Kent Hoover, August 1, 2014, Puget Sound Business Journal
Federal funding for highway projects will continue to flow after the Senate accepted the House’s version of an $11 billion bill to replenish the Highway Trust Fund through May 2015.
The Senate passed the House bill on an 81-13 vote Thursday night. Without action, the Federal Highway Administration said it would have start rationing federal funds for highway, bridge and transit projects on Friday.
State transportation officials and construction companies were relieved by this last-minute fix to the shortfall in the Highway Trust Fund, but they note this bill is only a short-term solution.
“This isn’t a moment to celebrate,” said Brian McGuire, president and CEO of Associated Equipment Distributors, a trade association representing companies that sell and rent equipment for construction and other industries. “By waiting until the last minute to solve a problem we’ve known for years was coming, Congress brought the highway program and the construction industry to the brink of disaster. We hope this exercise has underscored to everyone on Capitol Hill that the Highway Trust Fund is in dire shape and needs additional revenues, be it from a gas tax increase or some other source.”
Congress wasn’t willing to raise federal gasoline taxes this time around — the $11 billion short-term fix was paid for by so-called “pension smoothing” — allowing employers to delay pension plan contributions, thereby raising their taxable income. It also increased customs fees and transferred money from a trust fund for leaking underground storage tanks into the Highway Trust Fund.
In the long run, higher gas taxes and adding tolls to existing interstate highways will be necessary to fund the nation’s transportation needs, contends the International Bridge, Tunnel and Turnpike Association, which represents owners and operators of toll facilities.
“Rebuilding the interstate highways will cost hundreds of billions of dollars over the next several decades and current funding sources alone are not equal to the task,” said Patrick Jones, the association’s executive director and CEO. “States should have the flexibility to use tolling and other viable funding and financing options that make the most sense for them.”