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Transportation Insiders

Grappling With Reality on Surface Transportation

Transportation Secretary Anthony Foxx has suggested that corporate tax reform could provide revenues for surface transportation.(Drew Angerer/Getty Images)

photo of Fawn Johnson
January 21, 2014

Lawmakers have until September to continue funding the country's roads and railways, and there is no easy way to pay for it. The Congressional Budget Office estimates that it will take at least $46 billion to keep the highway trust fund in line with current expenditures in 2015. Even using every clever method of cost-cutting and streamlining available, GOP congressional staffers say a two-year surface transportation bill will have to be in the $75 billion range. Democrats are angling for something closer to the current levels, at least $104 billion. Preferably more

Where does the money come from? The good news is that policymakers are considering a range of options, well aware that the highway trust fund is set to run out in September or October. This awareness is far more acute than the last time transportation chiefs on Capitol Hill negotiated a highway bill, in part because other niggling problems like the imminent threat of a government shutdown aren't hanging over them.

The bad news is there is no easy answer. President Obama has proposed corporate tax overhaul to pay for transportation infrastructure, an idea that was echoed last week by Transportation Secretary Anthony Foxx. Never mind that even the wonkiest of tax lobbyists don't believe tax reform will be completed this year.

 

There are other more concrete proposals out there, but they require making tough choices and nose-to-the-grindstone legislating. Senate Environment and Public Works Committee Chairman Barbara Boxer, D-Calif., has proposed replacing the current gas tax with a wholesale sales tax on fuels. Rep. Earl Blumenauer, D-Ore., has suggested doubling the current 18.4 cent-per-gallon gas tax.

Just last week, Sens. Michael Bennet, D-Colo., and Roy Blunt, R-Mo., introduced legislation creating a $50 billion infrastructure bank funded by bonds sold to U.S. corporations. As an incentive, the corporate buyers would be allowed to repatriate some of their overseas earnings tax free. This idea was first hatched last year by Rep. John Delaney, D-Md., who has secured 50 co-sponsors—25 Republicans and 25 Democrats—since he introduced the House version in February.

Meanwhile, House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., said last week that he wants the surface transportation bill to be wrapped up by September, which really means it needs to be on the House floor this summer. Shuster has declined to state how he would prefer to pay for the legislation. He is willing to look at all options. One logistical problem is that the revenue raisers other lawmakers have proposed, while potentially controversial, also aren't in his committee's jurisdiction. Adding other committees only adds time, and that's not something Shuster or Boxer have the luxury of indulging in.

The next six months will determine how lawmakers unravel this knotty problem, perhaps signaling a way toward a longer-term solution that could be worked out in the next Congress. Cynics say the best we can hope for is this year an extension of the current MAP-21 program. But even an extension has to be paid for. No matter what, transportation gurus in Congress are rolling up their problem-solving sleeves.

For our insiders: What are key things to watch for in the upcoming debate about paying for a surface transportation bill? Is Congress finally ready to embrace a gas tax hike? Is corporate tax reform, as suggested by the White House, anywhere close to a reality? What about Delaney's idea of the corporate bonds using repatriation? Could we be witnessing the beginning of a tough-but-necessary conversation about the path forward for a 21st century transportation network? Or is this just same old, same old?

From the Transportation Insiders

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