The clock is about to run out on the Federal Highway Trust Fund and Congress has considered competing bills about how to proceed. The House passed a $10.8 billion, 5-month continuation bill that would only last until May of 2016, while the Senate is poised to pass a $350 billion long-term 6-year bill, that’s only funded for three of those years. The upper chamber also added an amendment to its highway bill to revive the controversial Export-Import Bank that expired June 30. The debate on the Ex-Im Bank re-authorization raged until late into the evening Sunday, eventually passing by a vote of 64-29. Desperate House Republicans hastily filed an even shorter continuation bill Monday, kicking the can down the road for just another three months.
The Senate version continues the status quo and uses $47 billion in offsets from elsewhere in the federal budget to pay for just three years of the 6-year bill. The remaining three years lack identified funding. The offsets come from reducing the interest rate the Federal Reserve pays to large banks, selling oil from the Strategic Petroleum Reserve, and directing TSA processing fees to the highway fund.
Most expect Congress to pass another short-term fix. House leadership has rejected the idea of taking up the Senate’s bill that exceeds 1,000 pages with only days left before the August recess. The Export-Import Bank amendment also threatens to deep six passage of the Senate version of the highway funding bill.
During the raging debate over giving the president Trade Promotion Authority (TPA) just a few weeks ago, rumors were flying that a deal had been struck by Republican leadership with some hold-out Democrat senators reluctant to vote for TPA. Apparently, Senate Majority Leader Mitch McConnell garnered the votes needed to pass TPA by guaranteeing certain Democrats (who desperately want the Ex-Im Bank to continue) that re-authorization of the Ex-Im Bank would be tacked onto the highway bill. Texas Senator Ted Cruz outed the deal publicly on the Senate floor Sunday for which he was very publicly castigated by his old guard senate colleagues.
The Federal Highway Trust Fund has experienced a long-term structural funding shortfall for over a decade. Congress has preferred to kick the can down the road passing continuing resolutions or short-term bills like MAP-21 that expires Friday. With the majority of lawmakers unwilling to raise the federal gasoline tax — the primary source of highway funding — they’ve turned to other proposals to fill the gap, though none have gained much steam. Some have proposed a charge-by-mile tax, while certain House Republicans have called for ending Saturday postal service to help fill the highway fund shortfalls. Conservatives insist on devolving the federal program to the states. Democrats prefer a hike in the gasoline tax with one proposal by Rep. Earl Blumenauer nearly doubling it. With no consensus, the debate will likely be postponed to a new Congress next year.
The federal gasoline tax, which is 18.4 cents per gallon, has remained unchanged since 1993. It no longer collects enough money to fund the highway program at current levels. The Highway Trust Fund is estimated to be $16 billion a year short. Between diversions, increased fuel efficiency, inflation, increases in highway construction costs, and Americans driving less, the program has not been solvent long-term.
Over the years, in excess of 30% of the gas tax has been raided for transit and rail projects that don’t relate to the construction and maintenance of public highways. So many are calling for an end to those diversions and dedicating 100% of the federal gasoline tax to go to highways. The diversions problem has exacerbated any attempts to increase the gas tax or even have it keep pace with inflation. Taxpayers are not enthusiastic about dumping more money into an already leaky boat.
Fundamental reform does not appear to be on the horizon and likely won’t be until after the elections next year. When it comes to priorities of the existing Congress, public infrastructure and the solvency of the Highway Trust Fund clearly isn’t one of them. Hopefully, it won’t take another bridge collapse for Congress to enact the needed reforms to ensure this core function of government is properly funded.