Created on Tuesday, 15 July 2014 Written by JOAN LOWY, Associated Press
WASHINGTON (AP) — With an August deadline looming, the House is poised to act on a bill that would temporarily patch over a multibillion-dollar pothole in federal highway and transit programs while ducking the issue of how to put them on a sound financial footing for the long term.
The bill cobbles together $10.8 billion by using pension tax changes, customs fees and money from a fund to repair leaking underground fuel storage tanks to keep the federal Highway Trust Fund, which pays for transportation programs nationwide, solvent through May 2015. A similar bill is pending in the Senate.
Unless Congress acts, the Transportation Department says that by the first week in August the fund will no longer have enough money to cover promised aid to states, and the government will begin to stretch out payments. Congress has kept the highway trust fund teetering on the edge of bankruptcy since 2008 through a series of temporary fixes because lawmakers have been unable to find a politically acceptable long-term funding solution.
The most obvious solution would be to raise the federal 18. 4 cents a gallon gasoline and 24.4 cents a gallon diesel tax, which haven't been increased in over 20 years. But lawmakers are reluctant to raise taxes in an election year — especially Republicans for whom a vote in favor of any tax increase could trigger a backlash from their party's base.
As a result, Congress has had to look elsewhere for transportation money while not increasing the federal deficit. The bill by Ways and Means Committee Chairman Dave Camp, R-Mich., relies on tax changes that are forecast to generate revenue over 10 years, but provide only enough money to keep the highway and transit programs going for another 10 months.
The largest chunk of the money, $6.4 billion, results from allowing employers to defer payments to their employee pension plans. Funding pension plans normally results in a tax savings for companies, and deferring those payments means they will pay more in taxes and increase federal revenue.
"Listen, these are difficult decisions in difficult times in an election year," said House Speaker John Boehner, R-Ohio, defending the bill while acknowledging its limits. "The long-term problem is still there and needs to be addressed."
President Barack Obama, touring a transportation research center in Virginia, said he supports the House and Senate bills to keep aid flowing to states, but wants more.
"All this does is set us up for the same crisis a few months from now. So Congress shouldn't pat itself on the back for averting disaster for a few months," he said. Earlier this year, Obama offered a $302 billion plan to increase transportation spending and keep programs going for another four years. The plan, which was paid for by closing business tax loopholes, was received coolly by Republicans.
Democrats complain that it won't be any easier under the GOP bill to reach a compromise on sustainable, long-term means to pay for programs by pushing off a decision until next year when the presidential campaign is heating up. Republicans, however, may be in a better position to shape a transportation bill to their liking next year if they re-take control of the Senate in this fall's midterm elections.
Republicans are divided over transportation policy. A significant minority of the party's more conservative House members want to slash federal gas and diesel taxes, dramatically scale back transportation aid and leave it to states to come up with the money to pay for roads, bridges, buses and trains.
The conservative Club for Growth and Heritage Action for America, which are influential with Tea Party Republicans, urged lawmakers to vote against the Camp bill. But as a sop to conservatives, House GOP leaders allowed an amendment by Rep. Tom Graves, R-Ga., that says Congress should "increase the authority and responsibility of the states" to fund and manage their transportation systems.
States have been told to expect an average 28 percent reduction in aid if Congress doesn't act. The fund is expected to reach a zero balance by the end of August. Some states already have begun to delay or cancel construction projects due to the uncertainty of federal money.
Democrats plan to offer a motion that would reduce the money in the GOP bill to about $8 billion — just enough to pay for highway and transit aid through Dec. 31 — in the hope that another quick deadline would force Congress to come to an agreement on a long-term funding plan this year.
"When you take off the pressure that's forcing us to work, what incentive is there to take on the hard questions?" said Rep. Earl Blumenauer, D-Ore.
Associated Press writer Andrew Taylor contributed to this report.