It is highly unlikely that Congress will pass a federal surface transportation reauthorization bill before the 2020 Presidential election, leaving the current five-year law known as the “FAST” Act to expire as scheduled on Sept. 30, 2020, and forcing the federal Highway Trust Fund that pays for road projects to limp along after that on short-term appropriations extensions, a leading transportation attorney said Monday.
James H Burnley IV, who served as U.S. Secretary of Transportation at the end of President Reagan’s tenure and who has spent 40 years in Washington, most of it in private practice, said the toxic climate in the nation’s capital virtually precludes any chance of a transportation bill moving forward. Burnley, who spoke at the SMC3 summer meeting in Colorado Springs, Colorado, called the current atmosphere the most dysfunctional he’s seen in all his years in Washington.
Neither Congress nor the White House has made any progress in determining how the spending would be paid for, Burnley said. Congressional Republicans and the Trump Administration have no stomach to raise federal motor fuels taxes, which have not been raised since 1993 and were never indexed to the government’s official inflation rate. Democratic Congressional leaders met with President Trump in May in an effort to discuss federal infrastructure legislation, but the meeting quickly devolved into a shouting match over other issues and the president abruptly walked out of the meeting.
In mid-June, Acting Chief of Staff Mick Mulvaney was quoted as saying any infrastructure deal brokered by President Trump and House Majority Leader Nancy Pelosi (D-California) was done. Trump and Pelosi have escalated their public warring since the Democrats regained control of the House of Representatives in the November 2018 mid-term elections.
Short-term funding extensions are nothing new in the Trust Fund’s history. The Fund has come close several times to running out of money, and has needed transfer payments from the U.S. Treasury Department to remain solvent and to meet its commitments.
The FAST Act, signed into law in 2015, funded highway programs largely through deficit spending. The problem with that approach, according to Burnley, is that motor fuels tax receipts have been dropping as vehicles become ever more fuel-efficient. At the same time, the tab for the deficit spending continues to rise. Over the next five years, the Highway Trust Fund faces a shortfall of between $78 billion and $120 billion, a gap almost impossible to close with a funding mechanism that is bringing in less revenue than ever, Burnley said.
The Obama Administration had ordered significant increases in corporate fuel efficiency standards, known as “CAFE.” This made vehicles more efficient but deprived the Trust Fund of fuel tax receipts. The Trump White House rolled back some of those efforts, but with a Democratic majority in the House, there is reason to expect a push not only to return to the Obama plan, but to make the CAFE standards even more rigorous, Burnley said.
Early in his administration, President Trump said he favored the idea of an increase in the federal fuels tax, and went so far as to tell a meeting with lawmakers on both sides of the aisle that he would provide political cover to get it done. However, any hope of bipartisanship effectively ended in January when Democrats officially took control of the House, Burnley said.
While President Trump may see the value in raising the motor fuels tax, he’s “not going to jump off the cliff by himself,” especially when so many Republicans are opposed to the tax hike, Burnley said.
The most widely endorsed proposal has been a 25 cents per gallon increase in diesel and gasoline taxes, spread out in 5 cent per gallon increments over five years. The federal Highway Trust Fund is paid for almost exclusively out of a 24.4 cents per gallon tax on diesel bought at the pump, and an 18.4 cents per gallon tax on gasoline.
The 2015 law was largely the handiwork of Senator Barbara Boxer (D-California) and Senator James Inhofe (R-Oklahoma), who crossed party lines to get a bill passed. Infrastructure has traditionally been one of the few issues the two parties could agree upon. Boxer has since retired, while Inhofe continues to serve in the Senate.