$305B highway bill taps Fed, oil reserves

The $305 billion highway bill announced by lawmakers on Tuesday includes approximately $70 billion in revenue from areas other than the federal gas tax that is traditionally used to pay for transportation projects. 

The 1,300 page measure, which was unveiled days before a Friday deadline for renewing transportation funding, relies largely on revenue from reducing interest rates paid by the Federal Reserve to large banks, selling oil from the Strategic Petroleum Reserve that is used to prevent energy crises and increasing fees for customs processing. 

{mosads}The funding will be used to offset a transfer of about $70 billion into the Department of Transportation’s Highway Trust Fund to close a gap that is estimated to be approximately $16 billion a year until 2020.   

Backers of the deal said Tuesday that the agreement “provides long-term certainty for states and local governments, and good reforms and improvements to the programs that sustain our roads, bridges, transit, and passenger rail system.”

“This legislation is a vital investment in our country. A safe, efficient surface transportation network is fundamentally necessary to our quality of life and our economy,” Sens. Jim Inhofe (R-Okla.) and Barbara Boxer (D-Calif.) and Reps. Bill Shuster (R-Pa.) and Peter DeFazio (D-Ore.) said in a joint statement. 

“We knew that reaching an agreement on this measure would be challenging, but every member of the conference committee was certainly up to the task,” the lawmakers continued. “We appreciate their hard work in this effort, and we look forward to moving this measure forward and getting it signed into law.”

The agreement on the highway legislation comes as lawmakers are scrambling to beat a Dec. 4 deadline.

The proposal that was unveiled on Tuesday calls for taking $53.3 billion from the surplus of the Federal Reserve bank and $6.9 billion reducing the dividends that are paid to banks who are members of the Fed. Other funding sources in the measure include $6.2 billion from the sales of reserved oil, $5.188 billion from customs fees, and $2.4 billion from a move to require the IRS to use private tax collection companies. 

Congress has been grappling with the transportation funding shortfall since 2005, and they have not passed an infrastructure funding bill that lasts longer than two years during that span.  

The main source of transportation funding for decades has been revenue that is collected by the 18.4-cents-per-gallon federal gas tax. The tax has not been increased since 1993, however, and more fuel-efficient cars have sapped its buying power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually.

Transportation advocates have pushed for a gas tax increase to pay for a long-term transportation bill, but Republican leaders have ruled out a tax hike.

Congressional budget scorekeepers have estimated it would have taken about $100 billion, in addition to the gas tax revenue, to fully pay for a six-year transportation bill, which was the length that was originally sought by transportation advocates.