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Senate poised to take up House plan to patch Highway Trust Fund until Spring 2015

Sometime in the coming days the Senate is expected to take up and vote on the House’s bill to postpone the insolvency of the Highway Trust Fund until May of 2015 via an array of accounting maneuvers to cover ten months of transportation funding.

Last week, the House passed Ways and Means Committee Chairman Dave Camp’s bill transferring $10.9 billion to the trust fund from various sources, with a large portion coming from an accounting method called “pension smoothing.” This allows employers to defer payments to their employee pension plans; resulting in higher revenues for companies and therefore increasing overall federal tax revenue. It’s a controversial idea, lambasted by conservative political groups and the New York Times alike in advance of last week’s vote.

The Senate will likely be taking up the House’s version of the bill this week and voting on it, though several amendments could also be considered.

Finance Committee Chairman Wyden is expected to offer the alternative version approved by a bipartisan vote of the Senate Finance Committee earlier this month as an amendment. This would improve upon the House-passed bill by providing better revenue options, primarily tighter enforcement of tax laws and extension of certain fees.

Another amendment likely to be introduced by Senators Boxer (D-CA), Carper (D-DE), Corker (R-TN) would reduce the amount generated by some of the accounting maneuvers, essentially cutting the length of the patch and forcing Congress to act on a long-term funding solution before the end of the year.

This amendment would have the positive effect of keeping the pressure on lawmakers, as well as avoiding the potentially disastrous effects of pushing this debate to the months and weeks just before the 2015 construction season begins. (NPR took a look at this perpetual habit of “kicking the can” further down the road in a great piece earlier this week.)

While we commend Congress for reaching a short-term agreement to keep important projects from coming to a complete standstill, all this really accomplishes is postponing the inevitable insolvency for a later day. In the words of the letter sent to Congress this week by U.S. Secretary of Transportation Anthony Foxx and the last 11! USDOT Secretaries:

We are hopeful that Congress appears willing to avert the immediate crisis. But we want to be clear: This bill will not “fix” America’s transportation system. For that, we need a much larger and longer-term investment. On this, all twelve of us agree. Congress’ work will not be over with passage of this bill; they must continue moving forward and develop a long-term solution for our nation’s transportation funding.

We will continue to update as the Senate moves forward this week.

Senate, House committees approve short-term rescue of trust fund; long-term solution still needed

The Senate Finance and House Ways and Means committees today each passed similar short-term patches to keep the Highway Trust Fund in the black at least through early 2015. If adopted by the full House and Senate, the move to transfer $10.8 billion to the trust fund will avert immediate disaster, but there’s still heavy work needed to find a long-term funding solution.

Wyden Finance markup

Without this stopgap — if approved — worked out by Chairman Wyden and Chairman Camp and their respective committees, reimbursements to states would have been cut as much as 28 percent starting in just a few weeks, according to the U.S. DOT. But Congress has bought itself only a few months to address the larger problem of long-term solvency.

The House Ways and Means Committee was first to act this morning, marking up their funding patch to keep the trust fund solvent through May 2015 — five months longer than the Senate’s original plan. Senate Finance resumed discussion of its trust fund bail-out this afternoon after making key changes to match the $10.8 billion in the House provision while striking the language specifying an expiration date.

The upshot is that both measures have enough revenue to carry the trust fund into 2015, although Democrats have been pushing to consider a long-term transportation measure before the end of the year. Sen. Tom Carper offered an amendment to reduce the amount of the patch so that it would expire at the end of December, but it was not approved. Overall, the bill passed with just one “no” vote from Senator Carper.

As passed today, the Senate proposal would transfer $9.824 billion in general funds to the Highway Trust Fund, and $1 billion from fund for leaking underground storage tanks. The Senate bill modified some of the many mechanisms of paying this money back from their original proposal, most notably by including the House’s plan for “pension smoothing.”

The real question is how long this revenue cobbled from multiple accounting gimmicks will hold out. May 15 seems optimistic, given how the insolvency point moved sooner and sooner over the course of this year. Last month, the Congressional Budget Office projected we’d need $8 billion just to make it through this year.

Senator Bob Corker (R-TN), who co-introduced a plan to raise the federal gas tax 12 cents over two years, didn’t hide his disappointment in this plan and how Congress is paying for it. “This disgraceful practice of borrowing money to cover a few months of spending and paying for it over a decade is nothing more than generational theft,” he said in this Transport Topics story.

His comments as well as others made today by members of the House and Senate committees could represent a groundswell to find a real long-term funding fix and end the practice of lurching from crisis to crisis. After all, providing funding just for ten months instead of five months doesn’t actually give States the reliability and predictability they need for multi-year contracts and bigger projects — it just ensures that many projects underway or getting started this summer won’t hit the brakes. Think of it this way: States could resurface a road with some confidence, but that multi-year project to replace the deficient old bridge on the same road? Tough to do when you only have funding through May with any certainty.

Even House Transportation Committee Chairman Bill Shuster, who also supports the fix through May, said today, “This bill in no way precludes Congress from continuing to work on addressing a long-term funding solution, and a long-term reauthorization bill remains a top priority for the Transportation Committee.”

“We are pleased that Congress has begun to take the situation seriously and will avoid the economic pain of an insolvent trust fund, at least for the very near term,” said T4America Director James Corless.

“Perhaps the most important outcome is that the debate in both chambers showed a growing discomfort with short-term accounting tricks and a bipartisan desire for a long-term solution. In truth they have only bought themselves a few short months to grapple with an issue they have delayed for years. We look forward to working with Chairman Wyden, Chairman Camp and other leaders as they make good on their promise to work in earnest on a long-term solution to fund the infrastructure our economy and daily lives depend on.”

T4America applauds President and House tax chair for efforts to fix the transportation funding crisis, as local leaders plead for help

Today President Obama and House Ways and Means Committee Chairman Dave Camp (R-MI) introduced separate proposals that would prevent the looming insolvency of the nation’s key infrastructure trust fund.

President Obama today unveiled a proposal for a four-year, $302 billion transportation bill, with a windfall from business tax reform covering the shortfall in the Highway Trust Fund for that period. Chairman Camp proposed tax reform measures that would include staving off insolvency of the transportation fund for eight years. James Corless, director of Transportation for America, issued this statement in response:

“We are encouraged to see the threat to our nation’s transportation network begin to get the attention it deserves. With the bankruptcy of our transportation trust fund just months away, this can’t come soon enough. Just today, local leaders from across the country came to Capitol Hill to tell Congress what a robust federal investment in their transportation networks would mean for their economic development and long term prosperity. (See our blog post on today’s events here.)

These local leaders are putting their money where their mouth is, going to their voters for tax increases to pay for infrastructure they need. But as they said today, and as I reiterated in remarks to members of the House Transportation and Infrastructure Committee, their plans count on a dependable federal partner. Today’s actions by the Administration and key House leaders show the message may finally be getting through.

With the current transportation program expiring at the end of September, we look forward to working with Congress and the Administration on a fully funded program that promotes innovation, rewards initiative and gives local communities the latitude to solve their infrastructure challenges.”