Transportation Reauthorization Funding Mechanism May Be Settled

"With a growing Hill consensus on the use of corporate tax dollars to plug the Highway Trust Fund hole, a first-ever detailed proposal from the White House could help move the ball along as the House and Senate committees move forward in the coming months," writes Politico transportation reporter Adam Snider.

The 'hole' refers to the difference between the current revenue of the Highway Trust Fund, primarily gas and diesel taxes, and its expenditures on transportation - estimated at $20 billion per year as we noted last month. Obama's proposal calls for "$150 billion in new revenue generated by business tax reform" over four years, making up half his $300 billion plan.

Earlier, Streetsblog USA reporter Tanya Snyder wrote of the congressional proposal, "Few details have emerged about exactly how Republican House Ways and Means Chair Dave Camp plans to do this, but Politico has heard from Capitol Hill staffers that it would push $100 billion to $125 billion to transportation over an unspecified time frame." 

While that may be good political news with the current transportation bill, MAP-21, expiring in September, and the Highway Trust Fund going broke in August, it does nothing to create a sustainable source of transportation revenue that would be the case if funded entirely by user fees. Moreover, since corporate tax reform revenue could be directed to the general fund and used for deficit reduction, is the use of this business tax revenue nothing but a disguised subsidy for driving?

At least one major transportation player was unhappy. The American Trucking Association's press release addressed the failure of the administration, and presumably Congress, to adjust user fees to fill the transportation funding gap.

“Finding a long term, sustainable way to improve our nation’s roads and bridges is one of ATA’s top priorities,” said ATA Chairman Phil Byrd, president of Bulldog Hiway Express.

“Using the proceeds from corporate tax reform, while creative, does little to address the long-term solvency of the Highway Trust Fund or to uphold the principle of users paying for the services they get, in this case, the federal fuel tax, which has not been adjusted in more than two decades to account for inflation and improvements in vehicle fuel efficiency.

Byrd went on to express ATA's preferred option to 'plug the hole'.

“The fuel tax is, and will continue to be the most efficient and fair way of collecting revenue for highways and bridges and should be adjusted to reflect current economic conditions and needs,” Byrd said.