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June 23, 2014 3:00 AM, EDT

Senators Propose Saving Highway Trust Fund By Raising Fuel Taxes 12¢ Over Two Years

By Eugene Mulero, Staff Reporter

This story appears in the June 23 print edition of Transport Topics.

With a federal highway account that supports infrastructure projects close to insolvent, two senators have unveiled a plan aimed at averting an imminent deficit.

Sen. Chris Murphy (D-Conn.) and Sen. Bob Corker (R-Tenn.) proposed on June 18 increasing the federal motor fuels tax to shore up the Highway Trust Fund, which the government estimates will run out of money in August.

The plan would increase gas and diesel taxes by 6 cents each year for the next two years, for a total increase of 12 cents each, and it would then be indexed to inflation, based on the consumer price index.

“We’re currently facing a transportation crisis that will only get worse if we don’t take bold action to fund the Highway Trust Fund,” Murphy said. “By modestly raising the federal gas tax, we can address a crippling economic liability for this country — the inability to finance long-term improvements to our crumbling national infrastructure.”

The current tax on diesel fuel is 24.4 cents, and for gasoline, it is 18.4 cents. Congress has not raised taxes on gasoline and diesel fuel since 1993.

“I know raising the gas tax isn’t an easy choice, but we’re not elected to make easy decisions — we’re elected to make the hard ones. This modest increase will pay dividends in the long run, and I encourage my colleagues to get behind this bipartisan proposal,” Murphy said.

He told reporters the “time for some political courage” is at hand to resolve the fund’s looming shortfall, but it is unclear how far the senators’ proposal would advance in the Senate. Many congressional Republicans have pledged not to raise taxes. The White House is not behind the proposal, and a majority of lawmakers seeking re-election consider raising the gas tax a risky proposition.

Experts say the fund would need about $10 billion to $15 billion to remain solvent for several months.

Tax policy writers in the Senate are poised to unveil their own proposal this summer to shore up the trust fund. Most observers expect that plan to consist of a transfer of funds from the U.S. Treasury.

In a letter obtained by Transport Topics, nine GOP senators, including ranking committee member Orrin Hatch of Utah, wrote to Senate Finance Chairman Ron Wyden (D-Ore.) on June 12 to “strongly encourage enactment of a short-term measure” that ensures the fund “is able to continue making payments to states without interruption.”

The senators wrote: “The intent of this letter is to show our commitment to maintain the highway and mass-transit accounts of the Highway Trust Fund for a finite period of time while we work together on a long-term solution.”

The nine Republicans noted they would sign off on a series of funding proposals they said could inject funds to address the highway account’s looming shortfall. The proposals were expanding oil and gas exploration in Alaska and the Outer Continental Shelf, scaling back on federal credit for plug-in vehicles and reducing subsidies for Amtrak.

“We believe it is appropriate to consider Amtrak subsidies as a source of short-term HTF funding,” the senators wrote, noting that the Congressional Budget Office determined that certain federal subsidies for Amtrak support an “operation of uneconomic services and routes . . . that are not used extensively.”

Republican Sens. Rob Portman of Ohio and Mike Crapo of Idaho, members of the Finance panel, are not shown to have signed the letter.

American Trucking Associations President Bill Graves favors the plan, saying that it would “put the Highway Trust Fund on the path to solvency and provide the revenues we need to maintain a 21st-century transportation network.”

He said, “We have long said that the fuel tax is the fairest, most efficient way to fund our nation’s infrastructure.”

Wyden has yet to announce a fix for the fund. He has scheduled hearings this summer, which aides familiar with the matter indicated highway funding would be discussed.

Senate Democratic leaders have opposed a House Republican plan calling for using savings from eliminating most Saturday mail to finance an extension of the trust fund.

In December, Rep. Earl Blumenauer (D-Ore.) offered legislation aimed at raising the tax on gasoline to 33.3 cents per gallon by 2016 from 18.4 cents per gallon, then indexing it to inflation.