Lawmakers Mull Alternatives to Bolster Highway Trust Fund

This story appears in the Nov. 19 print edition of Transport Topics.

Several lawmakers said last week they would consider raising fuel taxes to shore up the Highway Trust Fund, while an administration official warned against cutting transportation infrastructure programs because that could imperil public safety.

“Both economic recovery and fiscal stabilization are enhanced by having a modest program of fuel tax increases,” said Earl Blumenauer, a Democrat on the House Budget Committee and the Ways and Means Committee. “I think that there is no good alternative in the short term.”

Blumenauer, of Oregon, told Transport Topics that President Obama should support a fuel-tax increase.

The likely new chairman of the House transportation committee, Rep. Bill Shuster (R.-Pa.), said recently he would consider raising fuel taxes among other methods to fund the highway program (11-12, p. 1). Meanwhile, the head of the National Transportation Safety Board said that highway “safety needs” must have a seat at the table as lawmakers and Obama negotiate financing the trust fund and reducing the federal budget deficit.

“We’ve got to make sure that safety is part of the dialogue,” NTSB Chairwoman Deborah Hersman said at a Nov. 14 press conference, the Washington Post reported.

The agency also called for 10 safety initiatives including a “national inspection standard that raises the bar for bridge and roadway integrity” (see Digest, p. 4).

“There were all sorts of very complicated politics surrounding taxes in this election, but now this is about the president’s legacy and it’s about moving forward with economic recovery and fiscal stabilization,” said Blumenauer.

“Virtually all the stakeholders, truckers, AAA, bicyclists, engineers, architects, the Chamber [of Commerce], construction trades, contractors: there are hundreds of groups that maintain an active Capitol Hill presence that would support in a heartbeat a fuel-tax increase,” said Blumenauer.

“American Trucking Associations has long seen an increase in the fuel tax as the best way to solidify the Highway Trust Fund and improve our nation’s infrastructure,” said Sean McNally, spokesman for the group.

ATA is currently studying options for infrastructure financing through a new internal committee, McNally said.

In recent years, Congress has had to transfer $70 billion in general funds to the highway account, which is expected to be insolvent in 2015, in part because more fuel-efficient vehicles have cut tax receipts and in part because the tax hasn’t been raised in some 20 years.

Although other lawmakers stopped short of Blumenauer’s call to raise the fuel tax now, several said Congress must consider such a hike as it seeks to solve pending fiscal issues.

Rep. Nick Rahall (D-W.Va.), ranking Democrat on the transportation committee, said he has long advocated an “all of the above” approach, which includes possible increases in fuel taxes.

“We need to be exploring all options to identify the user-based sources that can provide the Highway Trust Fund revenues necessary to invest in our nation’s surface transportation network,” Rahall stated Nov. 14.

On the Senate side, Mike Enzi (R-Wyo.) has said fuel taxes should be increased via inflation indexing to raise needed revenue. Indexing means the 18.4-cent per gallon gasoline tax and 24.4-cent diesel tax would rise automatically with inflation.

“We have run some rough numbers and believe that the gas tax would have increased about 11 cents had it been indexed in 1993,” said Enzi’s press secretary, Daniel Head. The fuel tax was last increased that year.

“Sen. Enzi’s proposal would not cover all of the revenue needed to fund the Highway Trust Fund but is about starting a conversation on a long-term fix,” Head said.

Not everyone was convinced, however, that political support exists for higher fuel taxes.

“I consider a retail gasoline tax a non-starter given the White House’s opposition and what I would say would be massive Republican opposition and, probably, a lot of Democratic opposition,” said Rep. Peter DeFazio (D-Ore.).

To pay for badly needed transportation investments, DeFazio has suggested three alternatives to higher taxes at the pump.

He proposed a tax on trades by oil speculators, a per-barrel tax on oil at the refinery level, or more federal borrowing, possibly underwritten by cancelling the payroll tax cut.

DeFazio said the money lost to the Social Security Trust Fund during the recession because of the payroll tax cut would have been better spent on infrastructure investment that put people to work. A third of the nation’s deficit problems are because of unemployment, he said.

Some transportation experts have suggested the Simpson-Bowles deficit reduction commission report of 2010 is a good starting place for talks on generating money to save the highway fund and end emergency transfers from the general fund.

The commission recommended phasing in a 15-cent increase in the gasoline tax by 2015, all of which would go to transportation. None of the revenue could be used for deficit reduction.

The last two times fuel taxes were increased — under President Clinton in 1993 and President Reagan in 1982 — the increase was part of a larger deficit reduction compromise.