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Proposal Would Fund Federal Highway Trust Fund With Corporate Tax Reform

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The gas tax is not high enough to fund federal transportation, forcing the Obama administration to look elsewhere.
VaDOT: http://www.flickr.com/photos/vadot/6923782709/
The gas tax is not high enough to fund federal transportation, forcing the Obama administration to look elsewhere.

The Obama administration sent its transportation spending proposal to Congress on Tuesday, months before the fund that pays for the repair and replacement of roads, bridges, and transit systems is expected to go broke.

The four-year, $302 billion program includes more than $150 billion in new revenues that would be generated under the administration’s corporate tax reform plan.

Instead of raising the federal gas tax, last increased to $.18 per gallon in 1993, the president’s proposal would find money for transportation projects by encouraging U.S. corporations to repatriate overseas investments, an idea with some bipartisan support. There is virtually no support for a gas tax increase in this election year, and President Obama has opposed raising it during his five years in office.

“We've said all along that we are open to other ideas that emerge as a result of bipartisan discussions on the hill, and as a result we will continue to keep our ear to the ground,” said U.S. Transportation Secretary Anthony Foxx in a conference call with reporters.

When asked what the administration’s backup plan would be if Congress does not support corporate tax reform, Sec. Foxx added, “This is our proposal and we think this is the right way to go.”

The federal Highway Trust Fund has had to be replenished repeatedly in recent years because the demands of maintaining the nation’s enormous road network continued to outstrip gas tax revenues, forcing Congress to transfer general funds to the highway pot.

The administration would like to push past the recent trend of short-term replenishments by proposing a large increase in revenue, emphasizing the importance of infrastructure improvements to the nation’s economic health. But given the climate in a divided Congress where the resolution of a host of critical issues — immigration reform, the minimum wage, unemployment benefits — is not expected, transportation policy experts do not expect a multi-year road and transit program to be approved.

“We thought [corporate tax reform] is a good idea. We know there is revenue there that deals with some of the challenges we have raising new revenue for infrastructure projects,” said Rob Puentes, the director of the infrastructure initiative at the Brookings Institution.

Some members of Congress have floated similar funding plans, including Maryland Democratic Rep. John Delaney.

“But it is tough to imagine Congress doing anything this substantial any time soon,” said Puentes, who said he expects Congress to approve another short-term fix to keep the highway trust fund solvent.

The administration also is proposing allowing states looking for transportation revenue more flexibility in tolling portions of interstate highways under certain conditions and with U.S. Department of Transportation approval.

Current federal policy allows states to toll interstates only when adding new capacity and in other exceptional cases. The 495 Express Lanes on the Beltway in Northern Virginia is one example: two new lanes in each direction were built over 14 miles that are now tolled electronically.

The administration’s plan would allow tolls to be built on existing capacity as long as the project is designed to reduce traffic congestion and/or use the toll revenue for transportation improvements in the corridor.

Puentes, who has written on the necessity of flexibility in tolling, said this plan would face tough opposition too, primarily from the trucking lobby and motorists’ groups.

“There are folks who think that it would be a form of double taxation because we are already paying for the transportation network with the gasoline tax and other charges,” Puentes said. “However, we know most Americans don’t even come close to paying for the cost of the system they use. The gasoline tax doesn’t cover the impact drivers have on the system.”

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