A Five-Step Revenue Road Map to Fund America’s Highways, Transit Systems

(Originally posted at https://www.uschamber.com/blog/five-step-revenue-road-map-fund-america-s-highways-transit-systems)

By Janet Kavinoky, Vice President, Americans for Transportation Mobility Coalition & Executive Director, Transportation & Infrastructure at U.S. Chamber of Commerce

Members of Congress are running out of time to reauthorize MAP-21, the legislation that funds America’s highway and public transit systems that expires on May 31. As lawmakers return from recess to (hopefully) address this critical need, there are five things they need to focus on to make things work.

Not all revenue sources are equal, so we need to evaluate proposals. Transportation financing and funding is an incredibly complicated topic, but the lens through which we can evaluate viable options is surprisingly clear.

Most revenue options fall into one of two categories: 1) general taxes or 2) transportation-related taxes and fees. The Chamber uses five criteria to evaluate revenue proposals:

  1.  Is it transportation-related? Because of special federal budget rules, if revenues are transportation-related, Congress can pass a long-term bill that provides funding certainty. Without transportation-related revenues, annual appropriations could vary dramatically. Uncertainty means transportation projects cost more and have less impact because big, high-impact projects rely on multi-year transportation funding certainty.
  2.  Are revenues ongoing, rather than one-time solutions? One-time money is a band-aid rather than a solution. This is the path Congress has taken to “solve” the problem since 2009. It involves funneling money from one place to another and does not address the Highway Trust Fund’s structural problems in the long term.
  3.  Are the revenue sources structured to be sustainable and growing? We need to not only meet today’s demands on our national transportation network but also the increasing demands in the coming years.
  4.  Are the revenue sources — alone or in combination — adequate for full funding or, at a minimum, able to maintain funding levels? In combination or by themselves, we need $91 billion over the next six years just to maintain funding levels. And that won’t necessarily deal with the backlog of maintenance and construction needed to spur economic growth. We should aim for full funding, meaning what’s needed to bring our seriously outdated network of highways, bridges and transit systems up to par — and keep it that way, so future generations can rely on the network.
  5.  Can the federal government collect the revenues? There are some options, like sales taxes, that are viable at a state or local level but that the federal government cannot use. It seems basic, but this knocks out a lot of potential ideas that work well at other levels of government.

Recently, the Chamber praised the Obama administration for putting forward its GROW America Act and launching the debate over the future of transportation. The administration’s proposal would provide transportation funding through revenue generated from taxing corporate overseas profits. But we had to call the way in which the administration seeks to pay for its proposal “unacceptable.”

It falls short on every single one of the above points. It’s not partially or mostly unacceptable; it’s wholly unacceptable. What about the other proposals that may be coming down the line? We’ll look at the viability of those if and when the detail on each is made available.

Proposals to pay for transportation range from “ideas” (see AASTHO’s ’33 ideas’ to shore up the Highway Trust Fund (HTF)) floating around the policy community, to actual legislation (the GROW America Act and Rep. Earl Blumenauer’s bills to increase user fees — something that the Chamber supports).

What Congress does on a surface transportation bill within the next two months matters tremendously; 52% of highway and bridge capital, and 45% of transit capital, comes from the federal government. Simply maintaining current levels of direct federal funding for highways and transit requires $91 billion in new revenues over the next six years, and it’s no secret that current levels of funding are woefully insufficient.

The Chamber opposes cutting transportation spending to fit the current revenues being deposited into the Highway Trust Fund from gasoline and diesel taxes. In addition, infrastructure projects take years to construct; about 63% of dollars that leave the HTF each year are paying obligations from prior years. So to address HTF insolvency, it would be necessary to eliminate all new funding for a fiscal year, to let the revenues “catch up” to spending. Congress has rejected such dramatic cuts to the highway and transit programs several times since 2008.

We are calling on Congress to pass a long-term, fully-funded bill that will, at a minimum, maitain current federal funding levels for roads, bridges, public transportation and highway safety. Congress has a big job ahead of it, but lawmakers really just need to follow this five-step plan.

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