Standoff on U.S. roadway repairs becoming ‘highway cliff’
Without quick action by Congress, the U.S. Transportation Department may begin scaling back or halting work on thousands of roads, bridges and other infrastructure projects at the height of the construction season this July, when the nation’s Highway Trust Fund is expected to run dry.
But as recent spending battles in Washington have shown, finding bipartisan cooperation to prevent the fund from becoming insolvent will be no easy task, particularly in an election year.
The standoff is the latest example of partisan gridlock on Capitol Hill, reminiscent of similar battles over the budget. Some are already referring to the transportation funding deadline as the “highway cliff,” a reference to the 2012 fight over expiring tax rates and the debt ceiling.
On Wednesday, President Obama prodded Congress to move quickly, calling infrastructure investment essential to the nation’s economic future.
“First-class infrastructure attracts first-class jobs,” Obama said, standing against the backdrop of one of the nation’s most ambitious infrastructure projects, New York’s aging Tappan Zee Bridge and its partially built $4-billion replacement.
Failure to agree on new funding sources will put at risk more than 112,000 highway projects, 5,600 transit programs and nearly 700,000 jobs, the White House warned.
In addition to keeping federal funds flowing, lawmakers must come up with a longer-term solution to close a projected $16-billion annual shortfall in the trust. But key figures on Capitol Hill remain at odds over how to make up the gap.
Washington finds itself in this jam because taxes on gasoline and diesel fuel, which provide 90% of the revenue for the Highway Trust Fund, no longer raise enough money to support the programs, in part because cars have become more fuel-efficient.
Congress last passed a major transportation bill in 2012, authorizing spending on such areas as public transit and safety programs. Major business groups and labor unions are pushing lawmakers to pass a longer-term package. Some lawmakers are also eager to renew the bill because it would give them an opportunity to trumpet the role of the federal government.
Lawmakers are only now taking their first steps. Sen. Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works Committee, announced a bipartisan proposal this week that would keep highway spending at existing levels, indexed for inflation, for six years. But the plan was silent on the key question of how to replenish the trust fund, leaving that to the Senate Finance Committee.
The previous two-year transportation bill tapped the Treasury to make up for a projected gap, but the highway fund ran dry faster than anticipated.
One proposed solution would increase the current 18.4-cent-per-gallon gas tax. Federal fuel taxes have not been raised since 1993, but doing so this year seems unlikely when the entire House and more than a third of the Senate are up for election.
Rep. Bill Shuster (R-Pa.), chairman of the House Transportation Committee, has yet to put forward a proposal. Rep. Dave Camp (R-Mich.), the departing chairman of the Ways and Means Committee, called for dedicating $126.5 billion to the trust fund as part of a major overhaul of the nation’s tax code, which would fully fund highway projects for eight years.
The White House has also called for replenishing the trust fund through an overhaul of the corporate tax system.
“This is an area where there is bipartisan interest,” Transportation Secretary Anthony Foxx told reporters this week. “It’s just that we have to play this out and work hard every day to make progress on it.”
But prospects for a major deal on tax reform are dim, and time is running out.
“The uncertainty is troubling,” said David Parkhurst, staff director for the National Governors Assn.’s office of federal relations, noting that states are likely to bear the brunt of any funding lapse.
“The states have spent the money. The states have paid the bill,” Parkhurst said. “If the trust fund shortfall goes down to zero and the federal government is unable to make those cash reimbursement payments to the states for work already done, the states are on the hook.”
While waiting for Congress to act, Obama said his administration is speeding up infrastructure projects by streamlining permits and improving transparency. The result would increase job growth, repair crumbling infrastructure and keep the U.S. competitive with its rivals, he said.
The president cast the issue as bipartisan, but blamed Republicans for cutting funds for building projects and refusing to work with him out of political spite. “Usually they show up at ribbon-cuttings for projects they refuse to fund,” Obama said. “I guarantee you they will have more than enough to disagree with me about. But let’s not fight on something we all know makes sense.”
While Obama spoke in New York, Vice President Joe Biden was in Cleveland holding his second event in as two days as part of the administration’s infrastructure push.
Also this week, the Laborers’ International Union of North America announced a $1-million effort that will include radio ads pressing Congress to act.
“Another short-term patch — simply duct-taping the roads and bridges we all rely on — must be off the table,” union General President Terry O’Sullivan said.
Short of a major breakthrough, the most likely scenario is for lawmakers to tap the Treasury again to avoid insolvency in the fund this year. But even that may be a fight, particularly from Republicans who insist that new spending be offset by cuts.
“Even getting to a patch is not easy,” said Marcia Hale, president of the Building America’s Future Educational Fund, which advocates greater infrastructure spending. “That’s a tough vote for some people.”
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