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A Long-term Federal Transportation Bill Has All But Vanished in Washington D.C.

Wednesday, July 29, 2009   (0 Comments)
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Hope for the enactment of a long term transportation bill this year has all but vanished when Rep. James Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee, testifying at a hearing of a House Ways and Means Subcommittee on July 23, acknowledged that he does not favor raising the gas tax to pay for the $500 billion transportation authorization ($450 billion for highways and transit, $50 billion for high-speed rail). "Although increasing and indexing the gasoline and diesel user fee is a viable financing mechanism...I do not believe that the user fee should be increased during the current recession," Oberstar stated in his opening statement, echoing the posture previously taken by the White House. Instead, the T&I Committee chairman suggested a host of possible financing options to close the funding gap. None of the options, however, come near to raising the $190 billion in additional revenue needed to finance the six-year program. Ultimately, Chairman Oberstar deferred to the Ways and Means Committee. "The Committee on Ways and Means must undertake the difficult task of identifying the revenue to finance this bill," he concluded. "We’ll take any dollar you can scare up for us for the trust fund."

In their prepared testimony, Rep. Oberstar and Peter DeFazio (D-OR), chairman of the Highways and Transit Subcommittee, suggested several potential sources of additional revenue, only some of which would provide an immediate infusion of cash to the Trust Fund. Among them were: (1) Restoring funds to the Highway Trust Fund owed to it for Emergency Relief and foregone interest; (2) Issuing $60 billion worth of 10-year Treasury bonds. (The bonds would be repaid over a period of ten years, possibly using additional revenue generated from indexing the gas tax); (3) Imposing a fee on barrels of imported and domestic crude oil; (4) Instituting a transaction tax on speculative trading of crude oil futures; (5) Freight-related fees to finance freight-related infrastructure improvements.

Committee Ranking Republican John Mica (R-FL) took a somewhat different view. "The gas tax is basically dead," he declared. Instead, he said, we should adopt a flat sales tax on the purchase of gasoline. Mica also saw added revenue potential in public-private partnerships, expansion of the Transportation Infrastructure Finance Innovation Act (TIFIA) credit assistance program, and the creation of an infrastructure bank.

U.S. Department of Transportation Undersecretary for Policy Roy Kienitz, testifying before the Committee, threw cold water on these proposals, saying that the Obama Administration will not back any new funding sources at this time.

Meanwhile, on the Senate Side...

In the meantime, Senate committees continued to forge ahead with their plans to extend the existing program for 18 months, as proposed by the Administration. Finance Committee Chairman Max Baucus (D-MT) introduced a bill (S 1474) to replenish the Highway Trust Fund with a transfer of $26.8 billion from the General Fund. The transfer is said to represent reimbursements for lost interest payments due to the Fund since 1998 and for past disaster emergency expenditures. This measure, combined with anticipated gas tax receipts, is believed to provide more than adequate funding for the surface transportation program through March 2011 (by contrast, the Administration requested only $20 billion.) The bill will most likely be merged with a proposed legislation to extend the current surface transportation program through March 2011, approved earlier by the three committees having jurisdiction over the surface transportation program: the Public Works and Environment (EPW) Committee (approved on July 15), the Commerce, Science and Transportation Committee (July 21) and the Banking Committee (July 23). In approving the 18-month extension, Banking Committee chairman Christopher Dodd (D-CT) said the Senate would be unable to pass a long-term transportation legislation this year due to other more critical priorities. However, he expressed the hope that action on a long-term bill may be possible in 2010.

The Senate action, extending the surface transportation program for 18 months and authorizing an additional $26.8 billion through March 2011, will have to be reconciled with an extension bill to be approved by the House. Action in the House awaits an imminent decision by the Ways and Means Committee and Speaker Nancy Pelosi (D-CA) on the recommended level and duration of the extension. Since the House is scheduled to recess on Friday, July 31, only five days remain for the Senate and the House to complete action on the extension. This includes voting on their respective extension bills, reconciling their differences in a Senate-House conference and approving a final bill by the full House and Senate. While the exact length of the extension will probably end up as a compromise, we believe, along with most other informed observers, that Congress will not act on a long-term transportation authorization this year.

Please feel free to contact Mike Nystrom at or Keith Ledbetter at or call the MITA office at 517-347-8336 with any questions or comments.

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