WASHINGTON — As the smoke cleared on a new political reality last week, transportation was a bit of an afterthought in the “what will the election mean for” discussion, which focused mostly on immigration, health care, trade agreements and tax reform. Roads, bridges and transit got a fleeting nod as “infrastructure,” the more elegant-sounding category to which they belong.
But if Congress and the White House are to agree on anything next year, there is a good argument that it should be on how to pay the nation’s transportation bills.
The money is set to run out — once again — on May 31. As added consequences of failure: hundreds of thousands of construction jobs put at risk and perpetuation of the widespread belief that partisan discord rules Washington.
An estimated $6.5 billion would keep highway projects afloat and construction workers employed until the 2015 fiscal year ends Sept. 30. But it would take about $100 billion in additional revenue to fund a six-year transportation bill that virtually everyone considers ideal.
“Republicans in both houses are looking for something to show they can govern, and passing a major infrastructure bill, such as the surface transportation bill, is clearly a way to do that,” said John Schmidt, a former Justice Department lawyer who is now a dealmaker for private investment in public infrastructure.
Optimism was the public face after the elections, both on Capitol Hill and among transportation advocates, but privately most acknowledged that until there is consensus on finding more money, transportation may be doomed to limp along in perpetual crisis.
“It’s hard to envision what it actually would be at this point,” said one transportation analyst, who spoke candidly on the condition of anonymity. “To the extent that we can continue to find dollars under the couch cushion, you could piece together shorter bills or extensions, but I think, increasingly, all the low-hanging fruit has been picked off.”
Congress began to search for money under couch cushions when revenue coming into the Highway Trust Fund dwindled. The fund, which receives money from the 18.4 cents-per-gallon tax on gas and the 24.4 cents-per-gallon tax on diesel, has fallen victim to improved vehicle efficiency and erosion by inflation. The gas and diesel tax rates were last increased in 1993.
Additional funding for the current two-year bill was cobbled together by tapping $2.4 billion that had been set aside to pay for cleaning up leaks from underground tanks at gas stations. When the money threatened to run out before the bill expired this year, House Republicans used a convoluted process that lets companies put less into their pension funds — creating higher taxable corporate profits — to help generate the $10.8 billion to extend the bill until May 31.
While transportation committees in the House and the Senate may now work with greater harmony to craft a transportation policy bill, it will fall to the finance committees to come up with the money.
“I don’t know if the election has changed things that dramatically on the funding side, the revenue side,” said Jim Tymon of the American Association of State Highway and Transportation Officials. “I don’t think it provided a clear path forward, either.”
Tymon, until recently the staff director for the House transportation committee, played an integral role in drafting the past three transportation bills.
Given that a new Congress takes time to get organized, Tymon says that unless House Speaker John Boehner, R-Ohio, and incoming Senate majority leader Mitch McConnell, R-Ky., agree to make a transportation bill a top priority, “it’s going to be tough for them to meet this end-of-May deadline.”
“If they were just dealing with policy, this is definitely an area where Congress and the administration could cut a deal in the first five months of the year,” Tymon said. “But the $100 billion question is, how do they pay for it?”
Political Washington has been dodging the question ever since the gradual decline of gas tax revenue was forecast years ago.
An analysis of revenue-raising options produced by the highway and transportation association shows why: Every option has its enemies, and virtually all of them would hit taxpayers in the pocketbook.
The most viable way to raise a big chunk of transportation money this year would be to increase the tax on gas and diesel fuel. Bumping up diesel by 15 cents a gallon and gas by 10 cents would raise an estimated $120 billion to fund a six-year bill.
The opposition? Almost anyone who drives a car or truck.
A similarly challenged option: putting a percentage tax on the sale of gas and diesel. That would haul in $218 billion over six years.
Neither of those ideas is likely to work in the long term, given that automakers are required to meet a fuel-efficiency target of an average 54.5 miles per gallon by 2025.
The highway and transportation association’s list includes more than two dozen other options — all of them an additional tax or fee on someone — that would yield smaller amounts of money, and every one of them would be a cost that eventually would be passed on to consumers.
Republicans can imagine the attack ads that would haunt them if one of the first things they did with control of both houses was to push through a tax increase.
“If you wanted a higher gas tax to produce revenue by June 1, you’d probably have to start it earlier than that,” Tymon said. “If you’re looking at something we’re not currently collecting revenue from, it’ll take awhile to stand that up.”
One example is much pondered in transportation circles: charging drivers for each mile they travel. The association calculates that would bring in $175.58 billion over six years if cars and light trucks paid 1 cent per mile. If full-size trucks were charged 4 cents per mile, the combined revenue would total $246 billion.
A longtime observer of the process predicted that the most likely outcome when the May deadline rolls around is another extension with a patchwork of additional funding sources, something less than the six-year bill state officials say is vital if they are to make decisions about multi-year projects.
“Either you’re doing a short-term extension through the end of the (2015) fiscal year or through the end of the calendar year,” said the observer, who spoke on the condition of anonymity because he is involved in the discussions, “or Congress just says, ‘We can find two years of money for you; we’re going to more a streamlined authorization bill that extends the programs for two years with minimal policy changes. We’ll see you back here in 2017.’ “
None of that will satisfy the likes of Pete Ruane, the outspoken head of the American Road and Transportation Builders Association’s Transportation Investment Advocacy Center, who underscored that states rely on Washington for 52 percent of their roadway funding.
“The newly elected Congress and the White House must take note and do their job and permanently fix the Highway Trust Fund,” Ruane said in a statement last week. “Transportation funding cannot remain frozen in the ice of political inertia and partisanship.”
