Oberstar Urges Debt-Tax Plan to Get $130 Bln. for Highways

This story appears in the April 19 print edition of Transport Topics.

WASHINGTON — Rep. James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, proposed borrowing $130 billion from the Treasury Department to finance a new highway bill, which could be repaid through an increase in the federal fuel tax increase.

Oberstar raised his proposal during an April 14 hearing, when state and federal officials said they needed more “innovative financing” options but that those options would not supplant existing methods of paying for roads and bridges.

“A proposal I initially thought wouldn’t work . . . would be to direct the Treasury to deposit $130 billion in Treasury notes into the Highway Trust Fund,” Oberstar said, noting that general fund revenue has propped up the fund for some time.

Those notes, he said, would be “repaid with future revenues out of the Highway Trust Fund, with a moratorium on repayments over the first four years, giving our economy time to recover and the surface transportation system time to become more robust and then have an increase in the gas tax or user fee four years hence.”

Oberstar has had difficulty coming up with the $140 billion difference between his proposal for a $450 billion multiyear bill and what the federal fuel tax and other revenue sources that feed the trust fund are expected to generate over the six-year life of the next authorization bill.

Several witnesses at the hearing said they approved of Oberstar’s idea, however.

“I agree with your approach,” said Phillip Washington, general manager and chief executive officer of the Denver Regional Transportation District. “I do not think that we can afford to do nothing.”

Eugene Conti Jr., North Carolina transportation secretary, said states were “looking for stability and predictability, so anything that’s done at [the] federal level to assure us that dollars will be there over the next five or six years is very critical.”

“I would support anything that would guarantee that kind of long-term stability in the program,” Conti said.

The Obama administration is opposed to raising the fuel tax to support the Highway Trust Fund, something that continues to rankle Oberstar.

“Our current president ran on a pledge of not raising taxes, so raising the user fee is out,” he said. Oberstar added that he has become “an equal opportunity complainer,” citing his previous fights with the Bush administration.

Christopher Bertram, DOT’s chief financial officer, laid out a number of loan and grant programs the administration was using to stretch transportation dollars. He said the growing interest in innovative funding sources is a response to difficulties states and local governments are having in funding large projects.

These projects, he said, are “rarely financed through just one source of funds.”

Oberstar said ideas such as public-private partnerships and tolling “are targeted at facilities, but they don’t add up to a sustainable program.”

Bertram conceded that, by and large, innovative financing tools “are limited to certain types of projects that have revenue streams” and are not a “magic bullet.”

“They have their place, and they can be very useful,” he said.

Conti said that North Carolina officials “fully support the use of these innovative financing programs,” alongside more traditional financing methods that “are heavily constrained.”