WASHINGTON — Key lawmakers yesterday urged the revenue panel of the House Ways and Means Committee to immediately approve a short-term legislative fix for the expected shortfall in the highway trust fund, and in the long run to move toward a vehicle mileage tax to pay for transportation.
The hearing coincided with the committee’s development of a revenue section for the six-year transportation bill that is pending in the House. The bill has been approved by a House Transportation subcommittee, but lawmakers have pointed to a lack of consensus over how to pay for the bill as a large hurdle it must overcome.
The federal highway account of the trust fund is expected to be $1.9 billion short of cash by the end of the fiscal year on Sept. 30. The shortfall would cause delays in reimbursements to state transportation departments for their construction projects.
To prevent the shortfall from damaging state programs, House Transportation Committee chairman James Oberstar asked the House Ways and Means Committee to approve a $3 billion transfer of general funds into the highway account of the trust fund — which would include an extra $1 billion in case the trust fund falls shorter than expected.
For long-term funding, Oberstar argued for measures similar to those in a recently introduced Senate bill. He urged the committee to restore funds that had been transferred out of the trust fund for various purposes over the years, and to provide it with interest that it would have earned beginning in 1998, when Congress stripped the fund of its interest-earning capability. The foregone interest alone would provide the highway trust fund with $20 billion, he said.
“To my knowledge, the highway trust fund is the only trust fund of its type that does not earn interest,” Oberstar said.
Oberstar also took a side on the gasoline tax debate. He said the 18.3-cent federal gasoline tax should not be increased during the current recession, but could be implemented to take effect after two consecutive quarters of economic growth. Rep. Peter DeFazio, D-Ore., who chairs the House Transportation highways and transit subcommittee, agreed that indexing the gasoline tax to construction costs would need to wait until the economy improves.
Other suggestions from House lawmakers included issuing Treasury bonds, increasing excise taxes on crude oil barrels and imported fuel, and requiring fuel-tax exemptions — such as those given to state and local governments and nonprofit schools — to be reimbursed by the general fund instead of the highway trust fund.
To attract private-sector investment in the industry, the federal government could raise the $15 billion cap on private-activity bonds for transportation, implement a 25% tax credit for rail infrastructure investments, or create a more general infrastructure tax credit, lawmakers said.
Oberstar argued for a tax on oil speculation as well, and urged the committee to support transitioning to a vehicle mileage tax system of federal transportation revenues.
The mileage tax would generate at least as much revenue as the gasoline tax, said James M. Whitty, manager of innovative partnerships and alternative funding for the Oregon Department of Transportation.
Whitty said the earning potential could even surpass that of fuel taxes because it would not decline as vehicles become more fuel-efficient. He said the next transportation authorization should include a six-year timetable to substantially complete development of a mileage system so that it could be ready to go in the next six-year cycle.
Meanwhile, the National Governors Association released a report yesterday on the hodgepodge of financial instruments that states use to pay for transportation.
States issued $19.8 billion of new debt for transportation in 2007, the report said.
Grant anticipation revenue vehicles accounted for about 40% of all state bonds issued for transportation purposes in 2008, according to the report. Thirty states and territories authorized 32 Garvee issues worth $9.3 billion in 2008, it said. Another five states issued eight “indirect” Garvee deals that were backed by other future sources of federal highway funds.
New Build America Bonds and fairly new private-activity bonds also made up a chunk of highway and bridge funding. Public issuers sold almost $8 billion of BABs since the passage of the American Recovery and Reinvestment Act, the report said. Six states issued a total of $4.9 billion of PABs last year.
