Panel: No Quick Fix to Highway Funding, But Possible Long-Term Legislation in 2015

AASHTO Journal, 5 December 2014

Bud Wright, AASHTO Executive Director
Photos by Eno Center for Transportation

A panel of Washington policy experts including AASHTO Executive Director Bud Wright predicted Congress will not be able to quickly pass a major highway/transit bill in coming months, but that a long-term bill could emerge in the context of a broader deal on tax law changes.

Appearing at a Dec. 3 press conference about a new report from the Eno Center for Transportation (more on that below), Wright and others said they expect Congress to continue using a “hybrid” revenue system for the Highway Trust Fund.

That means lawmakers would keep tapping both the HTF-dedicated fuel and equipment excise taxes and use general fund revenues to cover the shortfall between those excise taxes and the higher level of outlays the HTF makes for highway and transit programs.

Wright said he sees it as extremely difficult for Congress to hike dedicated trust fund user fees like the gasoline and diesel taxes enough to cover required outlays, but he said lawmakers are supportive of transportation investments. “It is not an aversion to federal transportation investment” that is holding back a major bill, he said. “It is an aversion to increasing taxes or user fees.”

Jeff Davis, a former congressional staffer who now publishes a widely read Transportation Weekly newsletter in Washington, said he thinks Congress will not be ready to pass a long-term highway/transit bill before the trust fund runs out of money next May, and will have to push through at least one more short extension.

But Davis also said it would be possible for Congress to enact a transportation funding measure next summer if it can line up agreement on a major tax overhaul or budget deal. President Obama, later that day, said it could take six to nine months to craft a tax reform measure, which could include transportation funding.

Wright said there is a hope the Republican leadership in both House and Senate in the new Congress will craft a longer-term transportation funding plan to show that they can govern effectively. And he said they could enact one “if for no other reason than it’s going to come back to haunt them every three months or six months or how long it is” if they continue short-term extensions, forcing their members into a series of votes on infrastructure funding.

Susan Binder, Cambridge Systematics

The panel split sharply over some views expressed in the Eno report titled “How We Pay for Transportation – The Life and Death of the Highway Trust Fund.” Some argued the trust fund model itself is broken and needs to be replaced, while others said the model works and needs shoring up.

Susan Binder of Cambridge Systematics — a former congressional staffer and senior official at the Federal Highway Administration who also helped lead a national revenue commission – criticized a section of the report that included an option of dissolving the trust fund in favor of paying for all transportation needs out of the general federal budget.

Rather than see the current series of short-term extensions as a failure of the trust fund’s revenue mechanisms, which have not been updated in 21 years, Binder said “in many respects things are working” in that the fund is generating significant revenue and operating as designed.

Although Eno did not endorse any specific policy change, the report explores long-term problems with its main gas tax, which yields less per capita as vehicle miles flatten and as drivers buy more fuel efficient vehicles.

Binder warned against “throwing the baby out with the bath water” and said “throwing the trust fund onto the curb would not resolve a number of the issues.”

Wright agreed, and said despite some problems with the gas tax it remains a powerful mechanism to capture a transportation-user revenue stream. In fact, Wright said that given how slowly the public changes the national vehicle fleet to embrace high-mileage models, and the growth in total miles traveled as population increases, for “the next 10 or 15 years the gas tax is going to be pretty reliable” as a major revenue stream.

“Let’s not abandon the Highway Trust Fund,” Wright said, “and let’s not prematurely abandon the gas tax.”

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