Congress Passes Transportation, Trade Bills

Staff -- Industrial Distribution, 9/1/2005

A number of "on-hold" highway construction projects can begin to go forward as a result of Congress passing the Transportation Equity Act, a massive highway and transportation bill that had long been delayed in both the House and the Senate.

President Bush signed the $286.5 billion measure into law in mid-August, concluding a series of legislative delays and stalemates that had prevented final passage. Before finally agreeing on a bill, Congress had to pass 11 separate extensions in recent years.

A major stumbling point had been over the return that states are guaranteed on their contributions to the Highway Trust Fund—funds collected mainly through gasoline taxes.

"Donor states," which contribute more in tax revenue than they receive back in transportation money, had long insisted on a more favorable return. Major donor states include California, Texas, Arizona and Florida.

Marshall Jones, persident of the Specialty Tools & Fasteners Distributors Assn., said passage of the bill, "will be a good thing for many of our distributors. Some projects that have been waiting for funding will now be able to move forward."

The bill is the largest public works bill in the nation's history. About 80 percent of the bill's funding will be aimed at highway projects. Mass transit projects are expected to receive about 18 percent of funds, with the remainder paying for transportation safety projects, as well as a number of bicycle trails and other recreational projects.

Every state in the country will reap highway and transit benefits from the legislation, spread out over the five-year span that the bill covers. Some examples of what the bill will do for various states:

• Illinois—Transit systems will receive $2.1 billion out of the more than $6 billion the state has allotted. Other projects slated include reconstruction and new additions to Chicago's North-South Wacker Drives as well as improvements on Highway 51.
• New York—The state will receive more than $16.5 billion dollars, including $10.07 billion in highway funds and $6.5 billion for the various railroad and transit systems.
• Oklahoma—More than $2.8 billion will go to projects such as improvements to the state's Interstates 40 and 44 ($220 million) with more than $50 million being used to upgrade bridges.
• Vermont—More than $1 billion will enable the state to upgrade various roadwork, bridges and railroad systems, including the heavily used St. Lawrence and Atlantic Railroad.
• Rhode Island—The smallest state in the country will be upgrading its highways ($53.5 million) and bridges ($33.5 million). An additional $5 million will go to the commuter rail system as well as $31 million in bicycle paths and trails.

Stephen Sandherr, CEO of the Associated General Contractors of America, praised the passage of the legislation, saying in a statement that the ACG was "pleased that this bill includes many solid policy changes that [ACG] recommended to Congress—changes that will help our members deliver projects quicker and safer."

"It is, in many ways, a jobs bill," said Jade West, senior vice president of government relations for the National Assn. of Wholesaler-Distributors. "It creates a healthy economic certainty which the continuing extensions never did."

It is impossible to predict how many jobs will be continued, let alone added, by the legislation, West noted.

"But this bill has a broad reach," she said. "After all, every state has highways."

In addition to the highway legislation, Congress approved the Central American Free Trade Agreement. Proponents of the bill say it will help eliminate barriers to trade and investment between the United States, Honduras, El Salvador, Nicaragua, Guatemala, Costa Rica and the Dominican Republic.

Boosters of CAFTA said the countries involved add up to the second-largest market for U.S. goods in Latin America (after Mexico), estimating that they took in about $15 billion in U.S. exports last year. However, that amount is just slightly more than 1 percent of the $1.15 trillion in U.S. exports.

Opponents of CAFTA expressed concern that its passage would indicate that free trade deals would be possible with virtually any country, regardless of how low it sets its wages or how minimal its labor protections.