Congress dithers while highway funding runs low again
By Roy Ockert Jr.
May 19, 2015
National Infrastructure Week came and went last week, and still Congress failed to make significant progress on a transportation bill. Legislation authorizing highways and mass transit spending will expire May 31, and by the end of summer the Highway Trust Fund will run out of reserves.
The Arkansas Highway and Transportation Department announced last week that work on 131 federally funded road and bridge projects will be shut down if May 31 passes without new authorization. Earlier U.S. Transportation Director Anthony Foxx advised state highway officials that the federal Highway Administration would begin furloughing employees then and therefore would not be able to process state requests for reimbursement.
Seventy other Arkansas projects had been canceled earlier.
“Our nation’s economy and the way we live both depend on having strong infrastructure,” Foxx said. “But the truth is that our current levels of investment are falling short of what is needed just to keep our existing system safe and in good condition. To make matters worse, over the past six years Congress has passed 32 short-term measures that have stripped away the ability of state and local governments to complete big projects.”
Indeed, we had the same problem this time last year. A proposed highway bill would have dedicated $265 billion for transportation projects, but in an election year Congress couldn’t figure out how to pay for it. Instead, lawmakers passed a stopgap bill for nearly $11 billion, thus kicking the can down the road another eight months.
Eight months and an election later, still no solution.
Republicans are now in a tough spot because they have the majority in both the Senate and House of Representatives. They know we need a highway bill, but they can’t bring themselves to admit that new revenue is needed.
For more than 50 years federal transportation revenue has come from dedicated revenue, mainly per-gallon taxes on fuel. Since 1993 the federal tax on gasoline has been 18.3 cents per gallon and on diesel fuel, 24.4 cents per gallon. However, since 2008 the dedicated revenue has fallen short of spending, and Congress has covered the difference without actually paying the cost.
According to a nonpartisan study, “The Road to Sustainable Highway Spending,” this year federal highway spending will total about $52 billion, and dedicated revenues will bring in an estimated $39 billion, leaving a $13 billion deficit. Without a solution, the annual shortfall will continue to grow to about $25 billion by 2025.
Never fear. The Senate has scheduled a hearing in June on a new transportation funding bill. However, lawmakers have not yet come up with a funding mechanism.
Republicans are working on a 2-month extension so that they could continue working on a “bipartisan agreement.”
Fourth District Congressman Bruce Westerman, R-Ark., announced Friday that he will file legislation this week that will “plug the $15 billion deficit in the trust find without raising taxes.” Westerman said he will offer “common sense legislation that members on both sides of the aisle should get behind in order to fund our critical infrastructure construction and maintenance and to avoid these crisis deadlines in the future.”
You can figure on Westerman’s magic plug would simply take funds from elsewhere.
Two Senate Democrats are also proposing a 2-month funding patch, thehill.com reported last week, but they, too, are struggling to find a way to pay for it.
One alternative proposal getting some traction is to use revenue from a “deemed repatriation tax” — legislation proposed by President Obama to establish a tax on foreign corporate income current reinvested overseas. It would deem all such income as repatriated and tax it at a 14 percent, rather than the standard rate of 35 percent. The proceeds would then be directed as one-time revenue for infrastructure.
Regardless of how much revenue such a scheme would raise, it wouldn’t be stable, long-term revenue for transportation.
Both parties need to face the reality that new revenue is long overdue. Another temporary fix is acceptable only if it comes with a new 6-year transportation bill.
“The Road to Sustainable Highway Spending” says that Congress must find $11 billion to ensure adequate funding for the current fiscal year and another $175 billion just to maintain transportation spending at current levels over the next decade. That’s the equivalent of a 14-cent-per-gallon gas and diesel tax increase, a 37 percent spending reduction or a 3-year delay on new projects, the study says.
Either of the latter two outcomes would have a devastating effect on the nation’s economy.
The total price tag — $186 billion — isn’t really that much, considering that the United States has spent an estimated $819 billion to fund the war in Iraq since 2003 and nearly $4 trillion on the against terrorism. None of that, by the way, has been paid for through user fees.
Fuel taxes would be a short-term fix. First-year revenue would help greatly. After that, we start losing ground again.
Nevertheless, Americans like their streets and highways, and they are more willing to accept user-related fees to pay for them than any other means. At least this would get that can a lot further down the road.
Roy Ockert is editor emeritus of The Jonesboro Sun. He may be reached by e-mail at royo@suddenlink.net.