After a week of intense debate over how to replenish the quickly diminishing Highway Trust Fund, Congress ended the month of July with the passing of a bill that calls for $10.8 billion of highway and transit funding. Passed through Congress last Thursday, the bill has now been sent to President Obama who has expressed plans to approve it. Had Congress not acted, the Transportation Department would have begun delaying and cutting payments to states on Friday.
The bill calls for a 10 month extension to the life of the Highway Trust Fund, reauthorizing it until May. Though the bill provides a much needed plan for emergency funding, it essentially moves the debate over how to sustainably finance the Highway Trust Fund into next year. According to the Wall Street Journal, some Senators tried to only approve funding for up until Dec. 19 so that Congress would be forced to develop a long-term funding plan when the year ended. After passing through Senate, that plan was rejected by the Senate in 272-150 vote. The amended bill the will extend funding until May passed through the Senate by a vote of 81-13.
Congress still struggles to find a long term solution to the decreasing effectiveness of the fuel taxes which continue to bring in less and less revenue as consumers switch to more fuel efficient vehicles. The federal gas tax has remained at 18.4 cents a gallon since 1993 and is the primary source of funding the government uses to finance highway and transit improvements around the country.
If approved by the President, the House measure will create new sources of revenue through pension smoothing, which allows companies to contribute less to their pension plans. This budgeting tactic provides the federal government with more money to use for funding because companies lose out on the tax deduction associated with pension contributions. Though this is an effective way to bring immediate revenue back into the Highway Trust Fund, lawmakers from both parties are skeptical of pension smoothing.