Bond Buyer 6/9/14 2:52pm ET By Jim Watts

DALLAS — House Majority Leader Eric Cantor, R-Va., said Republicans will push ahead with a plan to fund highway projects in fiscal 2015 with almost $11 billion of savings from stopping most mail deliveries on Saturdays.
The plan would include a temporary extension of the current two-year transportation bill and would prevent the Highway Trust Fund from slipping into insolvency before the congressional recess in August, Cantor said in a memo to the House GOP on Friday.
“We are preparing a proposal that would combine a move to modified six day postal delivery along with a short-term extension of the highway bill that places the necessary resources into the [Highway] Trust Fund to prevent a disruption of highway projects,” Cantor said.
The current highway bill, Moving Ahead For Progress in the 21st Century, will expire on Sept. 30, at the end of fiscal 2014. Transportation Department officials have said reimbursements to states for on-going highway projects will be deferred or curtailed if the cash balance in the highway portion of the HTF falls to less than $4 billion. No new projects could be funded in fiscal 2015 unless Congress supplements the fuels tax revenues dedicated to the HTF, the Congressional Budget Office said in May.
“As a result of lower than anticipated revenues into the [HTF], the trust fund will require an additional transfer of funds prior to the August district work period,” Cantor told the GOP congressmen. “Failing to provide additional funds would mean a disruption of ongoing construction projects – right in the midst of the construction season.”
Lawmakers have transferred more than $58 billion into the highway fund from the general fund since 2008 due to inadequate revenues from the federal gasoline tax 18.4 cent per gallon and diesel tax of 24.4 cents per gallon, CBO said. Funding surface transportation projects at current rates would require $18 billion of additional revenues or spending cuts in fiscal 2015, CBO said, and between $13 billion to $18 billion a year through fiscal 2024.
Cantor said the postal plan would keep the HTF solvent through mid-2015. The savings would make up for a transfer from the general fund that must occur before the HTF hits the $4 billion threshold in late July, he said.
“Under current House Rules and under recent practice, a transfer of general funds into the [HTF] must be offset,” Cantor said. “Given the limited window for action, we believe it is important that an offset be simple and have the support of the [Obama] administration and congressional Republicans.”
The House on Monday began consideration of the appropriation committee’s bill for the U.S. DOT that would keep federal highway funding at the current level of $40.3 billion a year in fiscal 2015. Congress will recess from Aug. 2 through Sept. 7.
A memo from Cantor, House Speaker John Boehner, R-Ohio, and House Majority Whip Kevin McCarthy, R-Calif., distributed to the House Republican caucus in late May said the proposal would save $10.7 billion over 10 years. Much of the expected savings is based on expectations that the Post Office would not need an expensive bailout by Congress if Saturday mail service is limited.
But the proposal has drawn some criticism.
Russ Vought of the conservative group Heritage Action said the plan is a misguided effort. There are no actual savings being considered, he said.
“The GOP plan assumes a large taxpayer bailout of the U.S. Postal Service in the future, then claims credit for promising a smaller bailout,” Vought said. “This cash cow simply does not exist.”
Sen. Barbara Boxer, D-Calif., chairwoman of the Senate Environment and Public Works Committee, said the House GOP plan “makes no sense.” She favors a sales tax on gasoline and diesel at the wholesale level. Her committee has approved a six-year, $250 billion transportation funding bill that leaves unresolved the funding gap outlined in CBO report. “This idea is a jobs killer which does not even fund the [HTF] for a long enough period of time to provide the certainty that states, cities, and businesses need,” she said.
Sen. Ron Wyden, D-Ore., said the House postal proposal is not one of several highway funding options being considered by the Senate Finance Committee, which he chairs. Wyden said he hopes to have a bipartisan highway bill ready for committee action by the end of June, but he does not expect a multi-year solution to the funding problem by then. “We’re going to have to look at some other options in the short term,” said Wyden.
Edward Wytkind, president of the AFL-CIO’s Transportation Trades Department, called the Republican plan “a non-starter” that “should be dead on arrival.”
Using potential savings from eliminating mail service is not good public policy, Wytkind said. “Not only would this proposal cut up to 80,000 good-paying jobs including postal employees represented by TTD unions, but we question whether the promised revenues would actually materialize,” he said. “More to the point, offering a politically toxic and flawed proposal will only distract and delay serious policy makers from solving this funding crisis that, if left unaddressed, promises to crater our economy.”

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