Transportation Secretary Anthony Foxx unveiled a six-year transportation proposal yesterday that would cost $478 billion and reauthorize surface transportation programs nationwide but is unlikely to gain significant traction in Congress.
A one-time tax of 14 percent on $2 trillion in American companies’ foreign earnings, which the administration has said is untaxed revenue, would fund the proposal, in addition to income from the Highway Trust Fund. The remainder to finance the proposal would come from gasoline taxes and other sources, as the administration laid out to Congress in its fiscal 2016 budget request.
"All over the country, I hear the same account — the need to repair and expand our surface transportation system has never been greater, and yet federal transportation funding has never been in such short supply," Foxx said in a statement.
Congressional authorization for highway and public transportation funding will expire May 31 if Congress fails to intervene, and congressional lawmakers appear more likely to pass short-term legislation than a multi-year bill as they have 32 times in the past six years.
"If Washington doesn’t fix this, it’s going to roll downhill," Foxx said yesterday afternoon at the Newseum in Washington, D.C., adding that less transportation funding from the federal government means state and local authorities cut back on their infrastructure financing, too.
"Frankly, our transit systems are an escape valve for some of the traffic that’s going to cause congestion in the future," he said. "Let’s get six years of certainty under our belts."
Highway Trust Fund faces squeeze
In additional to congressional uncertainty, fuel efficiency improvements pose a problem for the nation’s long-term transportation outlook. U.S. EPA said last week that vehicles made in 2013 hit an all-time high in fuel economy, a trend that has happened in eight of the last nine years. That means declining income for the Highway Trust Fund.
According to a January estimate from the Congressional Budget Office, the fund had a balance of $4 billion at the start of 2014 and $11 billion at the beginning of this year.
Yet the forecast projects that with $46 billion in expenses budgeted for this year, the fund will have less than $500 million on hand by year’s end — far less than the $4 billion and $1 billion the highway account and transit accounts, respectively, must maintain to meet their legal obligations.
The federal gasoline tax is 18.4 cents per gallon of gasoline, a rate that cannot keep the fund afloat without government action.
"The gas tax will be dead in 10 to 15 years," said Baruch Feigenbaum, a transportation policy analyst with the Reason Foundation, which backs free-market policies.
Instead, Feigenbaum said, mileage-based user fees — financing methods that show how far drivers travel with roadway funding — are showing promise on the state level.
Revenue from ridership alone almost always falls short of financing public transit services, as Feigenbaum noted last week.
"It’s very hard for transit systems, for bus systems to pay for themselves," he said. "It’s just a reality."
Rep. Earl Blumenauer (D-Ore.) introduced a bill last month that would raise the tax on gasoline, diesel and kerosene to 26.3 cents per gallon next year, but it has failed to gain any Republican co-sponsors. The taxes would be indexed to inflation in subsequent years.
"My choice for the next accomplishment would be fully funding our six-year surface transportation reauthorization," Blumenauer said in a statement Thursday, referring to potential common ground legislation for both parties.
"We’ve assembled a vast coalition of interest groups — business, labor, professional groups and local government, all supporting legislation I’ve introduced to increase the gas tax for the first time in 22 years," he said. "Thirteen states have already been able to do this. It’s time for Congress to act and do so before the May 31 deadline."
Meanwhile, pilot programs testing mileage-based fee systems, also known as vehicle miles traveled (VMT) fees or taxes, are underway in Illinois and Oregon, and committees in Arizona, California, Florida and Indiana, among other states, are studying comparable VMT-based tax policies.