How to pay for infrastructure? Ways and Means will count the ways
Raising long-stagnant fuel taxes is an option, but some Republicans have other ideas. Pay per mile?
When the House Ways and Means Committee meets Wednesday to take its first tentative steps to deciding how to pay for a federal infrastructure bill, its members will revive a perennial battle that could derail the whole debate: whether to raise a gas tax unchanged since 1993.
Since it was created in 1956, the Highway Trust Fund — paid for primarily by a federal gas tax — has largely funded highway construction and maintenance as well as transit.
But increasingly fuel-efficient cars and a gas tax unchanged since the Clinton administration conspired to create a shortfall: Since fiscal 2008, the federal government has had to transfer more than $140 billion from its general fund and other government funds to meet the needs of the nation’s highways and mass transit.
The problem isn’t expected to get better. Between this year and fiscal 2030, according to the Congressional Budget Office, the cumulative shortfall for the highway account is expected to reach $134 billion, with a shortfall of an additional $54 billion for mass transit.
Enter Ways and Means, which has jurisdiction over how to pay for the bill.
Wednesday’s hearing — with an agenda of five witnesses, including representatives from the American Association of State Highway and Transportation Officials, the Massachusetts Development Finance Agency and the New Jersey Department of Transportation — is expected to be a high-level look at funding alternatives.
Among the options put forth Monday in a paper from the Joint Committee on Taxation are a mileage-based tax system, an infrastructure bank, tolling and public-private partnerships.
Perhaps the easiest option is to stick with the tried and true: raising the gas tax.
House Transportation and Infrastructure Chairman Peter A. DeFazio, D-Ore., has suggested Congress raise the gas tax in part by indexing it to inflation. And groups as diverse as the U.S. Chamber of Commerce, the AFL-CIO, the American Public Transportation Association and the American Trucking Associations have also backed an increase in the gas tax, which is fixed at 18.3 cents per gallon of gasoline and 24.3 cents per gallon for diesel and kerosene.
But Republicans remain resistant.
The ranking Republican on the House Transportation and Infrastructure Committee, Rep. Sam Graves, R-Mo., has instead endorsed a mechanism that would allow highway users to pay based on vehicle miles traveled.
On Monday, he highlighted a report by the state of Washington recommending it move away from fuel taxes to a vehicle miles traveled system to pay for the state’s highways, saying “the report clearly shows that transitioning to a VMT system is a more equitable way to charge drivers for the roads they use, and that we are in fact capable of beginning that transition now.”
DeFazio — who is expected to announce general principles of his infrastructure bill on Wednesday as well — has been generally supportive of moving toward a VMT method, but argues that it’s too soon for such a dramatic shift in financing mechanisms.
Senate Finance Chairman Charles E. Grassley, R-Iowa, has also been reluctant to embrace the idea of raising the gas tax.
The Senate Environment and Public Works Committee last July approved a five-year, $287 billion surface transportation bill (S 2302). But Grassley’s committee, which has jurisdiction over how to pay for the bill, has yet to take it up. Two other Senate committees — Banking and Commerce, and Science and Transportation — also have jurisdiction over elements of that bill.
Though it is the most well-known source of funding, the Highway Trust Fund is far from the only mechanism used to pay for infrastructure. The Airport and Airway Trust Fund; the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund also contribute to federal infrastructure projects.
DeFazio noted there has also been a boost in the New Markets Tax Credits program, which has been tapped previously to provide incentives for electrification projects in economically struggling areas. With the tax credit allocation for this year raised from $3.5 billion to $5 billion, DeFazio suggested there could be a larger electrification component in the infrastructure package than some expect.
President Donald Trump and House Democrats had looked close to reaching a comprehensive infrastructure agreement in early May 2019, when Trump appeared to embrace the notion of a bill that could cost up to $2 trillion.
Those plans were thwarted by the end of that month, when Trump, at a second White House meeting on infrastructure, demanded an end to what he called “phony investigations.”
But on Monday, House Majority Leader Steny H. Hoyer, D-Md., said that House Democrats haven’t given up on working with Republicans on the issue.
“We’re still going to try to work with the White House, of course,” he said.
Doug Sword and Lindsey McPherson contributed to this report.