Last week the House and Senate passed a new highway bill to fund surface transportation programs at current levels through the end of Fiscal Year 2014. The final agreement also included a one-year extension of the current interest rate for federal student loans and a five-year extension of the federal flood insurance program. The House passed the bill on a 373-52 vote and the Senate approved it on a 74-19 vote.
Congress also passed a short-term extension to fund transportation programs until the new bill is enacted. The President signed the extension on Friday and is expected sign the two-year authorization bill this week.
The Congressional Budget Office estimates that the law will reduce projected deficits by $16.3 billion over ten years. Since fuel tax revenues deposited into the highway trust fund are not enough to cover the bill’s spending, the legislation transfers $18.8 billion from the general fund of the Treasury to the highway trust fund.
The bill also includes a number of offsets such as provisions that would affect business contributions to pension plans, and premiums paid to the Pension Benefit Guaranty Corporation. Also included was a new tax on roll-your-own cigarettes.
Policymakers deserve credit for including some offsets in the final agreement. However the offsets, general revenue transfers, and funding provided through Fiscal Year 2014 are at best a temporary solution. The fact remains that gas tax revenues coming into the trust fund are no longer sufficient to effectively fund transportation priorities.
An honest discussion of the trade-offs needed to fund those priorities is long overdue and should occur well before Congress considers another authorization bill.