban areas, rural areas and for the elderly and people with disabilities. It includes Capital Pro-gram Grants and Loans, Bus and Bus Related Facilities, New Starts, Transit Research and Planning, Clean Fuels Formula Grants, and the Job Access and Reverse Commute Grants.
There also is a new Transit Enhancement program for bus shelters, landscaping, public art, bike access, and signage. Funding for transit projects increased from $8 million in 1990 to $265 million in 1997 under ISTEA. The bill authorized 25 new rail projects and a New Starts Program to attract economic development and build better communities. No cities in Ohio will receive funds, but Louisville, Memphis, and Nashville will.144 (A list of cities authorized by TEA-21 to receive rail investments can be found in Figure 3-2.)
Under TEA-21 the level of guaranteed funding for transit actually exceeds what is generated by the gasoline taxes. Monies from the General fund must be used to make up the difference. However, Amtrak was not funded under the transit guarantee programs; therefore it must compete for federal funds. TEA-21 did further commuter choice by increasing the amount an employee can receive tax-free each month for bus fare from $65 to $100 a month by 2002.
The Enhancements program in Ohio will receive $127 million per year from TEA-21, which is a 40 percent increase from ISTEA. The program’s purpose is to encourage diverse modes of travel, foster local economic development, and bring direct benefits to communities from transportation spending. It provides monies for pedestrian and bicycle safety and education activities, acquisition of scenic easement, and scenic and historic sites, landscaping, historic preservation, pedestrian and bicycle trails, and control and removal of outdoor advertising.145 Ohio received $87 million under ISTEA for enhancement projects. See Appendix F for a list of projects that were funded in Ohio under ISTEA. Transportation Enhancement programs only account for 2 percent of the Act’s total authorization. A portion of Ohio’s Enhancement Funds, $254,000, was transferred to other projects, but no funds from TEA-21 are transferable.146
In the 18 years prior to ISTEA only $41 million was used for bicycle and pedestrian facilities nationwide. Under ISTEA more than $1.4 billion was invested; over $295 million went for sidewalks, tree plantings, street lighting, and other improvements to create a more walkable environment. For bike lanes, highway shoulders, and bicycle parking facilities, $133 million was spent and more than $921 million in Federal funds was invested in multi-use trail development along abandoned railroad lines, stream and river corridors, and canal towpaths. Streetscaping and landscaping improvements that included some pedestrian or bicycle facilities cost $251 million.147
Innovative Finance Provisions
Provision in TEA-21 could move us away from direct funding by the federal government toward private capital leveraged by federal loan guarantees through the Transportation Infrastructure Finance and Innovation Act (TIFIA). These funds may be used for more toll roads but could be used for more transit projects. Direct loans, loan guarantees, letters of credit, recognition of donated funds, property, and in-kind contribution, and joint public-private financing of transit oriented community economic development are ways to fill the gaps for funding projects. Costs that are eligible include planning, design work, environmental mitigation, construction, buying real property, reconstruction, and rehabilitation.148