The latest in a long series of stop-gap measures would temporarily plug the funding hole in the ailing Highway Trust Fund while lawmakers continue to search for a long-term solution.
Two weeks. That’s how long before the Highway Trust Fund drops below its minimum balance and the U.S. Department of Transportation begins scaling back federal aid to states for road construction and bridge repair.
On Tuesday, Transportation Secretary Anthony Foxx warned transportation officials at the state level that the Federal Highway Administration will be unable to incur new obligations or reimburse their departments beginning Aug. 1, a day after the current extension for MAP-21 surface transportation authority is set to expire.
The Highway Trust Fund (HTF) is projected to go into the red in early September because existing obligations exceed revenue from gas and diesel taxes, which have not been adjusted since 1993. But the legal authority to allocate new money expires July 31. The rise in fuel-efficient vehicles along with the erosion of HTF purchasing power due to inflation have resulted in a situation in which the trust fund is repeatedly depleted without congressional transfers of money from the General Fund.
In August, the DOT’s Highway Account is anticipated to dip below the $4 billion threshold, triggering cash-management procedures and leading to delayed reimbursements to states. In addition to not having enough money to pay states on schedule for the federal share of ongoing projects, let alone new ones, the FHWA will be required to furlough employees. That will mean a loss of personnel who process payments to states, and help with project approvals, environmental reviews and permitting, authorizations for new projects and modifications to existing projects, and other types of technical assistance.
Some states have already put the brakes on new projects due to concerns the Department of Transportation will be unable to fully reimburse them on time.
The trust-fund cliff is a broken record for transportation infrastructure advocates and the goods movement sector. Unable to pass a long-term surface transportation reauthorization since the expiration of SAFETEA-LU in mid-2012, Congress has resorted to short-term extensions and the two-year MAP-21 legislation to maintain spending at the status quo. MAP-21 instructed the DOT to implement several performance-based reforms and steps toward a national transportation strategy, but did not address the funding shortfall. Lawmakers last fall passed a nine-month extension of and pumped $11 million into the HTF through a series of accounting measures and transfers from the Treasury, followed by the two-month extension that expires at the end of this month.
According to the Department of Transportation, there is an $808 billion backlog of investment needs on highways and bridges, including $479 billion in critical repair work.
On Monday, Bill Shuster, chairman of the House Transportation and Infrastructure Committee, and Paul Ryan, chairman of the House Ways and Means Committee, introduced a five-month surface transportation extension through the end of the year. The $8 billion bill would be paid for through provisions that intend to improve tax compliance and prevent people from underpaying obligations by understating their tax liabilities and about $3 billion from reduced spending of passenger security fees collected by the Transportation Security Administration.
Meanwhile, efforts continue in the Senate for a multi-year bill, but few political observers believe there is any chance of such a bill advancing given the election calendar, divisions over tax-and-spend policies, and the lack of a parallel long-term bill in the House yet.
The Senate Commerce Committee is scheduled today to finalize language and vote on a bill that would authorize the office of the Transportation Secretary for six years and includes reforms related to safety, streamlining grant programs, and improving accountability and efficiency of oversight efforts. Among its highlights are provisions to develop a national freight strategy and permanently codify the TIGER grant program, which helps provide funds to support multi-modal and multi-jurisdictional transportation infrastructure projects across the nation.
The bill would then be combined with the DRIVE Act to create a comprehensive surface transportation reauthorization bill that would be ready to go to the floor for a full Senate vote. The DRIVE Act is a six-year, $278 billion reauthorization bill passed last month by the Senate Environment and Public Works Committee that includes about $13.3 billion for a dedicated investment program targeted at freight infrastructure.
Lawmakers are divided on how to come up with more revenue to fully fund highway infrastructure upkeep and improvements, with many opposed to raising motor fuels taxes and insisting that any new revenue be deficit neutral. House Rep. Tom Rice, R-S.C., last week introduced a bill that would increase the federal gas tax by $0.10 per gallon, but it is unclear whether such a measure would receive enough support to pass in both the House and Senate.
President Obama’s GROW America proposal is for a six-year, $478 billion transportation package, with a one-time windfall of funding anticipated from possible tax reform that would encourage corporations to bring home foreign earnings in exchange for being taxed at a lower rate. The plan includes $18 billion to be placed in a fund for regional freight transportation projects in areas where congestion is worst.
Obama’s plan would tax oversees profits at 14 percent, but Republicans want a lower rate and an open-ended tax holiday so companies could choose if, and when, to repatriate earnings. Such a plan likely would be part of an overall tax-reform plan in Congress, which has not gained any momentum yet.
The Commerce Committee’s “Comprehensive Transportation and Consumer Protection Act of 2015” includes provisions on state flexibility in freight planning, reforming some procedures of the Federal Motor Carrier Safety Administration its CSA scoring system of motor carrier safety, and port performance.
The committee previously passed the Port Performance Act, which would require port authorities to submit data on operational metrics that provide a window into whether marine terminals are overcrowded.
The Obama administration and others are pushing for swift action on a long-term transportation bill, saying the “game of kick-the-can” with funding patches is preventing states from committing to infrastructure investments. House leaders say they want the same thing, but that there isn’t enough time to debate a full bill.
“Congress’s failure to pass a long-term bill is of great concern to all of us who are engaged in the work of building and maintaining our nation’s transportation infrastructure,” Foxx wrote in his letter to state DOT secretaries. “Careening from self-inflicted crisis to self-inflicted crisis undermines our system. We need Congress to break the cycle of short-term extensions; we need a long-term bill with significant growth.
“Furthermore, many of you have already told us that a two-or-three-year patch is insufficient to right the trajectory.”
CORRECTION: A previous version of this article listed the proposed highway bill extension as a six-month measure, not a five-month extension as is correct.
House leaders propose 5-month extension for transport programs
