Federal Gas Tax Index 'Dead on Arrival' Warns House Majority Leader

HR 1846, sponsored by Rep. Jim Renacci (R-Ohio), would index the 18.4 cent per gallon federal gas tax effective January 1, 2016. It does not appear likely to pass according to McCarthy, despite picking up 20 Democrat and Republican cosponsors.

I think passing a gas tax is politically impossible,” he said, pointing out that he just paid $3.20 a gallon to fill up his car in his hometown of Bakersfield, Calif. [See AAA California Daily Fuel Gauge Report to see last year's price]

Yet any recent uptick in gas prices has not prevented "five states, 'red Republican states', (from increasing) their gas taxes," stated Rep. Earl Blumenauer at the keynote address to the International Bridge, Tunnel and Turnpike Association's conference on April 26 in Portland.

"McCarthy said Congress wants to approve a long-term transportation bill, even though the gas tax hike is a non-starter on Capitol Hill," reports Scott Wong of The Hill on the briefing the majority leader held in his office on April 28. If the level of transportation remains steady at $50 billion a year, that would mean finding $16 billion a year—the shortfall between current transportation spending and Highway Trust Fund receipts.

The California lawmaker said Congress may have to tackle a short-term patch to replenish the depleted Highway Trust Fund in order to reach a longer-term solution. 

According to Blumenauer, that would be the 24th patch bill since 2008. It also would mean adding to the $60 billion to $70 billion transferred from the General Fund to the Highway Trust Fund since 2008.

A short-term patch would extend funding for highways but not longer than the end of this year, McCarthy said.

The current patch bill terminates on May 31, meaning that a new patch bill should take effect on June 1. However, the reserves in the HTF should become exhausted in the summer, so Congress has some breathing room. However, the uncertainty negatively affects state departments of transportation that may be reluctant to commence new, or continue on existing road contracts.

McCarthy indicates he favors a repatriation tax as the funding basis for a long term plan. President Obama's $302 billion Grow America Act is based on taxing overseas profits—a type of repatriation that is forced, as opposed to voluntary, such as the  "Invest in Transportation Act" proposed by Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) on January 29. Funds from repatriation would mean a transfer from the General Fund. Will the highway subsidy ever end?