WASHINGTON — Senate transportation leaders are in a standoff with their House counterparts over a six-month extension of the current transportation law, as states are experiencing a 30% reduction in their federal highway and bridge funding.
“We still don’t have the House side with us” on the six-month extension, said Senate Environment and Public Works chairwoman Barbara Boxer, D-Calif., during a briefing yesterday. Boxer said she would like Transportation Secretary Ray LaHood to “move forward now and help us” secure a six-month extension.
While lawmakers wrangle over the extension, the highway trust fund that provides money to states will likely provide uninterrupted funding through next summer, according to the latest estimates of the Department of Transportation.
The fund collects revenue from user fees such as fuel taxes and ran out of money during the past two years due to a nationwide decrease in traffic.
Congress has rescued the fund from insolvency twice by transferring general funds into the account, most recently $7 billion in August.
“The trust fund balance is actually very healthy right now,” Roy Kienitz, under secretary for policy at the DOT, said during the briefing.
Kienitz said the account has more than $5 billion that will stretch “well into” next year. There “wouldn’t be any kind of interim crisis” during the six-month extension that Boxer’s committee and two other Senate panels are pushing for, he said.
In addition, the nearly $30 billion of highway infrastructure funds provided to states by the American Recovery and Reinvestment Act are being spent at least as quickly as the normal annual funding states receive, he said.
But at the same time, budget rules applied to the stopgap measures that are currently providing highway funds to states, along with a one-time $8 billion rescission of unobligated funds after Sept. 30, are reducing state spending.
Nevada and Illinois are among states already being forced to reduce their transportation contracts by 30% as a result of those factors, Kienitz said.
Meanwhile, a second stimulus plan, or so-called jobs bill, is in the works from both the House and Senate. Lawmakers are trotting out their ideas to finance it.
House Democratic Caucus leader John B. Larson of Connecticut in July proposed a 0.25% transaction tax on over-the-counter derivatives, which he is now recommending be used to pay for infrastructure job creation.
Larson’s office said the total revenue that would be collected by the Internal Revenue Service is unknown because the market is unregulated. However, it is estimated in the tens of billions of dollars, according an aide.
Some market participants are generally opposed to the tax.
“Imposing a tax on financial transactions is the wrong idea at the wrong time,” said Kenneth E. Bentsen Jr., executive vice president of public policy and advocacy for the Securities Industry and Financial Markets Association. “It would directly and detrimentally affect millions of Americans by imposing a tax on their savings such as mutual funds, just as they are seeing their investment assets regain value.”
Bentsen called the exemptions in the proposed legislation “completely unworkable” and said the tax would restrict economic expansion.
“The better policy direction to ensure any future financial crisis does not result in an economic downturn is establishing a strong systemic risk regulator and clear, unambiguous resolution authority for failing institutions,” Bentsen said.
