Lawmaker Says Tax Plan in 2017 to Fix Trust Fund
This story appears in the July 18 print edition of Transport Topics.
WASHINGTON — A congressional tax-writing committee will include in a tax-reform package next year, a long-term plan to keep the Highway Trust Fund sustainable, the House lawmaker tasked with overseeing highway funding told Transport Topics.
Highways and Transit Subcommittee Chairman Sam Graves (R-Mo.) said July 14 that senior colleagues on the House Ways and Means Committee would look to resolve the trust fund’s woes in a comprehensive tax reform package that House Speaker Paul Ryan (R-Ohio) intends to advance early next year. Rep. Kevin Brady (R-Texas) is chairman of Ways and Means.
“They are very aware of the need to try to have some sort of a fix, and again we want it in this comprehensive tax package,” Graves told TT after addressing an American Road and Transportation Builders Association conference here.
“We’ve got a lot of water to cross under the bridge before we get to that point. But Chairman Brady said he was going to put a title in there for us and leave that open. I hope that works out. I hope that’s the case,” Graves said. “Obviously, he has to run it through the committee first, but that’s a big step in the right direction.”
The trust fund, which the U.S. Department of Transportation uses to help states pay for road projects, is poised to reach low levels in five years. The trust fund received a $70 billion boost last year.
To ensure the account stays operable, Graves said he is considering myriad funding options. Those options include raising taxes on fuel, adopting a vehicle miles traveled (VMT) fee on drivers, adding toll roads and relying on private capital to pay for new highways and bridges.
“I think we’re going to fall somewhere on a VMT-type of a situation. But there are some very innovative things that we’re looking at, too,” Graves said.
Asked whether Congress would raise taxes on gas and diesel fuels to keep the trust fund sustainable, Graves responded: “Raising the gas tax is one of the options. The problem with that is, that helps out in the short-term but long-term, we’re going to see more and more and more hybrid [vehicles], and it’s going to be more and more and more regressive. We’ve got a lot of vehicles that are using the road, wearing the road, that aren’t paying into the system, and we need to recoup those dollars.”
Graves indicated his team is monitoring Oregon’s VMT program, which recently reached its first anniversary. The Beaver State’s VMT monitors the miles driven in-state with projected charges, allowing drivers to compare those with actual fuel taxes paid. Likewise, California has started a program that includes trucks. Oregon’s is only for cars.
Dwindling revenue from fuel taxes has prompted Congress to supplement the trust fund with nontransportation-related accounts. The five-year FAST Act transferred $70 billion into the trust fund. The trust fund is projected to be liquidated in fiscal 2020. After that, Congress would need to raise fuel taxes or come up with alternative funding streams for highway projects.
Before the FAST Act, Congress had approved 36 short-term funding extensions since 2009 to keep the trust fund solvent. Congress has not raised taxes on gas and diesel since 1993. The federal tax on diesel is 24.4 cents a gallon, and on gasoline, it’s 18.4 cents.
Graves’ subcommittee contributed significantly to the FAST Act. The law allows states to designate certain public roads as a critical rural freight corridor. It also includes provisions meant to improve truck freight movement and increase truck freight efficiencies.
Graves had earlier addressed the American Road and Transportation Builders Association’s annual conference on public-private partnerships.
