Highway fund is latest victim of high gas prices

Key lawmakers are at odds on how to fix another consequence of soaring gas prices.

The federal trust fund that pays for highway and bridge construction and repairs runs on gas taxes and already faced a multibillion-dollar shortfall, even before fuel prices spiked above $4 per gallon. With Americans now buying less gas, the problem is exacerbated.

{mosads}Drivers logged 1.4 billion fewer highway miles in April compared with the same month last year, according to the Department of Transportation.

Industry officials and lawmakers fear the economic impact of lost construction jobs if highway projects around the country start grinding to a halt because the funds aren’t there to support them.

Rep. John Mica (R-Fla.), the ranking member of the House Transportation and Infrastructure Committee, worries that some of the projects already are stalled.

“[States] are not moving forward with projects because they are being told the money won’t be there,” Mica said. “We need every project to move forward to help stimulate the economy.”

Mica said Ways and Means Committee Chairman Charles Rangel (D-N.Y.) is taking the lead on the most recent plan to transfer more than $8 billion from general Department of Transportation funds to the highway trust account, replacing an amount moved from the highway fund to the general fund in 1998 when the trust was flush and running a surplus.  

Several attempts to get the $8 billion transfer passed into law in recent weeks, however, have failed.

In an interview, Rangel called the Highway Trust Fund fix a “must-do” before Congress leaves for its August recess. He said he and Senate Finance Committee Chairman Max Baucus (D-Mont.) met earlier this week to discuss a new approach but were distracted with the housing rescue and energy-related bills.

“It’s got to get fixed, but it’s very difficult,” Rangel said.

Last week Senate appropriators easily passed a fiscal 2009 transportation and housing spending bill that included language preventing the federal highway account from going into debt next year.

Senate Appropriations Transportation, Housing and Urban Development subcommittee Chairwoman Patty Murray (D-Wash.) said the $8 billion transfer would prevent a 34 percent cut in spending for highway projects.

But any attempt to fix the shortfall through spending bills is unreliable. Senate Majority Leader Harry Reid (D-Nev.) has said only two appropriations bills will be completed this year and the rest — including the transportation and housing bill — will be rolled into a continuing resolution lasting into next year.

Baucus and Senate Finance Committee ranking member Chuck Grassley (R-Iowa) have been trying to find a solution for more than a year.  

Late last month, Baucus and Grassley added language to the Federal Aviation Administration reauthorization bill that would have channeled billions into the fund. Sen. Jim DeMint (R-S.C.) blocked that attempt once the bill reached the Senate floor, arguing that the Highway Trust Fund fix should have been addressed in an earlier bill making technical corrections to the 2005 transportation measure. Instead of trying to find savings in that bill for the trust fund, members chose to add new earmarks, he argued.

{mospagebreak}Rep. Jeff Flake (R-Ariz.), who shares DeMint’s opposition to earmarks, introduced legislation last week that would help bridge the shortfall by rescinding unspent earmark funds from the massive 2005 transportation bill. That measure contained more than 6,000 earmarks, totaling $24 billion.

“Congress larded up the transportation bill with more earmarks than there was money to pay for them,” Flake said.  “Instead of taking money from the general fund for these earmarks, Congress needs to go on a pork diet.”

Most members of Congress put a high premium on securing highway projects for their districts and would never give up their power to attain them.

{mosads}Other fiscal conservatives are putting the earmark argument aside because they recognize the dire need to bridge the shortfall as soon as possible. Sen. James Inhofe (R-Okla.), the ranking member of the Environment and Public Works Committee who played a lead role in crafting the 2005 highway bill, is circulating a letter asking for more than the $8 billion transfer. According to a Grassley aide, the letter has a “veto-proof margin of signatories” in the Senate.

Baucus and Grassley have indicated that they want to find a legislative solution as soon as possible.

A Baucus aide said his boss is continuing to work to identify the “most appropriate vehicle to get this passed and signed into law.”

“Since it is tax legislation, the most likely outcome is that the House will send the Senate a bill, which we’ll then try to move through this body,” the aide said.  

In a Senate Finance Committee hearing last week on the nation’s transportation infrastructure, Baucus said high gas prices have led to a $2 billion decline in Highway Trust Fund revenue over the last year. If nothing is done, he said, the country could lose 380,000 jobs, nearly as many jobs as have been lost in the economic slowdown since the beginning of this year.

“This Congress must act to make sure that the Highway Trust Fund remains solvent,” he said. “America’s infrastructure is crumbling. America’s economy is stumbling. In times like these, it would be deeply irresponsible for Congress not to provide a short-term fix to the Highway Trust Fund.”