Bond Buyer 7/2/14 4:06pm ET By Jim Watts
DALLAS– President Obama blasted Congress, and especially Congressional Republicans, Tuesday for failing to resolve a multi-billion dollar shortfall in the almost-insolvent Highway Trust Fund.
“If this Congress does not act by the end of the summer, the Highway Trust Fund will run out,” Obama said in an address at the Key Bridge in Washington. “There won’t be any money there.”
The cash balance in the fund that provides federal reimbursements to states for transportation projects is projected to drop to a critical $4 billion threshold by the end of the month. When that happens, the Transportation Department will ration federal payments to avoid depleting the fund before the current two-year highway bill expires Sept. 30.
The President called on Congress to act on his four-year, $302 billion transportation program that would be funded with $150 billion of revenues from corporate tax reforms aimed at repatriating foreign earnings held abroad to avoid U.S. taxes. The measure, known as the Grow America Act, was introduced in the House in mid-June.
“But so far, House Republicans have refused to act on this idea,” Obama said. “I haven’t heard a good reason why they haven’t acted.
“It’s not like they’ve been busy with other stuff,” he said. “I mean, they’re not doing anything. Why don’t they do this?”
Highway funding should not be a partisan issue, Obama said.
“Republican obstruction is not just some abstract political stunt,” he said. “It has real and direct consequences for middle-class families all across the country.”
Failure to sustain the Highway Trust Fund puts 700,000 construction jobs and 100,000 on-going highway projects at risk, Obama said.
“Soon, states may have to choose which projects to continue and which ones to put the brakes on because they’re running out of money,” he said. “Some have already done just that, just because they’re worried that Congress will not get its act together in time.”
Transportation Secretary Anthony Foxx sent a letter Tuesday to state highway and transit officials warning them reimbursements from the Highway Trust Fund will be made twice a month, rather than the current daily schedule, as of Aug 1. The less-frequent reimbursements are needed to maintain the $4 billion floor, he said.
“We will distribute incoming funds in proportion to each state’s federal formula apportionment in this fiscal year,” Foxx said. “We will continue to administer this process until the Congress can reach a solution that provides adequate resources to the [highway] fund.”
States on average will see a 28% drop in federal transportation dollars, Foxx said. “Depending on how they manage the fund, each state will feel the effects differently, but everyone will feel the impact sooner or later,” he said.
Revenues going into the highway fund from federal gasoline and diesel taxes currently lag almost $20 billion a year behind expenditures. The Congressional Budget Office has projected the shortfall to be $13 billion to $18 billion a year through 2024 unless spending is reduced or more revenue is generated.
The Senate Environment and Public Works Committee has adopted a six-year highway bill that keeps spending at 2014 levels plus inflation through 2020. Figuring out how to fund the legislation is the responsibility of the Senate Finance Committee.
The finance committee is scheduled to meet after the July 4th recess to consider a six-month fix proposed by Chairman Ron Wyden, D-Ore.
Wyden said he and Sen. Orrin Hatch, R-Utah, the ranking Republican on the panel, will meet with Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, to develop a bipartisan, bicameral solution that would provide $8 billion to keep the highway fund solvent through January 2015.
The short-term patch will give Congress time to develop a long-term fix, Wyden said.
Camp, who is not seeking reelection, has proposed a package of corporate tax reforms that he said would generate $126.5 billion for the highway fund over eight years.
Several proposals from lawmakers would bolster the highway fund with higher federal fuels taxes, currently at 18.4 cents per gallon for gasoline and 24.4 cents for diesel. The taxes, which are not indexed for inflation, were last increased in 1993.
Obama Slams Inertia On Highway Fund Fix
Bond Buyer 7/2/14 4:06pm ET By Jim Watts