Grassley proposes
$35-billion in transportation revenue raisers

Leaders of the Senate Finance Committee have proposed a package of transportation tax changes that would raise enough money to support the highway portion of a $317-billion successor to the Transportation Equity Act for the 21st Century. Committee Chairman Charles Grassley (R-Iowa) and the panel's top Democrat, Max Baucus (D-Mont.) have agreed on the tax package, aides say and the committee is slated to vote on the plan on Feb.2.

If approved by the panel, the revenue measure would be a key part of a multi-year transportation funding and policy bill. Senate floor debate could begin as early as that same day.

But there was a setback in the House: Transportation and Infrastructure Committee Chairman Don Young (R-Alaska) had hoped Transportation and Infrastructure Committee Chairman Don Young (R-Alaska) had hoped to have his panel vote Feb. 3 on a $375-billion, six-year reauthorization bill. Young's bill, H.R. 3550, is the "Transportation Equity Act: a Legacy for Users," or "TEA-LU" for short. But on Jan. 28, Young issued a statement saying that the committee meeting had been "temporarily postponed."

The Grassley-Baucus proposal would raise $35 billion over the six-year life of the new transportation bill without raising the federal gasoline tax. It includes:

  • changes in fuel tax compliance, which would raise $4 billion
  • recapture to the Highway Trust Fund of the 2.5 cents per gallon of taxes on gasohol that now go to the general fund ($5 billion)
  • a new tax credit that effectively would offset the revenue the Highway Trust Fund loses because gasohol's tax is 5.2 cents per gal. less than gasoline's ($9 billion)
  • spending down some of the Highway Trust Fund balance ($6.5 billion)
  • discontinuing refunds the highway fund makes to the general fund for state and local government vehicles' current fuel-tax exemptions
  • shifting the tax on "gas guzzlers" to the Highway Trust Fund from the general fund ($500 million)
Young postpones committee action on
his 'TEA-LU' bill

House committee chairman Young said that he and other leaders of that panel "need additional time to hear from a number of other committee chairmen and the leadership of the House on possible additional ways to pay for the much-needed improvements to the national's transportation system that are proposed in H.R. 3550."

Financing any proposed large increase in highway and transit spending has been the major hangup for months on the TEA-21 successor. Young wants an increase in the federal gasoline tax, but the White House continues to oppose that idea.

TEA-21 expired last Sept. 30. The stalemate on funding caused Congress to extend the highway and transit programs for five months. That extension runs out on Feb. 29, and it appears that another extension will be needed.

(Photo courtesy of office of Rep. Don Young and Office of Sen. Charles Grassley)