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.
External links:
Congressional Budget Office Score
Conference Report and Joint Explanatory Statement
Statement by House Transportation and Infrastructure Committee Chair John Mica
Statement by Senate Environment and Public Works Committee Leaders
White House Statement
