WASHINGTON May 7 A slow-motion pile-up is
coming into view on U.S. highways and Capitol Hill this summer:
federal funding for road construction is running out and
Congress faces a big fight over how to replenish it.
The trucking industry, many state transportation directors
and even a few lawmakers say the simple solution to shore up the
Highway Trust Fund and avoid construction layoffs is to raise
federal fuel taxes, unchanged since 1993.
But in a congressional election year in which both Democrats
and Republicans are wary of voter backlash, the message is
clear: Not going to happen.
"We have never proposed or a supported a gas tax," White
House spokesman Jay Carney told reporters on Monday.
Republican House Speaker John Boehner also opposes an
increase in fuel taxes, an aide said. And earlier this year,
Boehner all but ruled out another transfer of general funds to
keep the Highway Trust Fund afloat.
If Congress can't agree on an alternative way to increase
transportation money by late summer - or take the easier path of
a short-term fund transfer - the consequences could be huge,
halting or slowing work on thousands of projects. This could
idle hundreds of thousands of workers at a time when the U.S.
economy is finally gaining some traction.
A funding crisis would affect the nearly 600 major projects
under way in California at a cost of more than $11 billion, said
Mark Dinger, spokesman for the state's Department of
"In surprisingly short order, the operations of the nation's
largest transportation agency could grind to a halt," he said.
The situation parallels the numerous "cliffs" that Congress
has faced over the past year on divisive fiscal issues, with a
looming deadline and potentially dire economic consequences.
With time running short, an ambitious reform of a funding
mechanism that has been in place since the 1956 looks less
The central problem is that the existing per-gallon fuel
taxes of 18.4 cents for gasoline and 24.4 cents for diesel are
no longer producing enough revenue to fund road, bridge and
tunnel projects. This is due largely to improved vehicle fuel
efficiency, less driving amid a slow economic recovery and
construction cost inflation.
The U.S. Department of Transportation projects that the fund
will be depleted by late August, which may force the federal
government to curtail disbursements to states weeks earlier,
during the height of the summer road works season. The federal
government provides about 45 percent of what states spend on
road and bridge projects. A related fund for mass transit
projects is also running low.
AMERICA'S ASSEMBLY LINE
The funding crisis would put at risk projects large and
small, from routine repaving along Interstate 95 in Virginia to
a $670 million section of Interstate 49 under construction in
Louisiana, part of a new expressway corridor that will link New
Orleans and Kansas City and speed the flow of goods between
Midwest industries and a major U.S. port.
"The highways are our assembly line, and we have to rely on
the government to take care of it," said Randy Mullett, vice
president of government relations at trucking firm Con-Way Inc
Washington has kicked around numerous options for filling
the funding gap, but the trucking industry favors a fuel tax
increase because of its simplicity and because it ensures that
the money only pays for transport upgrades. The U.S. Chamber of
Commerce has also called for an increase.
Congestion on highways raised truckers' operational costs by
$9.2 billion last year, said Sean McNally, a spokesman for the
American Trucking Associations, citing an industry study.
Since 2008, Congress has transferred more than $50 billion
in taxpayer money to the trust fund, which was intended to be
self-sustaining. To stay solvent, it will need an infusion of up
to $18 billion in each of the next 10 years, the Congressional
Budget Office estimates. The CBO says it would take a 10-15
cents per gallon hike in the fuel tax to fill the gap in the
near term if that were the only solution.
Other ideas that have been explored, according to lawmakers,
aides and trade groups, include new technology that charges
taxes based on vehicle miles traveled. But methods requiring
electronic satellite tracking devices would raise privacy
concerns and require investment in new infrastructure.
In a proposed four-year, $302 billion transportation bill
sent to Congress late last month, Obama suggested ending some
business tax breaks to boost funding. Republicans have staunchly
opposed using such revenues for spending or deficit reduction.
The Obama administration also has floated the idea of
allowing states increase their tolls on interstate highways to
raise construction funds. But trucking and business groups are
worried the funds could end up being used for other purposes.
Some Republicans have proposed allowing companies to
repatriate overseas profits at lower tax rates, producing
windfall revenues that would fund infrastructure spending.
Congress must pass a new transportation bill before it goes
on recess in August to ensure that funding is not disrupted.
While lawmakers says they want to find a long-term funding
stream for projects, transportation officials believe they may
have to settle for a short-term extension.
"That's probably the most likely solution," Virginia
Transportation Secretary Aubrey Layne told Reuters.
Republican Thomas Petri, who chairs a highway subcommittee
in the House of Representatives, agreed, but added: "My worry is
that it not deteriorate into a long series of temporary
extensions," he said, adding that the continued uncertainty
would delay projects, increasing costs.
(Additional reporting by Eric Beech; Editing by Caren Bohan and