Trust-Fund Fight Heads to the Wire
With the congressional August recess around the corner, House and Senate lawmakers were moving along separate tracks with competing plans to avert an imminent crisis in the Highway Trust Fund. The House was aiming for a $5-billion “fix,” designed to prop up the fund’s
struggling highway account until Sept. 30. The Senate was working on a $26.8-billion infusion designed to keep the fund healthy through March 2011. Observers expected a deal to be struck before the recess, but at ENR press time the exact outcome was by no means clear.
The differences between the House and Senate trust-fund remedies are rooted in the chambers’ divergent views on reauthorizing the highway and transit program. The key date is Sept. 30, when the current legislation, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, expires.
The House was heading toward a two-month trust-fund patch, using a $5-billion infusion proposed by Ways and Means Chairman Charles Rangel (D-N.Y). That stay would give Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) leverage to push his $500-billion, six-year highway-transit-rail reauthorization bill in September
In the Senate, key lawmakers turned to an 18-month trust-fund rescue because they want to extend the highway and transit authorization until then, instead of acting this year on a multiyear bill.
Three Senate committees cleared 18-month extensions, for highway, transit and safety programs. Finance Committee Chairman Max Baucus (D-Mont.) proposed the funding. The pieces were expected to be merged on the floor.
| Senate: | House: |
|---|---|
| Trust Fund: Baucus on July 20 proposes $26.8-billion shift from general fund to trust fund. That would close highway account hole for 18 months, keeping account healthy through March 31, 2011. | Trust Fund: Ways and Means Chairman Rangel proposes $5-billion infusion. New money would cover highway account shortfall for about two months, through Sept. 30 |
| Reauthorization: Three committees approved 18-month extensions for highway, transit and highway safety programs. | Reauthorization: Oberstar pushing six-year, $500-billion measure, including $337 billion for highways. Bill is only through subcommittee so far. No revenue source has been approved yet to fund the package. |
| Other Key Factors: | |
| Obama administration: Supports 18-month reauthorization. Says $5 billion to $7 billion needed to carry trust fund through September. Unclear whether White House will insist on finding offset for any general-fund transfer to trust fund. | |
| Deadlines: Trust-fund shortfall projected to surface in August. House recesses on July 31, Senate on Aug. 8. Both return after Labor Day. SAFETEA-LU expires on Sept. 30. | |
The U.S. Dept. of Transportation favors the 18-month approach. “My hope is that the House will take the Senate bill that’s been passed by the three committees of jurisdiction and pass it,” says DOT Secretary Ray LaHood. “We believe that’s the best way forward. And then we will begin immediately working with Chairman Oberstar and any other members of Congress who want to work on a robust transportation bill.”
The Associated General Contractors supports a six-year transportation bill, says Brian Deery, senior director of AGC’s highway and transportation division. But, he says AGC’s first priority “is to ensure that there’s enough funds in the Highway Trust Fund to get us through fiscal year ’09.” He also says AGC would like to see enough money added to the trust fund so that fiscal 2010 “doesn’t turn into a debacle as well.”
Pam Whitted, National Stone, Sand and Gravel Association vice president for government affairs, also backs the six-year bill, but says Congress must pass a trust-fund fix before the August break. “We would prefer to see it be shorter-term, so it would keep the pressure on for [Congress] to do a longer-term bill,” she says.
The American Road and Transportation Builders Association warns that passing an extension that delays a multiyear highway-transit bill for 18 months would “submarine” the benefits of the American Recovery and Reinvestment Act. William Buechner, ARTBA’s vice president for economics and research, says ARRA road funds will peak in 2010 at $11.8 billion, pushing the total highway program that year to $51.9 billion. But then ARRA aid drops to $8.1 billion in 2011, $2 billion in 2012 and zero in 2013. If a new multiyear highway bill isn’t in place until mid-2011 or later, Buechner projects total federal highway spending would fall to $40.7 billion a year in 2013-2015.
As Congress debates the conflicting plans, new Federal Highway Administration chief Victor Mendez told state transportation officials on July 28, “Unless we shore up the trust fund, we will have no other choice than to pay the states less frequently for road and bridge repairs.”
FHWA now reimburses states daily for highway construction contract obligations they incur. If no new revenue is added to the trust fund, Mendez says FHWA may have to turn to weekly or twice-a-month payments, depending on how much money is available.
Contractors should take notice. If FHWA slows its payments to state transportation departments, AGC’s Deery says, “I’m sure that the states are going to slow down payments to the contractors.”
