Time Running Out for the Highway Trust Fund


Less than two months remain before the anticipated late August shortfall of the Highway Trust Fund, and Congress does not appear to be any closer to finding a funding solution. A shortfall would put an end to transportation funding from the Federal Government that helps pay for road, highway, transit, and rail projects throughout the United States. In anticipation of the shortfall, some states have already begun postponing important infrastructure projects during the height of construction season, and states that have begun projects will be caught in the middle of construction with no money for completion if the fund runs dry.

Two surface transportation bills to reauthorize or succeed MAP-21 have been proposed, but neither has advanced in the Senate or the House without a funding mechanism in place. President Obama's transportation bill, the four-year GROW AMERICA Act, contained a proposal for corporate tax reform as a funding mechanism, an unsustainable solution that also proved to be a non-starter in Congress. The Environment and Public Works Committee in the Senate put forth a six-year reauthorization of MAP-21, but it is still awaiting a funding plan from the Finance Committee, not to mention a transit and rail component from the Banking Committee and Commerce Committee respectively.

In absence of a long-term solution, lawmakers have suggested several proposals for temporary relief. A House GOP plan to cut USPS Saturday delivery for a one-year extension for the trust fund garnered a lot of press, but never was seriously considered by many policymakers. A onetime repatriation tax holiday for overseas earnings was supported by Senators Harry Reid and Rand Paul, but the scheme involved a $96 billion loss in revenue for the Federal Government by 2024, which made it an unpopular solution.

Most recently, Senator Ron Wyden proposed a $9 billion plan to sustain the fund through the end of December by pulling funds from several sources, including changing IRA inheritance policy and taking money from a fund for leaking underground fuel tanks. Analysts agree that the best chance for long-term funding reform is during the lame-duck session, after this year's election. Extending the trust fund until the end of the year may be the only option for a real, long-term funding solution. It would also avoid the untenable loss of funding for states in the middle of important infrastructure projects this summer.

The most obvious solution for fully funding our infrastructure needs is a gas-tax increase, but any tax increase is unpopular among many lawmakers, especially during an election year. Despite its unpopularity, two proposals have been put forward thus far. Representative Earl Blumenauer introduced a bill for a 15 cent gas tax hike back in December of 2013, but it never gained ground. In June a bi-partisan duo, Senators Chris Murphy and Bob Corker, introduced a proposal to raise the gas tax by 12 cents to fully fund the Senate's six-year reauthorization of Map-21, but it faces opposition by Republican lawmakers, including the new House Majority Leader Kevin McCarthy. A different kind of proposal has come from Representative Peter DeFazio, who proposed eliminating the gas tax in favor of a tax per barrel of oil sent to refineries, a long-term proposal that shifts taxes away from users of gasoline to producers.

No matter what ends up being the golden ticket to transportation reform, one thing is for certain, failure is not an option. It is predicted that bankruptcy of the Highway Trust Fund could mean a loss of as many as 700,000 construction jobs next year, and nearly $15 billion in cuts to highway and transit projects throughout the United States in FY 2015. These estimates don't even address the long-term impact of deteriorating infrastructure on our commutes, the freight network, and ultimately, the economy. The Highway Trust Fund is a ticking time bomb; we need transportation funding reform and we need it now, the fate of our infrastructure and our economy depends on it.

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