President Signs Three-Month Extension to the Highway Act
Monday, August 03, 2015
Congress passed a three-month extension of the Highway Act at a cost of $8 billion right before its August recess. The House previously passed a five month extension to provide time to negotiate a long term extension. The Senate also passed its $350 billion six-year extension last week, but the House already had recessed so the Senate agreed to another stop gap measure, which the President signed to avoid any shutdown on July 31, when the act would have expired.
At issue in any extension is how to pay for it with spending cuts and revenue increases. The biggest offset in the current extension is $3.1 billion in revenue from Transportation Security Administration (TSA) fees that the bill would dedicate to the Highway Trust Fund. Requiring estates to report the value of the property on the owners’ death will provide $1.5 billion more in taxes from estates that misstate that value to reduce estate taxes and later claim a higher value to reduce capital gains taxes. Allowing the IRS to investigate and reassess taxpayers for six, rather than three years, on tax shelters is projected to add another $1.2 billion. Another $1.8 billion is expected from more detailed reporting from lenders on mortgages.
The Senate’s six-year reauthorization bill will be considered further in the fall when the House is expected to have its own version of a long term extension. The Senate bill contains guaranteed funding for only the first three years. An additional $51 billion is needed to fund the Senate bill to 2021. The Senate bill does not raise any taxes, and among the budget cuts to fund the bill are significant cuts to the Transportation Infrastructure Finance and Innovation Act (TIFIA), which provides loans, loan guarantees and other assistance to finance state transportation projects.
The Highway Act now is set to expire on October 29.
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