Congress has approved legislation (H.R. 5021) that extends spending authority for the Highway Trust Fund through May 2015 and provides about $11 billion in additional funding to patch the HTF’s chronic shortfall through that month. President Obama is expected to sign the legislation. Today was to be the day that the Dept. of Transportation (DOT) implemented stopgap measures to cut payments and slow the drain in the fund’s balance
After the House voted Thursday afternoon by a large margin to hold firm on the May 2015 extension, the Senate backed down on its plan to limit the extension to Dec. 19 in order to keep up pressure for further action this year that potentially could have resulted in a longer-term bill and, perhaps, an increase in federal fuel taxes as proposed by Sens. Chris Murphy (D-CT) and Bob Corker (R-TN).
During House debate on Thursday, opponents of a short-term extension argued that not only was it a bad idea to negotiate a long-term bill during a lame-duck session but also that the Senate’s version of the bill contained a major technical error because it’s funding measures didn’t provide enough money to carry the HTF to Dec. 19, the date that the Senate had approved earlier in the week.
With the only alternative being letting the HTF become insolvent during the August recess, the Senate voted 81 to 13 on Thursday night to accept the House version of the bill, clearing the legislation for the White House.
With no looming deadline, there’s little chance that Congress will adopt a longer-term measure this year even though several key leaders pledged to work toward one. When Congress returns after Labor Day it is expected to be in session for less than a month before lawmakers head home to campaign for reelection. With the lame-duck session following the November elections, nobody will focus on legislation that Congress doesn’t have to complete.
With a possibility that Republicans will take control of the Senate next year, failure to cut a deal on highway funding during a lame-duck session could doom even the slim chance that Congress would adopt increased taxes to pay for highway development. Dave Camp (R-MI), chairman of the House tax committee, basically said as much when he unveiled the extension plan that Congress just passed.
H.R. 5021 extends the funding for surface transportation development, repair projects and operations of the Federal Motor Carrier Safety Administration (FMCSA). The May 2015 extension, therefore, takes off the table this year the only legislative vehicle for any statutory changes related to motor carriers, such as DOT’s proposals for mandatory detention pay for drivers or numerous new enforcement powers for FMCSA.
The decision to “kick the can down the road” also means we are destined to see a host of new or reissued reports next year explaining why a larger, longer-term transportation bill is essential for the economy and how Congress should go about doing it.
Everyone seems to agree – including most legislators who voted for H.R. 5021 – that Congress should not use budgetary gimmicks to keep the HTF limping along. And yet, that’s exactly what H.R. 5021 does. The lion’s share of the funding for the trust fund patch comes from a trick called pension smoothing, which does nothing more than letting businesses delay pension contributions, which increases their taxable income and, therefore, tax payments to the U.S. Treasury.
While some of the HTF’s financial problems are temporary – fewer highway miles and, therefore, less fuel tax revenue during the recession, for example – others are long-term and will only grow worse. Inflation is gnawing away at the buying power of the existing gasoline or diesel taxes, which haven’t increased since 1993. In addition, because of improved fuel economy of cars and trucks and the growth in electric and alternative-fuel vehicles, a cents-per-gallon fuel tax brings in less revenue per highway mile than it once did.