December 21, 2014

Down to the Wire on Highway Funding Measure

  • Discretionary spending is the portion of the federal budget determined through the Congressional appropriations process. Approximately one-third of...

The Senate was scheduled to vote on an $11 billion highway bill later today -- only days before the Department of Transportation (DOT) says it will be forced to begin delaying and cutting payments to state governments for transportation projects.

The legislation, which the House passed earlier this month, is a misguided fix that would only postpone the trust fund’s problems until May while possibly increasing future federal deficits.

Several weeks ago DOT announced that the highway account in the Highway Trust Fund would be insolvent after the beginning of August, causing states to suffer an average 28 percent loss in federal highway funding. Some states have already begun delaying projects.

The shortfall in the trust fund can be traced to the federal gas tax, which has not been increased since 1993 despite rising highway costs. But the current legislation relies on a gimmick known as pension smoothing, which increases federal revenue in the short run but can reduce it later.

Several senators are pushing for an amendment that would use offsets other than pension smoothing -- such as increasing tax compliance measures -- to keep the trust fund solvent until December.

It is disappointing that lawmakers have failed for so long to agree on a more responsible and permanent way to match transportation spending and revenue.