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Senate Finance Committee to Mark Up Highway Trust Fund Measure

Wednesday, July 9, 2014  
One of the “must-do” items on the Congressional agenda is to close the budget gap in the Highway Trust Fund (“Trust Fund”) before it runs out of money in late July. The gas tax revenue that funds the Trust Fund is running nearly $10 billion short of expenditures per fiscal year. Congress needs to find around $9 billion to keep the Trust Fund through this fiscal year and $18 billion would be needed to carry it through fiscal 2015. As SFAA has previously reported, both chambers have conducted hearings at which a wide variety of new source of revenue and expense cuts have been suggested. The only agreement is that an increase in the gas tax will not occur before the November elections. Funding still is the problem.

The U.S. Senate Finance Committee (Committee) is trying to get the ball rolling with a mark up of a short-term extension of the authority of the Highway Trust Fund through December 31, 2014 with a $9 billion infusion in funding. The funding would come from various tax changes, including doubling the cap in the heavy vehicle use tax. Most of the revenue provisions are unrelated to transportation and many seek to increase revenue through tax compliance enforcement, such as denial of a passport if unpaid federal taxes exist.

Republican senators are offering alternatives to the Chairman’s proposal, such as eliminating the Davis-Bacon requirements for transportation projects, which mandates the payment of the prevailing wage to federal contractors. The savings in cost would be charged to the Trust Fund. Republicans also are suggesting transitioning from a federal tax system for user fees in order to return more money to the states, arguing that it makes no sense for funds to be sent to the federal government through gas taxes for their eventual redistribution to the states. On the House side, the Republicans backed off an approach to stop mail delivery on Saturdays and apply the costs savings to the Trust Fund.

The U.S. Department of Transportation reports that the Trust Fund likely will become insolvent in July this year without action from Congress. The insolvency could prevent or delay the reimbursement of many state projects already underway and Congress is looking to put a short-term patch on the Trust Fund before its July recess. The current reauthorization under MAP-21 is set to expire on September 30, 2014. An extension of the HTF to December likely would mean that reauthorization of the Highway Act and a long term funding solution for the Trust Fund could be considered during a lame duck session following the elections in November.

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