June 26, 2014
On June 26, 2014, the U.S. Senate Finance Committee marked up the Preserving America's Transit and Highways Act (PATH) of 2014, a proposal to extend the nation's highway and transit programs through December 31, 2014. The current transportation authorization law, Moving Ahead for Progress in the 21st Century (MAP-21), is set to expire on September 30, 2014.
The PATH Act would provide for a three-month extension of MAP-21's programs, relying on $7.6 billion of revenue raised over ten years to offset the anticipated shortfall in the Highway Trust Fund. This revenue would be raised from a number of different sources, most of which are unrelated to the transportation system but rather focus on encouraging tax compliance. Examples include modifications to mortgage reporting, clarification of the statute of limitations for overstatement of basis, revocation or denial of a U.S. passport due to unpaid taxes, and modification of distribution rules for pension plans.
In fact, only one proposed revenue source is related to the transportation system. The PATH Act would rely on $750 million in transfers from the Leaking Underground Storage Tank Trust Fund, which is funded from a 0.1 cent-per-gallon tax on motor fuel and some other fuels. As originally proposed, the PATH Act would have increased the maximum heavy vehicle use tax from $550 to $1,100, but this provision was struck in a modification to the Chairman's mark. Additionally, the Chairman's modification would price liquefied natural gas (LNG) based on the energy equivalent of a gallon of diesel, reducing the tax rate on LNG from 24.3 cents per gallon to 14.1 cents per gallon.
The Chairman's modification also includes "sense of the Senate" language that acknowledges the need for a long-term transportation reauthorization bill. The language calls for a reauthorization bill to extend though at least FY 2020 and for the Senate to diligently and expeditiously complete such a bill.
A number of amendments to the PATH Act have been filed. Examples include increasing the motor fuel tax by 12 cents and indexing that tax to inflation; establishing an innovative finance authority; and creating a new Multimodal Transportation Account to support freight, rail, and intelligent transportation system projects. Amendments beyond the Chairman's modification were not considered at the June 26 markup session; the Senate Finance Committee plans to consider the PATH Act again the week of July 7, 2014.
While the U.S. Senate Finance Committee proposal would avert an immediate funding crisis for the nation's transportation system, it would move the federal program further from the user-pays principle. Additionally, it would rely on speculative revenue sources to do so, and these sources would be phased in over the next several years. In essence, the PATH Act would provide for a near-term transfer from the General Fund to the Highway Trust Fund, and then pay for this transfer over many years.
CMAP urges Congress to continue working toward a long-term reauthorization bill that relies on robust, sustainable investment in the transportation system and supports transportation user fees as the source for these investments. While GO TO 2040 supports increasing the federal gas tax and indexing it to inflation, it also recognizes the need to pursue a long-term replacement for the gas tax as vehicle technologies continue to evolve. CMAP's revised reauthorization principles provide more detail on the agency's policy positions.