July 21, 2008 10:00 AM, EDT

Congress May Boost Fuel Tax as Highway Fund Deficit Looms

Larry Smith/Trans Pixs

Following Congress’ rejection of calls by presidential contenders to rescind the federal tax on gasoline and diesel fuel this summer, some lawmakers are quietly considering boosting the tax by a dime to ensure the federal highway fund is adequately financed, the Associated Press reported.

The construction industry in particular pushed back against any hiatus in the tax, which could have led to a reduction of up to $9 billion available for highway spending and big job losses, AP said.

Some lawmakers are now considering raising fuel taxes by a dime from the current 18.4 cents a gallon on gasoline and 24.3 cents on diesel fuel, AP reported.

A list compiled by a key House committee showed how many jobs and how much money each state would lose, which ranged from $30 million and 1,000 jobs in Vermont to $664 million and 23,000 jobs in California, AP said.

Just three years ago, the highway trust fund had a surplus of $10 billion, but even without a tax freeze, the fund is projected to finish 2009 with a deficit of $3 billion, which could grow as Americans drive less and buy less gas because of higher pump prices, AP said.

Congress now has to deal with the short-term deficit crisis in the fund and come up with a new spending plan, including revisiting the gas tax issue, when the current six-year, $286 billion highway-transit act expires in September 2009, AP reported.