Mark Szakonyi, April 8, 2014, Journal of Commerce
Former U.S. Transportation Secretary Ray LaHood doesn’t have much faith in Congress getting its act together soon to pass a surface transportation bill.
LaHood said last week during a conference call hosted by Stifel Transportation & Logistics Research Group that the prospect that Congress will pass a new bill to fund highways, roads and bridges by the time the existing one expires at the end of September is “very dim.” He cited a lack of transportation vision in both chambers and that Congress hasn’t passed any major legislation recently. With midterm elections ahead in November, Congress is reluctant to take on anything controversial or onerous, and that definitely includes raising the fuels and indexing it to inflation to boost the sagging Highway Trust Fund, he said.
“I think that for stakeholders all over America the transportation news is very bleak,” LaHood said. “The [current] two-year bill gave no real definition, no real vision to plan like a five- or six-year bill, which was traditionally passed by Congress.”
Instead of raising the fuels tax to save the Highway Trust Fund from insolvency, Congress will likely use general fund dollars to prop up the main engine of federal surface transportation funding, said Lahood, who left the Department of Transportation in 2013 and is now a senior policy advisor at DLA Piper, a global law firm. The Highway Trust Fund could run out of steam as soon as late July, spurring many state transportation departments to already pull back on long-term projects because of uncertain funding.
If LaHood is right in his prediction, shippers and transportation providers can at least take heart that the federal government won’t completely cut off funding for highways, bridges and roads. But Congress’s inability to tackle the funding challenge even with the threat of Highway Trust Fund insolvency hanging over it suggests that even more highway bill extensions could be ahead. As a result, many shippers and transportation providers will face higher costs in transporting their goods as current funding levels barely maintain the existing network, much less boost capacity for future freight growth. There is also the threat that Congress will reduce the level of surface transportation funding through one or several extensions.
Congress has punted the highway transportation funding issue before – 26 times to be exact – before passing the current bill. Only through pay-fors, or budget gimmicks, and a general fund injection into the Highway Trust Fund was Congress able to bridge the gap to pass Moving Ahead for Progress in the 21st Century, or MAP-21, in 2012. Congress needs to pass a five-year bill, which would be roughly three years longer than the current legislation, LaHood said.
The heads of the two committees key to passing the next highway bill – House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., and Senate Environment and Public Works Committee Chairman Barbara Boxer, D-Calif. – in recent months have both downplayed the prospects of raising the fuels tax. Neither committee has introduced a new surface transportation bill, but Boxer said in February she wanted her committee to consider legislation this month.
The Obama administration hasn’t backed raising the fuels tax either. The president’s four-year, $302 billion plan is dependent on windfall gained through corporate tax reform, which is highly unlikely to connect this year. LaHood has only publicly come out for raising the fuels tax since he left the Obama administration.
The 18.4 cents-per-gallon gasoline tax and 24.4 cents-per-gallon diesel tax, which fuel about 90 percent of the Highway Trust Fund, haven’t increased since 1993, and inflation has cut about 7 cents from the taxes’ buying power. With raising the fuels tax a non-starter in Congress, both legislators are discussing how public-private partnerships, which often include tolling, and loan programs can increase transportation funding. These ideas help stretch highway funding but don’t provide the sorely needed dollars.
“It doesn’t all have to be Highway Trust Fund, but that is the pot of money that has the most potential to get America back to being No. 1,” LaHood said. “I believe it’s going to be difficult to accomplish much this year given the abysmal record of Congress addressing big issues.”