Bingaman: Senate Approves Bill to Fund Highways, Bridges and Public Transit

Press Release

U.S. Senator Jeff Bingaman today voted to approve (74-22) legislation that will send tens millions of dollars to New Mexico to keep our state's highways and public transit systems in top shape.

The Moving Ahead for Progress in the 21st Century Act or MAP-21 bill reauthorizes and funds the Department of Transportation's transportation programs for two years. It authorizes about $370 million for highway projects in New Mexico this year and $376 million for 2013.

Additionally, the bill authorizes $33 million for public transit projects in Albuquerque, Santa Fe, Las Cruces and Farmington, as well as other smaller communities throughout the state. And it doubles to $30 million the amount set aside for a Bingaman initiative that funds public transit in tribal communities throughout the country, and re-authorizes at $450 million the Indian Reservation Roads grant program.

"This bill makes a tremendous investment in our state, ensuring that our roads and highways are safe for commuters and the flow of commerce. It also invests in our state's public transit systems, which many New Mexicans rely heavily upon," Bingaman said.

The bill also contains an amendment Bingaman co-authored that reauthorizes for one year the Department of Agriculture's Secure Rural Schools and Community Self-Determination Program. The extension would mean $12.3 million for 22 counties in our state that rely economically on national forest lands. Additionally, the provision fully-funds the Payment in Lieu of Taxes (PILT) program for an additional year. PILT compensates counties for federal land that cannot be a source of property taxes. On average, 32 New Mexico counties share about $35 million in PILT payments annually.

Bingaman was able to include an amendment to help municipalities to raise the capital they need to finance local infrastructure projects -- including school and road construction, and to meet other ongoing needs.

Under current law, banks are incentivized to purchase municipal bonds only from municipalities that issue $10 million or less in debt each year. The American Recovery and Reinvestment Act, which passed in 2009, incorporated a provision pushed by Bingaman to raise that limit to $30 million, but that measure was allowed to expire at the end of 2010. The Bingaman provision reinstates the $30 million limit from July 1, 2012 to June 30, 2013.

When the limit was $30 million, many municipalities across the country were able to place bonds directly at financial institutions, including community banks. When municipal governments work directly with community banks, they achieve considerable savings on interest and transaction costs.

"This proposal would allow more communities in our state to make the infrastructure investments they need, and in doing so will create good job opportunities for New Mexicans," Bingaman said.

Bingaman also had two other amendments adopted. The first amendment that was adopted during the Finance Committee's markup corrects tax code provisions that are driving exceedingly long leases of our nation's highways to private operators, while providing an unjustifiable taxpayer subsidy to these private operators.

The tax code provides favorable treatment in two ways to these long-term highway leases. First, the code allows the lessor to depreciate the cost of leased infrastructure assets over 15 years, even though the Bureau of Economic Analysis (BEA) says the useful life is 45 years. To be eligible for this deduction, the lessor must have constructive ownership of the assets, which occurs when a lease is longer than the highway's "useful life;" this is one reason for the long lengths of these highway leases. Second, no matter how long the lease, the intangible "franchise right" to collect tolls can be amortized over 15 years -- even though economic reality would dictate an amortization period equal to the lease length (i.e., 75 years for the Indiana Toll Road).

The Bingaman amendment modifies the tax treatment of these long-term highway leases to match the economic reality. First, the amendment requires the lessor to depreciate the cost of the existing highway infrastructure over 45 years, which is BEA's estimate of the useful life of the infrastructure. Second, the amendment requires the lessor to amortize the intangible "franchise right" to collect tolls over the entire length of the lease or 15 years, whichever is longer.

A separate Bingaman amendment removes certain privatized highways from consideration in apportioning Federal highway funding among the states. Specifically, the amendment eliminates the lane-miles and vehicle-miles traveled (VMT) for any "privatized" toll road as a factor in the formulae used to apportion federal highway funding. The definition of "privatized highways" under the measure includes any formerly publicly operated toll road that has been transferred to a private entity that controls the operation of the highway and ownership of the revenues collected.

When an existing toll road is privatized, all responsibility for maintaining the road, collecting tolls, paying the investors' profit, and so forth are taken on by the private entity. However, because such a privatized toll road continues to be a factor for federal formula funding for highways, the nation's highway users and taxpayers are essentially continuing to pay for the road despite the fact that a state has privatized it and no longer has any responsibility for operating or maintaining it. Drivers across the nation shouldn't be subsidizing any state that has chosen essentially to "sell off" an existing highway to the highest bidder.

As a result of this amendment, New Mexico and most other states would see an increase in their federal highway funds.

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