WASHINGTON — Lurking in the legislative weeds on Capitol Hill is another threat to states’ and localities’ ability to fund bond-financed and other transportation projects.
The federal gasoline tax is set to expire Sept. 30, the end of the fiscal year. If it isn’t extended, the federal government would lack the wherewithal to finance transportation programs.
Revenue from the current 18.4-cents per gallon tax go into the Highway Trust Fund. The Department of Transportation uses the fund to pay for various grant and loan programs that assist states and localities.
If the 18.4-cent tax expires, only a 4.3-cent tax on gasoline, diesel fuel, kerosene, and alternative fuels would remain.
“That would be so dramatic a scenario that I don’t see either party could allow this to happen,” said Ken Orski, a transportation expert who covers the field for Innovation News Briefs.
Normally, neither party would put the gas tax at risk because of the potential adverse impact on state and local governments.
“Many states bonded against their expected federal receipts with government [grant] anticipation revenue vehicles, or Garvees,” said David Goldberg of Transportation for America. “Those states would be in immediate dire straits at a time when state budgets are strained to the breaking point.”
Garvee bonds, issued in anticipation of the receipt of federal grants, would lose their backing if the grants fail to materialize.
But lawmakers surprised everyone by allowing the shutdown of most of the Federal Aviation Administration and several hundred airport improvement projects. House Republicans held the FAA extension hostage for policy changes that would eliminate subsidies for airline service to some rural airports.
Transportation advocates fear another legislative stalemate over the gas tax.
As it happens, the House and Senate are now also wrangling over a full multi-year transportation bill because its latest extension has the same Sept. 30 deadline as the gas tax.
“There could be an attempt to leverage concessions toward the House view of the [transportation] bill by sort of holding the gas tax hostage,” Goldberg said.
The House Transportation Committee and the Senate Environment and Public Works Committee have presented outlines of widely varying bills. “I know there are at least as many differences of opinion on the surface transportation bill as there are on the FAA bill, if not more,” Orski said.
The Senate committee’s Democratic chairwoman, Sen. Barbara Boxer of California, proposed a $109 billion two-year bill that would maintain current transportation funding levels. But her bill is $12 billion short of what the Highway Trust Fund could provide and the Senate Finance Committee has not yet come up with the extra money.
House Transportation Committee chairman Rep. John Mica, R-Fla., proposed a $230 billion, six-year bill that would cut funds by 30%, using only trust fund revenue.
Congress has 24 legislative days left before the end of the fiscal year. Jack Schenendorf, of counsel to Covington & Burling, said, “There’s no way they can reconcile those two bills by September.”
That means passing another extension, which has its own issues, according to Schenendorf. “What length, two or three or five months, and whether at the House-assumed levels or at the higher Senate levels?” he asked.
But he pointed out that the public is frustrated with deadlock and Goldberg agreed. “I think the FAA fiasco may inoculate against similar shenanigans around the gas tax, because I don’t think that worked out politically to anyone’s benefit.”