House plugs gap in highway trust fund

House plugs gap in highway trust fund The U.S. House of Representatives overwhelmingly voted to restore $8 billion from the nation’s general fund to cover an expected shortfall in the Highway Trust Fund.
   The money actually returns the money that was shifted to the general fund by the 1998 multiyear surface transportation spending authorization known as TEA-21. At the time, the funds were viewed as unnecessary to support highway program funding levels.
   The Congressional Budget Office and Joint Committee on Taxation determined the short-term fix is allowable because it doesn’t constitute a spending outlay, violate pay-as-you-go requirements and has no effect on the government’s total revenue.
   Last week, the Department of Transportation announced that the trust fund was approaching a zero balance and could go in the red. Without the trust fund rescue the federal government faced the prospect of paying interest on bills submitted by states for reimbursement of work done on highways.
   The Senate passed the bill the day before and it now goes to President Bush for his signature.
   Rep. James Oberstar, Democratic chairman of the Transportation and Infrastructure Committee, criticized the Bush administration for holding out against restoring the user fees until the last minute, saying the delay has had serious economic consequences.
   State highway and transportation officials report that they have begun slowing investment in highway construction because of the cash flow problems associated with the trust fund. States are rationing federal highway construction funds, delaying federally supported projects, suspending contract awards, and looking for ways to stop ongoing construction.
   “We must enact this critical legislation this week to avoid slowdowns or reduction in infrastructure investment, and the loss of American construction jobs,” Oberstar said on the House floor.
   Transportation Secretary Mary Peters previously blamed Congress for failing to heed warnings that the trust fund could fall into deficit, a situation accelerated by reduced gas tax revenues as motorists drive fewer miles in the face of steep gas prices. The Bush administration proposed in February that Congress transfer funds from the Highway Trust Fund’s mass transit account, which has a surplus, instead of tapping the general fund.
   'Taking money from other pressing national priorities to plug a hole caused by poor fiscal discipline sets a dangerous and disturbing precedent,' Peters said last week.
   The Federal Highway Administration last week began stopgap measures to reimburse states on a weekly basis and make funds available on a prorated basis, meaning each project would receive some amount less than full funding. States would then receive the balance of the funds the following week and new requests would also be dealt with on a prorated basis. It also is exploring ways to free up additional funding for the federal aid program.
   Meanwhile, Congress faces a much larger task trying to find a permanent funding solution for the nation’s surface transportation modes as the trust fund faces mounting demands for highway maintenance and upgrades. Congress will spend the next year trying to develop a follow-on to the SAFETEA-LU surface transportation spending plan, which expires at the end of September 2009. ' Eric Kulisch