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Congress Edges Toward Highway Funding Stopgap

July 16, 2014

By Oliver Patton

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Congress is inching closer to passage of a stopgap measure to prevent the Highway Trust Fund from drying up this summer.

The House this week passed a $10.6 billion bill and the Senate is going to choose between a similar measure or a long-term bill.

The Senate has two weeks to act before the Department of Transportation will be forced to start cutting the flow of reimbursements from the Highway Trust Fund to the states.

DOT says that unless Congress acts the Fund will become insolvent by late August. It has told the states it must commence cash management policies on August 1. States already have begun delaying or stopping projects to prepare for a possible shortfall.

Senate Majority Leader Harry Reid, D-Nev., said he wants a vote on the House bill as well as on two alternatives from the Senate.

The House bill would keep the Highway Trust Fund solvent until the end of next May. It cleared the House by a 367-55 vote and has been endorsed by President Obama.

The administration said the bill is just a patch that does not address the long-term highway funding shortfall but it will prevent a cut-off that could bring state projects to a full stop and throw hundreds of thousands out of work.

The House bill relies on money from general revenues and an infusion from the Leaking Underground Storage Tank Trust Fund. The general revenue transfer would be offset by changes in pension rules and customs user fees.

One Senate alternative is a stopgap measure passed by the Finance Committee that is similar to the House bill but does not include the May 2015 date.

The other comes from Sen. Barbara Boxer, D-Calif., who wants a vote on a long-term bill by the end of this year.

“Sadly, the House has kicked the can down the road and has decided to shirk its responsibility to fix the Highway Trust Fund in this Congress,” Boxer said in a statement.

“We still have an opportunity to pass a long-term bill this year, and I will pursue a December deadline so this Congress is forced to deal with solving the transportation crisis that we face in the Highway Trust Fund,” she said.

All seem to agree that the stopgap approach is a second-best solution in light of the need for reliable, long-term reinvestment in highways.

“A long-term solution would be my preference,” said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee.

Camp has been working on a tax reform proposal that he says would yield enough money to keep the Highway Trust Fund solvent for eight years. The Obama administration has proposed a bill along the same tax-reform lines.

Some members of Congress prefer the old-fashioned way with an additional boost: raise the federal fuel taxes and index them to some measure of inflation.

But there is not enough time to work through the complicated tax reforms that Camp and Obama have proposed before the Highway Trust Fund goes bust. And despite business community’s strong support for raising the fuel taxes, that approach is anathema in this Congress.

A fuel tax increase “is just about the worst tax increase Congress could hit hardworking Americans with,” Camp said.

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