Senate Finance Committee Approves Reauthorization Bill
The U.S. Senate Finance Committee approved the Highway Investment, Jobs Creation, and Economic Growth Act of 2012 by a vote of 17-6-1 during its markup session on February 7, 2012. The Act would finance the highway, transit, safety, and research bills passed by various other Senate committees and will be combined with those bills to be voted on by the full Senate, perhaps as early as next week. As reported in previous Policy Updates, the Senate Environment and Public Works Committee marked up its highway bill last November, the Senate Commerce Committee reported out freight and safety titles in December, and the Senate Banking Committee approved a transit bill in earlier in February. Although the Finance Committee's proposals would move towards a fully funded transportation program, they stray from sound transportation finance and would not make progress toward the establishment of adequate, sustainable revenue sources as recommended in GO TO 2040.
The Highway Investment, Jobs Creation, and Economic Growth Act of 2012 would reauthorize and extend current revenue sources accruing to the Highway Trust Fund and its Mass Transit Account at existing rates. These revenue sources would be extended through September 30, 2015. The Act would also extend expenditure authority from the Highway Trust Fund through September 30, 2013, to finance the federal transportation program outlined in the Environment and Public Works, Commerce, and Banking committee bills.
Due to inflation, reduced vehicle travel, and improvements to fuel economy, traditional transportation user fees are expected to be insufficient to fully fund the Senate's $109 billion two-year transportation program. In fact, the Congressional Budget Office recently estimated that the Highway Trust Fund would be insolvent by Fiscal Year 2014. To fund the two-year program, the Finance Committee bill would provide an additional $10.5 billion over ten years in funding offsets from a variety of sources, including transfers to the Highway Trust Fund from the Leaking Underground Storage Tank Trust Fund, from various import tariffs, and the excise tax on low fuel-efficiency vehicles. The bill would also close a loophole in the Alternative Fuels Mixture Excise Tax Credit, increase levy authority on payments to Medicare providers with tax delinquencies, and secure revenues from various financial transactions.
The markup session also resulted in reforms that would reduce federal revenues, including an increase in the monthly exclusion for transit and vanpool benefits to equal that for employer-provided parking. Furthermore, during the markup session the Committee approved the Transportation and Regional Infrastructure Bonds (TRIP) program. We discussed this proposal in a Policy Update last fall. Please consult the Finance Committee website for an overview of the original bill, as well the modificationsapproved during the markup session.
GO TO 2040 calls for transportation investments to be based on transparent, efficient user fees. Revenue sources such as the gasoline tax directly link transportation costs paid to benefits received, and have been the cornerstone of transportation finance in the U.S. for decades. The Finance Committee's funding proposals stray from this principle. With the exception of the Leaking Underground Storage Tank Trust Fund revenues, which are currently collected from the federal motor fuels tax, and to an extent the tariff on imported vehicles, the other revenue sources are at best indirectly linked to use of the transportation system and at worst totally unrelated to transportation.
GO TO 2040 also supports increasing the state and federal gasoline taxes in the near term and indexing these taxes to inflation to provide adequate revenues to maintain, modernize, and expand the transportation system. In the long term, GO TO 2040 supports identifying a replacement to the gas tax, which is unsuited to changes in vehicle technology and the growth in alternative energy sources, and suggests a tax on total vehicle-miles traveled as a potential replacement.