The Senate Finance Committee’s two top lawmakers said they want to fashion a short-term cash infusion for the U.S. Highway Trust Fund that will keep road and bridge projects going while Congress works on longer-term legislation.
Committee Chairman Ron Wyden, an Oregon Democrat, said avoiding the prospect of stalled highway projects and laid-off construction workers may depend on adding $10 billion to keep the trust fund solvent through the end of this year. The panel’s top Republican, Orrin Hatch of Utah, said the two agree short-term action is needed.
“We do face a near-term problem in that reimbursements to states will likely be impacted if the trust fund is not shored up in the very near future,” Hatch said at a hearing today in Washington. “Neither the chairman nor I wants to see a slow-down in payments.”
Transportation leaders in both the Senate and House are drafting bills that would fund highway programs and mass transit for as many as six years once the current two-year, $105 billion law expires in September. The main division in Congress is over how to boost funding as the current methods for paying into the trust rely on gasoline and diesel-fuel taxes that haven’t kept up with the pace of new projects.
U.S. Transportation Secretary Anthony Foxx said last week a short-term infusion of general funds will probably be needed to buy more time for a long-term solution.
“I would say that we have a tough, a tough challenge ahead of us that hasn’t been solved for a long time,” Foxx said in an interview on Bloomberg Television’s “Political Capital with Al Hunt.”
The Highway Trust Fund may not be able to meet its financial obligations as early as July, according to the Transportation Department. The Obama administration on April 29 sent legislation to Congress proposing $302 billion for road and mass transit projects over four years, with part of the money coming from new taxes on company earnings overseas.
As much as $200 billion a year in additional infrastructure funding could be obtained through private investors, according to Jayan Dhru, the senior managing director for corporate and infrastructure ratings at Standard & Poor’s. He told the committee that investors are interested in public-private partnerships to fund transportation projects.
“Our analysis has found that institutional investors such as insurance companies, pension funds and non-bank lenders are well-positioned to help fill that void,” Dhru said at the hearing.
About $1.3 billion in spending on infrastructure in real terms in 2015 would add 29,000 jobs to the construction sector and even more jobs to other transportation-related industries, Beth Ann Bovino, the chief U.S. economist for S&P, said in a report today.
Joseph Kile, an assistant director at the Congressional Budget Office, told lawmakers that they will have to increase the gasoline tax by 10 cents to 15 cents per gallon or find $13 billion to $18 billion a year in revenue or spending cuts elsewhere to maintain current levels of project spending.
The lack of consensus over long-term funding was clear at today’s hearing.
Hatch said he dismisses the idea of taxing overseas earnings by companies to fund a highway bill, a proposal advanced by President Barack Obama and House Ways and Means Committee Chairman Dave Camp. Hatch said he wants to see a method of financing that retains the current user-pays approach and said he also wants to examine ways to cut some wasteful spending.
Wyden says he wants to examine various ideas that include resurrecting the Build America Bonds program created under Obama’s 2009 economic stimulus measure.
That program sold more than $180 billion worth of taxable securities to pay for state and local public-works projects before lapsing in 2010. Congress refused to extend the program after some Republican lawmakers criticized the level of subsidies provided by the Treasury Department to cover a portion of the interest bills.
Reviving the idea of using bonds to help finance construction is gaining some ground. Representative Steve Israel, a New York Democrat, said he’s working on a proposal that would let companies move cash held abroad back to the U.S. at a 5.2 percent rate if the difference between that and the 15 percent capital gains rate were invested in a new kind of bond.
Israel said he’s working with Honeywell International Inc. Chief Executive Officer Dave Cote and executives of Caterpillar Inc. on the plan, to be called Rebuild America Bonds.
Wyden said he wants to seek bipartisan accord on a financing package that would boost infrastructure spending for years to come.
“I’d like to aim higher and do everything possible to build a bipartisan coalition for policies that generate $1 trillion in American infrastructure,” Wyden said.
A six-year highway proposal made in 2012 crumbled amid disputes over how to pay for it. Congress settled on the two-year measure that used general tax revenue to keep construction going. Business groups say a longer-term measure could boost the economy while benefiting construction companies like Caterpillar Inc.