Friday, April 24, 2015

Fixing the Highway Trust Fund Finds Bipartisan Support

Between finding a deal for a permanent "doc fix," finally passing an important human trafficking bill and confirming Loretta Lynch to Attorney General, and now the rumblings of an education reform package, it seems like Congress may have finally hit its bipartisan stride.

This collaborative spirit has made its way into the transportation realm, with a bipartisan group of representatives introducing legislation to address the Highway Trust Fund's dire fiscal straits.

The Bridge to Sustainable Infrastructure Act (H.R. 1846) provides for the long-term sustainability of the Highway Trust Fund (HTF), which will run out of money in less than two months without Congressional action. Specifically, the bill indexes fuel taxes to inflation, raising $27.5 billion - enough to fund highway and mass transit projects for 1.7 years. As the Committee for a Responsible Federal Budget importantly points out, this money would be raised over 10 years and, rather than paying for highway projects directly, would essentially pay back additional borrowing from general revenues, which have been used lately to make up for the Fund's shortfalls.

The legislation also establishes a bipartisan, bicameral Transportation Commission tasked with considering all options to fund the HTF for at least three more years. Should Congress fail to pass the Commission's recommendations, the gas and diesel user fees will increase by the necessary amount to sustain the Fund for that time. Here's a great graph from CRFB illustrating what will happen with the gas tax under the different possible scenarios:

While illustrative, the chart is also concerning: raising the gas tax, even when gas prices are at historic lows, is still politically difficult. But something needs to be done: our transportation infrastructure is simply too important - to our economic prosperity and to traffic safety - to let the Fund remain on such unstable footing.

There are other options on the table, some of which the Commission will no doubt consider if and when it is convened: the selling of bonds, the creation of Public-Private Partnerships, the institution of a carbon tax, to name a few. But it is good to know that, even if Congress fails to act, this bill would still provide for the sustainability of the HTF. Perhaps the default option's unpopularity will force Congress to pass a more palatable solution.

Then again, that's also what we thought with the sequester.

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