DALLAS — Lawmakers should avoid financial gimmicks and general fund transfers in resolving a structural shortfall in the Highway Trust Fund, a budget watchdog group said in the wake of a proposal by a bipartisan pair of Senators to raise the federal gasoline tax.
There is considerable support in Congress for the idea that the federal government has an important role in transportation infrastructure, but little consensus on how to pay for highway and transit projects, the Committee for a Responsible Federal Budget said in
The current two-year highway funding bill must be renewed or at least temporarily extended before it expires at the end of fiscal 2014 this fall, the budget group said. At the same time, the CRFB said, Congress must also deal with a rapidly depleting Highway Trust Fund that is expected to be unable to meet its full obligations by late July or August.
"Failing to replenish this trust fund will cause serious disruption and bring many transportation projects to a stand-still," the CRFB study said. "On the other hand, allowing the HTF to continue to spend beyond dedicated revenue could worsen an already dismal federal debt situation."
Revenue from federal gasoline and diesel taxes dedicated to the trust fund account for less than 75% of total spending, CRFB said.
Lawmakers have transferred more than $54 billion of general fund revenues since 2008 into the HTF to support it. Maintaining the highway fund at current income and expenditure levels would require an additional $18 billion of new revenues, spending cuts, or general fund transfers in fiscal 2015 - almost $170 billion over the next decade., the Congressional Budget Office has said.
The best solution to the highway funding shortfall would be a long-term bill that aligns expenditures with dedicated revenues, the CRFB analysis said. Failing that, it said, any general fund transfers into the HTF should be linked with actual spending cuts or revenue increases elsewhere in the federal budget.
"Under no circumstance should lawmakers rely on a deficit-financed (or gimmick-financed) general revenue transfer to fund the Highway Trust Fund," the CRFB said.
The Murphy-Corker proposal is both good and bad but mostly bad, said Maya MacGuineas, CRFB's president.
"The good news is that it is the only proposal out there with a long-term structural fix to the Highway Trust Fund," she said. "The bad news is that they then turn around and try to offset the gasoline tax hike by extending some expiring tax cuts that were likely going to be extended anyway.
"It is a disappointing state of affairs," she said.
Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, said Thursday that his colleagues are unlikely to agree to another general fund transfer into the highway fund.
The proposal this week by Sen. Bob Corker, R-Tenn., and Sen. Patrick Murphy, D-Conn., to boost federal gasoline and diesel taxes by 12 cents per gallon over two years, would generate $18 billion in the first full year of the increase and $164 billion over 10 years. The current rate is 18.4 cents per gallon of gasoline and 24.4 cents for diesel fuel.
Corker said there is little chance the higher tax could be in place by the time the highway fund hits its crisis later this summer or before the current highway bill, Moving Ahead for Progress in the 21st Century or MAP-21, expires on Sept. 30.
"I know that we are not going to pass this in the next month," Corker said in announcing the bipartisan proposal June 18. "It's unfortunate. Our goal is to build support for this in the next six months."
Corker said the tax deductions that would be extended to offset the higher fuel tax rate conforms to an anti-tax increase pledge promoted by Grover Norquist's Americans for Tax Reform advocacy group, but the advocacy group denied that assertion.
"ATR does not endorse the outline of a proposal by Senators Murphy and Corker," the group said. "The tax increases in that proposal are certain and permanent, and there is a vague and uncertain discussion of offsetting tax reductions."
The trust fund's shortfall is not a reason to raise federal fuels taxes, it said. "The Highway Trust Fund does not have an under-taxing problem," the group said in its statement. "It has an overspending problem."
