WASHINGTON -- The American Association of State Highway and Transportation Officials says it is “extremely dismayed” tax reform doesn’t address “the looming solvency crisis facing the federal Highway Trust Fund."

The comments were made in a Dec. 8 letter sent by Bud Wright, AASHTO’s executive director, to congressional leaders of both parties.

Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee
Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee Bloomberg News

The letter is the latest in a series from transportation officials who saw tax reform as an opportunity to include funding for transportation and infrastructure.

“Federal transportation tax reform should be a priority in this broad legislation,” Pete Ruane, president & CEO of the American Road & Transportation Builders Association said last month. “Thus far, the ball has been dropped.”

ARTBA has reminded lawmakers involved in the tax legislation that 253 House members—119 Republicans and 134 Democrats—signed a June 12 letter urging a permanent Highway Trust Fund solution should be included in tax reform.

The Highway Account and the Mass Transit Account of the Highway Trust Fund will both be depleted in the 2021 fiscal year, according to the latest projection from the Congressional Budget Office.

AASHTO projects that highway account programs will have to be reduced by 40% that year if they are funded solely from traditional highway-user taxes at their existing tax rates.

Joung Lee, AASHTO’s policy director, said Monday that that projected deficits from tax reform will leave little “fiscal space” for infrastructure.

“That’s our concern,” he said.

One long-discussed possible short-term fix – using the money repatriated from overseas profits to establish an infrastructure bank or shore-up the Highway Trust Fund -- has not been included in the tax package.

Instead, all the revenue raisers in the legislation are being used to keep the new deficit spending within the $1.5 trillion ceiling congressional Republicans established earlier this year.

AASHTO also is critical of both the House and Senate for proposing to eliminate advance refundings, which produce savings “that can be reinvested in other transportation and infrastructure projects.”

Wright’s letter said the failure of tax reform to address federal transportation issues makes it “unclear how Congress and the administration will be able to fund a significant infrastructure initiative next year.''

The Senate and House last week appointed conferees who are negotiating a final tax reform plan with the goal of sending the legislation to the White House later this month.

The Trump administration, meanwhile, is planning on rolling out its infrastructure plan next month.
President Trump was scheduled to meet Monday afternoon with Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee.

I’m cautiously optimistic,” Jack Basso, principal of Peter J. Basso & Assocs. in Rockville, Md. and former chief operating officer of AASHTO, said Monday. “They are clearly talking like something is coming on the heels of tax reform and it would make logical sense. This was a big promise on the part of Donald Trump and his campaign.”

Basso agrees with other transportation experts that tax reform has been a missed opportunity.

“It’s pretty clear what you could do,” Basso said. “You could raise the fuel tax user fees in tax reform. That’s what I think a lot of us hoped would happen. That didn’t happen, appears to not be happening. Beyond that, you have to find revenue and there aren’t a lot of places to find it, frankly.”

In the meantime, transportation advocates have urged House and Senate conferees to reject the House proposal to terminate private activity bonds after Dec. 31 in the final tax bill.

AASHTO said in its letter that PABs have been "an important infrastructure financing tool that attracts private sector investment to public-purpose facilities."

“Such public-private partnerships allow states to undertake larger and more complex projects and enable them to be delivered more innovatively and with potentially less risk for the public sector,” the letter said. “For multiple modes of transportation and their facilities, PABs are a key ingredient in lieu of bank debt when used for publicly beneficial purposes. At the time when the administration and many in Congress are looking for ways to encourage private sector participation in meeting the transportation investment gap, eliminating this option is short-sighted.”

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