Committee for a Responsible Federal Budget
Spending_Transportation_Highway

Congress Postpones Highway Decisions Until July

Jun 1, 2015 | Other Spending

The President signed a two-month extension of the highway bill on Friday evening, postponing decisions about spending and the financing of the Highway Trust Fund until July 31. This gives lawmakers time to find a long-term solution to highway funding.

Highway revenues, such as the gas tax, have remained relatively stagnant since 2008 while spending has grown, resulting in a shortfall of approximately $13 billion this year, or $175 billion over the next ten years. Because of the shortfall, Congress has often needed to provide extra funding when extending the highway bill. This time, however, the two-month extension was possible without any additional funding because gas tax revenues exceeded previous projections. Last summer's transfer intended to provide enough funding to continue highway spending at current levels until May 31, but since that time oil prices have dropped quickly, causing an increase in gasoline consumption and tax revenue. As a result, highway programs now have enough money to last through July, but the law authorizing money to be spent still expires at the end of May. Last week's bill aligns the deadlines, so the authorization and the money will now both expire at the end of July.

Now there is more time to consider a funding solution, as CRFB President Maya MacGuineas explained in a statement:

"This patch gives policymakers time to come up with a permanent solution for the highway funding shortfall, and they should use that time wisely. Too often, Congress acts like frazzled high school students, waiting until the last second to get their work turned in."
...
"Instead of worrying that the choices are too hard and the timeline too short, the next two months should be reserved for finding solutions,” MacGuineas said. “Congress can’t keep kicking the can down the road, then complaining when the road is full of potholes.”

If Congress is going to pass another short-term patch this summer, they should be sure to offset the costs with savings elsewhere in the budget to avoid adding to the national debt. According to CBO, the Highway Trust Fund would need about $3 billion to continue current spending through September, or $8 billion to continue it through the end of the year.

Ideally, Congress would pass a long-term highway bill that bridged the gap between revenue and spending, addressing this perennial shortfall. We offered one possible plan in The Road to Sustainable Highway Spending, which would pay for a short-term revenue transfer to support current levels of highway spending, raise the gas tax, and change the budget process to ensure we spend within our means in the future. A bipartisan group of House members has offered another solution that would responsibly ensure solvency with automatic gas tax increases if Congress does not adopt an alternate solution.

Lawmakers have bought themselves some time to address the Highway Trust Fund. Now they need to do the hard work of coming up with a lasting solution.