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The Highway Trust Fund has been on the verge of bankruptcy for much of this year, thanks to soaring construction costs and the failure of legislators to raise the federal gasoline tax since 1993. Now comes yet another eleventh-hour bailout, providing additional funding only through May 2015.
The bill, H.R. 5021, authorizes $10.8bn in new funds, money that is desperately needed by states and transportation agencies that would otherwise have suffered a 28-percent cutback in budgets on Aug. 1. In addition, the Highway Trust Fund would have been out of money entirely by September.
Congress, of course, found a way to throw one last wrench into the works. Last month, the House of Representatives passed a stopgap funding bill. But rather than rubber-stamp that measure, the Senate dallied over its own version, which would have extended funding only until Dec. 19 of this year. The idea, apparently, was to give the current Congress one last stab at addressing the issue from a longer-term perspective following the November elections.
With the clock ticking, lawmakers finally realized that any action was preferable to none at all. The House quickly rejected the Senate’s version and the latter was scrapped. What goes to the President is the original House bill. And Congress has once more put off dealing with the substantive issue of long-term funding for transportation infrastructure, this time for nine whole months.
The timing was just good enough to forestall a credit crisis for existing transportation projects. Standard & Poors announced that it was taking no action to lower its rating or outlooks for 26 transportation bond issuers in the sector known as grant anticipation revenue vehicles (GARVEEs). S&P keeps close watch on funding risks to current projects. It said the vital need for preserving and expanding the interstate highway system requires continued reauthorization of the Highway Trust Fund. At the same time, delays and uncertainty over the program’s future highlight “the key credit weakness” of GARVEE ratings, according to S&P. So action by Congress and the Administration is needed to keep that funding avenue strong.
In the meantime, the usual transportation groups have weighed in with faint praise of Congress’s less-than-bold passage of the short-term funding bill. “State department of transportation officials across the country are today relieved that the Highway Trust Fund will continue to support critically needed highway and transit projects through May, 2015,” said Bud Wright, executive director of the American Association of State Highway and Transportation Officials (AASHTO).
Former Secretary of Transportation Ray Lahood, who co-chair’s the advocacy group known as Building America’s Future, said the Senate’s ratification of the original House bill “is crucial for our friends and neighbors across the nation whose jobs and livelihoods depend on the Highway Trust Fund at the height of the summer construction season.”
And Kurt Nagle, president and chief executive officer of the American Association of Port Authorities (AAPA), said passage of the House bill “ensures that our nation will avert an immediate crisis and keeps funding flowing to surface transportation projects throughout the country until a longer-term fix is developed.”
No one was happy with the temporary nature of this latest fix. “While we’re relieved that H.R. 5021 is on its way to the President’s desk, this isn’t a moment to celebrate,” said Brian McGuire, president and CEO of Associated Equipment Distributors. “By waiting until the last minute to solve a problem we’ve known for years was coming, Congress brought the highway program and the construction industry to the brink of disaster.”
Edward Wytkind, president of the Transportation Trades Department of the AFL-CIO, said the bill “does nothing to help America rebuild our deteriorating transportation infrastructure and our economy over the long term.” Dysfunction in Congress, he said, “has become even more pervasive, spreading into one of the most basic duties of government: investment in and making possible the freight and passenger transportation network that a modern economy demands.”
Most egregiously, the bill sidesteps the issue of how transportation projects will be funded over the long term. In particular, it shies away from the controversy over raising the gas tax, which at 18.4 cents per gallon, and not indexed for inflation, is pitifully inadequate to meet today’s infrastructure-development needs. But few lawmakers possess the courage to challenge the virulent anti-tax atmosphere that pervades Congress today. Nor have they come up with a viable alternative to that funding mechanism.
Instead, the House bill offsets the short-term spending increase through an accounting trick. It permits corporations to reduce near-term pension funding contributions, on the theory that they’ll have fewer tax deductions and therefore generate more revenue for the federal treasury. Other dubious funding sources include money that was earmarked for repairing leaks in underground fuel-storage tanks.
There is cause for optimism. President Obama has proposed a plan to authorize $302bn for surface-transportation projects over four years. And, in a bipartisan effort, Sens. Bob Corker (R-TN) and Christopher S. Murphy (D-CT) have called for raising the gas tax by 12 cents per gallon over two years, and indexing it to inflation.
With each punting of the issue, Congress’s failure to act for the long term becomes more and more untenable. One can only hope that economic reality will eventually smash through Washington’s walls of denial.
