Senate panel to vote on highway trust fund fix
The U.S. Senate Finance Committee is scheduled Thursday to vote on legislation that would sustain the Highway Trust Fund through the calendar year.
The HTF is an account where user fees, such as gas and diesel fuel taxes, are deposited to help pay for highway, bridge and transit construction, and safety programs. The trust fund is expected to run out of money by the second half of August without some infusion of new funds because obligations to states for projects exceeds revenues in an era of more fuel-efficient cars. The uncertainty over the HTF has made it difficult for states to make long-term construction plans because they don't know when they will be reimbursed under the federal aid highway program.
The PATH Act (Preserving America's Transit and Highways) doesn't address the long-term issue of finding a sustainable source of new revenue for the Highway Trust Fund, which must be addressed in a multi-year surface transportation bill. The current two-year legislation expires at the end of September, and lawmakers are not expected to pass renewal legislation this year partly due to the fact that mid-term elections are looming in November.
Congress has borrowed $54 billion since 2009 and transferred the money from the General Fund to prop up the HTF. The PATH Act is designed to temporarily plug the gap with $9 billion of new revenue and other adjustments over 10 years.
One provision would double the heavy vehicle use tax to $1,100 for trucks with a gross weight above 75,000 pounds. The change would raise about $1.35 billion over 10 years, according to the legislation.
Other provisions would increase tax compliance and change rules governing certain retirement accounts. The proposals would require more reporting on information related to the mortgage interest deduction (estimated $2.2 billion savings); clarify the current six-year statute of limitations for overstatements of capital gains basis (estimated $1.3 billion in savings); revoke passports for taxpayers with at least $50,000 in delinquent taxes (estimated $388 million in savings); and expand the requirement that inherited IRAs be paid out within five years, similar to proposals in the Obama budget and the Tax Reform Act (estimated to raise $3.7 billion).
Sen. Tom Carper, D-Del., offered an amendment to increase the gasoline and diesel tax 12 cents over three years and then automatically raise it based on the Consumer Price Index. Motor fuel taxes have not been raised since 1993, and the HTF has lost almost 40 percent of its purchasing power as a result. The increase would bring the gas tax to 30.3 cents and the diesel tax to 36.3 cents, where they would be if the tax had been indexed to inflation.
Carper's proposal is similar to one offered last week by Sens. Bob Corker, R-Tenn., and Chris Murphy, D-Conn. Their plan would raise the fuel tax by 12 cents over two years to raise an estimated $160 billion over 10 years. They would maintain revenue neutrality by making permanent some tax breaks in the current tax extenders bill that is up for renewal.
Corker said Wednesday on CNBC's "Squawk Box" that his bill helps address the nation's infrastructure needs while maintaining smaller government. He said the PATH Act relies on borrowing and would increase the deficit.
Raising the gasoline tax does not have much political support in Congress and analysts do not expect such a measure to be approved this session.
Kevin McCarthy, the House Majority Leader-elect, said on Fox News Sunday this week that he is against raising the gas tax. He suggested that proceeds on fees from opening up oil exploration on federal lands, something proposed by Republicans two years ago, would be a better alternative.
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