Congressional negotiators from both parties deserve applause for having reached agreement Tuesday on the first long-term highway bill in nearly 20 years. Meanwhile, the Export-Import Bank, a vital mechanism for giving U.S. firms a fair chance in international trade was saved from extinction.
But make that only one-and-a-half cheers, because Congress still can’t agree on a sustainable source of funding for transportation infrastructure. The bill’s passage came just before the Highway Trust Fund was set to expire Friday.
Aside from its serious failure to bite the bullet and raise federal fuel taxes, the bill’s achievement is considerable. It authorizes a five-year program of highway construction and mass transit spending costing $305 billion, and it finds the funds to cover the costs, although on a one-time only basis. That means states and cities can now plan some capital improvements without worrying whether they will be funded.
The bill contains other positive elements. For example, it allows Amtrak to create a separate budget for its profitable Northeast Corridor, giving the railroad access to funds for improvements that would otherwise be used to subsidize passenger rail operations in other parts of the nation. The added funding for the Northeast Corridor will allow Amtrak to speed the installation of safety devices such as the speed controls that were lacking in the fatal Philadelphia derailment last May.
The creation of a separate budget for all other Amtrak operations will also force Congress to address the costs of mandated train service in other parts of the country.
The major provision of the proposed law not concerned with transportation was the extension of the Ex-Im Bank charter for four years. Including this measure in the transportation bill insured its passage over the objections of the GOP leadership.
Where the new bill disappoints is in its approach to funding the highway measure. The federal gas tax of 18.4 cents a gallon enacted in 1993 would have to be more than 30 cents a gallon today just to keep up with inflation. More efficient cars and trucks buy less gasoline and diesel, reducing Highway Trust Fund income further. As a result, over $70 billion in general revenue has been diverted to the Trust Fund over the past seven years, mostly from one-time windfalls.
The new bill continues this practice, squeezing money out of the Federal Reserve System and selling 66 million barrels of oil from the Strategic Petroleum Reserve at a price optimistically pegged at more than twice the current one.
Some legislators still hope that forcing American corporations to repatriate foreign profits so they can be taxed will create another windfall for the Highway Trust Fund.
But this is bad policy. The Highway Trust Fund was designed to be supported by highway users.
Congress has dodged the need to increase federal fuel taxes for at least a decade. It is long past time to restore highway user fees to a sustainable level.