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Options for Fixing the Highway Trust Fund

As the current surface transportation bill, MAP-21 approaches its late September terminus, Congress and the Executive Branch are hard pressed to find a solution to alleviate the projected short fall in the Highway Trust Fund account, which is used to pay for federal transportation projects. Recently, the United States Department of Transportation (DOT) estimated that, as early as June 2014, the Trust Fund will fall below its necessary $4 billion reserve balance. If this happens, the DOT is expected to delay payments to vital projects in states across the country. The consequences could cause major disruptions during the peak summer construction season.

While ideas to solve this shortfall have been mentioned from legislators on both sides of the aisle, not many have materialized. However, recently, the Obama administration, Congressman Dave Camp (MI), and Congressman Earl Blumenauer (OR) have each provided their separate solutions to salvaging the Trust Fund.

Representative Earl Blumenauer has introduced two unique pieces of legislation to alleviate the current fears attributed to the deteriorating Highway Trust Fund. His first, and most unconventional, piece of proposed legislation, the Road Usage Fee Pilot Act (HR 3638), calls for the establishment of a vehicle miles traveled (VMT) fee pilot program that would charge drivers a fee based on actual miles driven. Blumenauer based his VMT policy on the successful VMT pilot program that was launched in his home state of Oregon by the legislature and Governor John Kitzhaber. Congressman Blumenauer’s second proposal, the UPDATE Act, is one that has resonated well with many legislators on Capitol Hill. The UPDATE Act (HR 3636) aims to nearly double the current 18 cents per gallon gas tax to about 33 cents over a three-year period. Blumenauer argues that the federal gas tax has not been raised or indexed for inflation since 1993. His proposal could potentially raise $170 billion over the next 10 years.

Meanwhile, House Ways and Means Chairman Dave Camp (MI), has offered his solution to stop America’s infrastructure bank from going broke. The Tax Reform Act of 2014 serves as a comprehensive overhaul of the current tax code by cutting 220 sections of the U.S. tax code and closing loopholes to lower taxes and spur job creation, as well as economic growth. Included in the proposal, is $126.5 billion to be generated over a 10-year period. Congressman Camp has suggested that this surplus coupled with the current Trust Fund formula would be more than enough to fund surface transportation infrastructure for eight years. Camp’s plan is the product of more than 30 separate congressional hearings on tax reform and 11 bipartisan tax reform working groups. With only a few months before Congress returns home for mid-term elections, moving such a comprehensive tax measure through both chambers would be difficult. However, Camp’s office hopes that it can be a top priority.

On the heels of Representative Camp’s tax reform proposal, President Barack Obama laid out his suggested surface transportation package, which includes his own tax revamp plan to replenish the Highway Trust Fund with $302 billion in funding. President Obama’s plan would inject approximately $63 billion into the Trust Fund over four years to compensate for one half of the funding, while calling for the other half of the infrastructure investments to be paid for by a one-time, $150 billion deposit from “pro-growth” business tax reform. As with Camp’s tax reform plan, Congress may not have enough legislative days to tackle such a major tax policy.

With the clock ticking and the Highway Trust Fund on the brink of running dry, leaders on Capitol Hill may be forced to employ a stopgap measure that will prevent a transportation funding disaster, while also producing a new surface transportation bill before its impending expiration. ASLA will continue to closely monitor the progress and state of the Highway Trust Fund as well as any legislative solutions that may arise in Congress.

For more information on ASLA’s transportation priorities please visit us HERE.

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