Long-awaited Highway Bill Brings Positive Results

After 22 months of political wrangling and 11 extensions, H.R.3, the Transportation Equity Act - Legacy for Users (SAFETEA-LU) has been signed into law.

After 22 months of political wrangling and 11 extensions, H.R.3, the Transportation Equity Act - Legacy for Users (SAFETEA-LU) has been signed into law. The new legislation sets surface-transportation contract authority at an historically high $295 billion, with guaranteed spending authority of $286.4 billion over six years. This is a 38% increase over TEA-21 levels.

The increased funding included in the new law was possible largely due to reforms enacted to federal tax treatment of ethanol motor fuels. The tax changes ensure the Highway Trust Fund will be compensated for ethanol motor fuel sales, and will provide $18.9 billion in new trust fund revenues.

The highway bill addresses a broad range of transportation issues. Here are some of the key highlights:

• A central issue among states contributing tax revenue to the Highway Trust Fund has been the rate of funding received in return. In the past, many "donor" states actually sent in more tax revenue than they ultimately received back. The new law raises the minimum state rate of return from 90.5% in 2005 to 92% in fiscal years 2008 and 2009.

• All states will be guaranteed a total six-year average funding increase of at least 19% over TEA-21 levels. The legislation also provides greater flexibility for state DOTs to use federal funds for operational improvements and engineering.

• Innovative financing provisions have been incorporated into H.R.3, including a private-activity bonds program that will allow $15 billion in federal tax-exempt bonds to be issued for financing highway, bridge and intermodal facilities.

• H.R.3 creates a $5 billion dedicated safety program that will provide significant investment in roadway infrastructure safety.

• A provision has been included for Congestion Mitigation and Air Quality program funds for retrofit of diesel-powered off-road construction equipment used on federally-funded projects. This provision will assist contractors in meeting stricter clean air requirements going into effect next year.

• The new law streamlines the project-development process for projects requiring environmental impact statements. It exempts those with minimal effects on historic sites, parks, recreation areas and wildlife refuges from review (with concurrence of resource-agency officials). And it sets a 180-day statute of limitations for lawsuits challenging federal agencies' approval of highway and transit projects.

• Funding has been increased at the state and national levels for both public and private transportation-related research and development programs.

• The bill mandates creation of a bipartisan, "blue ribbon" commission to identify the best ways to finance federal transportation investments post-2009.

Ultimately, passage of the bill should prove beneficial to contractors, as well as the motoring public.

"This law will be a major boost in mobility for all Americans," asserts Jack Lettiere, commissioner of the New Jersey DOT and president of the American Association of State Highway and Transportation Officials. "The bill will accelerate needed transportation projects, save lives, improve people's quality of life, create jobs and improve many ways we do business."