Last week two members of congress called for an increase on fuel taxes to help buttress the failing Highway Trust Fund. Tax policy creates strange bedfellows, as one is Oregon Democrat Earl Blumenauer and the other Wisconsin Republican Tom Petri.
Rep. Blumenauer stated at the event that “the gas tax hasn’t been increased since the beginning of the Clinton administration. Today, with inflation and increased fuel efficiency for vehicles, the average motorist is paying about half as much per mile as they did in 1993.”
Blumenauer goes on to state that there is a broad coalition of support for the increase from the U.S. Chamber of Commerce, National AFL-CIO, and other construction and trucking industry interest groups. The fuel hike in question would be included in the proposed UPDATE Act of 2013.
The Update Act
The house event held by Blumenauer and Petri happened to coincide with the one-year anniversary of the Update, Promote and Develop America’s Transportation Essentials (UPDATE) Act, a bill sponsored by Blemenauer that still languishes in a senate subcommittee.
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The bill, originally drafted in 2013, specifically establishes a Road Usage Fee Pilot Program that would be used to study mileage-based fee systems nationwide. The bill also amends the tax code to implement the fuel tax increase.
The updated version of the legislation being pushed at last week’s event aims to phase in a 15 cent increase in the gas tax over a period of three years. It would also be pegged to inflation to prevent any runaway increases or decreases.
When originally drafted ATA President and CEO Bill Graves supported the legislation in saying that “the additional investment in highway projects made possible by this new revenue will significantly improve the safety, reliability and efficiency of the trucking industry, to the benefit of all Americans.”
Due to the dysfunction in Washington and mangled budgets, Congress has been adding to the General Fund deficit by transferring $50 billion of revenue to the Highway Trust Fund. To prevent insolvency, the fund would continually need almost $15 billion a year on top of what it gets from current gas tax receipts.
The Raw Data
In an effort to support their push to get the bill passed, Blumenauer and Petri highlighted data that further backed up their legislation:
- According to the American Society of Civil Engineers, the United States’ surface transportation infrastructure is in need of more than $2 trillion to keep up with the economy and allow for expansion.
- As of 2011, the Federal Highway Administration reported that almost $80 billion would be needed to keep bridges across the country maintained.
- Without a change in the current funding situation, by 2024 there would be a 30 percent drop in federal transportation spending.
- According to the Congressional Budget Office (CBO) to merely maintain the status quo the Highway Trust Fund will need $100 billion over five years, in addition to what it currently gets from gas tax receipts.
- The UPDATE Act would raise approximately $100 billion over five years.
The question now moves on from the mechanics to the politics of the bill. As Republicans look set to take over both houses of Congress in 2015, what are the chances of the legislation getting passed?
Will It Pass?
Though several key senators support the tax increase, Senator Tom Carper told Politico that after a discussion with House Speaker John Boehner, passage of the legislation was very unlikely. Apparently Speaker Boehner flat-out told Carper that they “were not going to do that in the house this year.”
Even President Obama weighed in on the issue when he stated at a Business Roundtable that “it’s probably a good time for us to redesign and think through what is a sustainable way for us on a regular basis to make the investments we need.” Unfortunately the optimism only went so far as he went on to say that “in fairness to members of Congress, votes on gas tax are really tough.”
Though the President, members of both parties and the industry support this legislation, the current climate in the lame duck session of congress makes passage unlikely. Will the Highway Trust Fund ever reach a real level of solvency and be properly funded? Only time will tell. Getting things done in a bipartisan manner doesn’t seem to be in vogue in Washington these days.