Senate panel to consider $9 billion highway fund infusion
WASHINGTON (Reuters) - Senate Finance Committee Chairman Ron Wyden on Tuesday proposed a $9 billion infusion into the Highway Trust Fund as part of a stop-gap effort to keep federal money flowing to highway construction projects through the end of 2014.
The Oregon Democrat's plan, to be considered on Thursday by the Finance Committee, would be paid for with a grab-bag of offsetting revenue raisers, including higher taxes on heavy trucks, distribution rule changes for inherited retirement accounts and measures to improve tax compliance.
Unless Congress replenishes the Highway Trust Fund and renews legislation to authorize transportation spending, federal highway money will slow to a trickle by August and halt altogether by Sept 30.
The fund has dwindled because its traditional income source, fuel taxes, has fallen chronically short of demand for funds, due to construction cost increases, improved vehicle fuel economy and fewer miles traveled due to a slow economy. The federal fuel tax rates have not changed since 1993.
But the White House and congressional Republicans and Democrats have ruled out an election-year fuel tax hike, sending lawmakers scrambling to find alternative funding methods. There has been no consensus on how to fund a six-year, $302 billion transport bill that President Barack Obama has requested.
The Highway Trust Fund, with $8.1 billion at the end of May, is expected to be depleted by late August, but it could start to curtail reimbursements to states for projects by mid-July, Wyden said, quickly causing delays to new projects. He said the Senate did not "have the luxury of just dawdling around, having lots of debates."
"This country is looking at the transportation equivalent of a government shutdown," Wyden told reporters in the Capitol. "In a fragile economy, I just don't want to take that risk."
He said his proposal contains "relatively benign" measures that Congress has previously considered, but he would be interested in hearing alternative proposals from Republicans.
The biggest source of revenue, $3.7 billion over 10 years, would be a provision that requires those who inherit individual retirement and 401(k) accounts to take distributions mostly within five years, subjecting that money to taxation much sooner.
The plan would lift the cap on annual use taxes for heavy trucks from $550 for vehicles over 75,000 pounds gross weight to $1,100 for vehicles over 97,000 pounds, raising $1.35 billion over a decade.
The plan would seek to raise funds from improving tax compliance by requiring more detailed information on claimed mortgage interest deductions, applying a six-year statute of limitation to correct understatement of capital gains income and revoking passports of individuals with seriously delinquent tax debts over $50,000.
(Reporting By David Lawder; Editing by Cynthia Osterman)