House, Senate Panels Move Temporary Trust Fund Bills

This story appears in the July 14 print edition of Transport Topics.

Tax-writing committees in the House and Senate last week approved bills to transfer about $11 billion to shore up the federal Highway Trust Fund.

The bills were slightly different but they follow broad similar outlines, such as transferring $1 billion from the Leaking Underground Storage Tank Trust Fund to keep the highway account solvent through May 2015.

The bills would extend customs fees, set to expire in 2021, until 2024. And it would raise money through an accounting practice known as pension smoothing, which allows companies with defined benefit retirement plans to assume higher interest rates when calculating the amount of money needed to contribute to employees’ retirement savings accounts.

The Senate bill would change the tax rate for liquefied natural gas to 14.1 cents per gallon equivalent from 24.4 cents today.

Both bills are expected to be debated this month, perhaps as early as this week in the House.

Ways and Means Chairman Dave Camp (R-Mich.) said the bill “is a much better approach than any proposal to just get us through the end of this year.”

“This bill gives this committee time to deliberate and produce a longer-term solution by the end of May next year,” he added. “And in the meantime, I intend to have a hearing in committee on a long-term solution” for the trust fund.

Camp’s legislation was backed by Rep. Bill Shuster (R-Pa.), the top transportation leader in the House, who has sought to update the 2012 highway law, which expires at the end of September.

“This legislation is the responsible solution at this time, ensures that we don’t play politics with these programs and provides for making continued improvements to our surface transportation system,” Shuster said.

Before approving the bill, the committee rejected, by a party-line vote of 23-16, an amendment offered by Rep. Earl Blumenauer (D-Ore.) that would have extended funding for the trust fund through the end of the year to give lawmakers time to approve a long-term surface transportation funding plan.

Blumenauer’s amendment, which also would have noted that it is the sense of Congress that long-term transportation authorization should be enacted, drew strong support from Democrats who opposed Camp’s bill.

“We now find ourselves at the 11th hour, with the Highway Trust Fund running on fumes,” said Sander Levin of Michigan, the ranking Democrat on Ways and Means.

“Unless Congress acts by the end of this month, more than 100,000 transportation projects could be delayed, and as many as 700,000 construction jobs could be put at risk. Our infrastructure, once a point of pride around the world, is literally falling apart.”

In the Senate, two key Democratic transportation leaders, Barbara Boxer of California, chairwoman of the Environment and Public Works Committee, and  Tom Carper of Delaware, have come out against the House bill, limiting its chances of advancing in the upper chamber.

“The House’s plan to kick the can down the road and pass a temporary patch for the Highway Trust Fund until next May derails the effort to pass a long-term transportation bill this year,” Boxer said in a news release.

The Senate Finance Committee on July 10 easily reported a bill to the floor that would allow the transfer of $10.8 billion for the trust fund.

Sen. Ron Wyden (D-Ore.) had tweaked the legislation in an effort to ensure Republican backing. That included removing a provision that would have imposed higher fees on heavy trucks.

“The bipartisan mark contains important priorities for both sides: For example, tax-loophole closing to crack down on those who do not pay what they owe, and it squeezed more value out of current government spending, while setting aside funds to protect endangered pensions and the needs of workers in a tough, global economy,” Wyden said.

With the highway fund approaching insolvency, dozens of state officials, and many industry leaders and infrastructure advocates have called on Congress to shore up the fund.

Troy Clarke, CEO of Navistar International Corp., told Transport Topics that his firm would experience gradual financial effects from trust fund insolvency. He added that he is optimistic Congress would pass a funding bill before August,

noting, “Men of goodwill and women of goodwill usually find a way to do the right thing.”

The U.S. Chamber of Commerce contacted members of Congress to urge them to tackle a major transportation bill this year.

“Time is short, and consequences of inaction are too high,” said R. Bruce Josten, the chamber’s chief lobbyist.

The Transportation Department has indicated the fund will run out of money at the beginning of August.

If Congress adjourns for the August recess without shoring up the trust fund, DOT leaders said that states will see their federal transportation payments drop by 28% on average.

Congress has not raised fuel taxes, the fund’s primary source of revenue, since 1993.