Several months ago we wrote about the impending mid-summer bankruptcy facing our nation’s Highway Trust Fund – the primary source of funding for America’s highway and transit programs. Or at least, that’s the theory. In reality, since 2008 the trust fund has been bailed out by a series of general fund transfers and short-term pay fixes. A combination of factors, including a gas tax that hasn’t been raised in more than 20 years, the fact that Americans are driving fewer miles than they used to, and significant improvements in fuel economy, have meant fewer and fewer dollars are reaching the trust fund. A failure to extend the trust fund beyond July could jeopardize 112,000 construction projects, nearly 700,000 jobs, and of course, Safe Routes to School projects across the country.
While we had all hoped lawmakers in Washington D.C. would come up with a four to six year solution, we are now facing the unfortunate reality that at least one short term patch will be required to give Members of Congress time to sort through a growing stack of short and long-term plans that would keep the fund solvent.
Some Movement in the Senate
To start, this week the Senate Finance Committee began consideration of a last-minute, bipartisan stop-gap that would keep the trust fund solvent through December 31. The proposed measure raises nearly $9 billion through a number of tax and spending changes, none of which are related to transportation, but this could give lawmakers some breathing room to look at longer-term solutions. That is, if it passes in both chambers of Congress. Congressman Camp (R-MI) has indicated that he is interesting in working with his counterparts on the Senate Finance Committee, though time is running short to reach a compromise.
This will hopefully be more palatable to lawmakers than a proposal put forward last month by House leadership to pay for a short-term extension through ten years of savings, reached by ending Saturday mail delivery – a proposal that has long been deeply unpopular with both parties in Congress.
Of particular note here, Senator Toomey (R-PA) put forward an amendment that would strip Transportation Alternatives Program (TAP) funding. While no vote was taken on his amendment, which would likely be ruled non-germane to the Finance Committee title, these attacks on TAP, and by extension Safe Routes to School funding, continue in spite of broad support for the program, including by nearly 400 mayors across the country.
Looking Beyond December
Senators Bob Corker (R-TN.) and Chris Murphy (D-CT.) made waves last week when they announced a plan, to the surprise of many in Washington D.C., which would raise the gas tax by $0.12 over the next two years and offset the increased tax burden by making permanent a number of provisions in the perennial “tax extenders” bill, including allowing small businesses to claim a tax deduction on capital expenditures. The bipartisan effort would raise $164 billion for the trust fund, but for all of its industry support, it is not without its detractors on Capitol Hill.
Other proposals have come from Senate Majority Leader Harry Reid (D-NV) and Senator Rand Paul (R-KY), who suggested using repatriation – allowing companies to bring overseas money back into the U.S. at a reduced tax rate – to keep the trust fund afloat. Additionally, the Obama Administration suggested using a number of corporate tax reforms put forward in Congressman Camp’s tax overhaul proposal. And some conservative groups are floating a highly controversial proposal to “devolve” transportation planning and spending to states. While all three plans have received scattered support, none solve the long-term funding needs of the Highway Trust Fund.
It is clear that there is too much at stake to simply let this slip by. Yet, there is no immediately clear path forward for Congress, and with just weeks until the trust fund runs dry, pressure is now mounting to get something done before the month-long August recess. It is the Washington D.C. equivalent to last week’s nail-biter USA v. Portugal game.
We will keep you updated as this unfolds over the coming weeks.
New State of the States Report
In the meantime, some good news as the first quarterly State of the States report for 2014 shows an uptick in funding announced and obligated for Safe Routes to School projects across the nation. After last quarter’s expectedly slow rollout of Safe Routes dollars, we anticipate a much stronger showing this year, as a number of states prepare to award remaining SAFETEA-LU funds. Moving forward, a continued focus on building and implementing projects will be critical, with 85 percent of Safe Routes dollars awarded but only 68 percent obligated.