A member of the team negotiating the $579 billion bipartisan infrastructure framework said Thursday that a disagreement over transit threatens to derail the entire agreement.
While the group of 22 Republicans and Democrats have ironed out dozens of differences in the framework since they reached a deal with President Joe Biden last month, Sen. Jon Tester said the group, which hopes to finish its negotiations this weekend, is still at an impasse over funding for transit.
The disagreement “could sink the whole thing,” said the Montana Democrat, who has traditionally been one of the more optimistic members of the negotiating team. “But I don’t think it’s gonna.”
Sen. Rob Portman, the lead Republican negotiator, meanwhile, told reporters Thursday that the transit funding "has not yet been resolved," suggesting it could be dropped altogether in order to avoid holding up a deal
"It's important but if we can't resolve it, then we could leave that out. I hope not," he told reporters. "Democrats are not being reasonable in their requests right now."
"I hope we can get a bipartisan deal," Sen. Sherrod Brown, D-Ohio, who chairs the Senate Committee on Banking, Housing and Urban Affairs, which has jurisdiction over transit, told NBC News. "If we can't, we do these things in the reconciliation bill."
Since 1983, every gasoline and diesel tax increase has allocated 20 percent of the revenue from that increase to mass transit, with the remaining 80 percent going toward highways. That formula and its interpretation has become the last major impasse that the negotiators face.
Democrats argue that if a transit reauthorization is included in the bipartisan framework, it should adhere to the 80-20 split, but they say that that split should apply to the gas-tax funded Highway Trust Fund in its entirety, not just revenue from the post-1983 gas tax increases.
They argue that with a $100 billion repair backlog, transit urgently needs federal investment, and that transit and highway funding are essentially married; the most recent federal surface transportation reauthorizations have reiterated that 80-20 split.
“It should be consistent throughout,” said Brown.
Republicans say the Democrats’ broad application of the split would flood transit with federal dollars and defy the concept on which the Highway Trust Fund was premised: Users pay for the highways they drive on.
Some Republicans are irked that the bipartisan framework as currently negotiated would provide an additional $48.5 billion for transit on top of 80-20 formula funding, providing even more dollars to transit systems still struggling to return to pre-COVID-19 ridership levels. Transit has received $70 billion since last March in COVID-19 relief dollars on top of regular spending.
Tester said Democrats worry that any agreement they reach could set a precedent for discarding the funding formula long term. “The problem is when this is renegotiated, that 80-20 becomes a big deal and if we just let it go the way it is now, then it’s kind of setting us back on the next one,” he said.
The transit allocation has been an issue nearly since its inception, but the divide has sharpened in recent years, with Republicans arguing that highway users in rural areas aren’t reaping the full benefits of the gas tax that they pay and Democrats arguing that transit is vital in the fight against climate change.
As part of a deal brokered in 1982 aimed at increasing the gas tax, one cent out of five would be dedicated to a new mass transit account. That 80-20 split of new revenues was maintained when Congress raised the gas tax again in 1990 by five cents and again in 1993, when transit received 86 cents out of a 4.3 cent increase per gallon, said Jeff Davis of the Eno Center on Transportation. Currently, 2.86 cents per gallon of gasoline and diesel taxes goes to the transit account, he said.
But all other Highway Trust Fund taxes in place prior to 1982 are still entirely dedicated to the highway account, including the sales on new trucks and tractor-trailers. Because of that, Davis said, the transit account currently gets only about 12 to 13 percent of the total Highway Trust Fund tax revenues each year. Still, Congress has authorized laws giving transit authorizations closer to 20 percent.
Meanwhile, the Highway Trust Fund has become insolvent. The gas tax has not been raised since 1993 and automobiles have become more fuel efficient. Treasury has transferred a total of $144 billion from general revenue to the HIghway Trust Fund since 2008, according to the Peter G. Peterson Foundation.
The fight, a perennial dispute between the parties, has been renewed in large part because the 11 Republicans and 11 Democrats negotiating to create a broad infrastructure bill from legislative language from measures advanced by the Senate Commerce, Science and Transportation and Senate Environment and Public Works committees, has no bill to draw from when it comes to transit. Senate Banking, Housing and Urban Affairs has been unable to reach a deal on its reauthorization bill.
Even as negotiators work on the transit dispute, another complication has emerged as key Democrats on the Environment and Public Works Committee objected to how the bipartisan group is approaching water infrastructure.
The committee earlier this year unanimously approved legislation that would spend more than $35 billion through fiscal 2026 on drinking water systems and wastewater projects. The Senate approved that measure on a bipartisan 89-2 vote. It includes $14.7 billion each for two state revolving funds that support public drinking water systems and wastewater projects, as well as additional funding to help disadvantaged communities.
Sen. Thomas R. Carper, D-Del., the EPW chairman, said Thursday that he’d been assured throughout negotiations that the bipartisan group would include the full funding levels in the committee’s bill, but that he was recently alerted that may not be the case.
Carper said that means he’s not prepared to declare his support for the bipartisan proposal.
“I want to have an assurance, a reassurance, that our legislation with huge bipartisan support, 89 votes, is going to be funded and it's gonna be funded in accordance with the way we wrote the bill,” Carper said.
He also said he’s particularly concerned that the bipartisan group is planning to pull as much as $15 billion out of what the Senate approved and stipulate that it must be used for lead pipe replacement. The bill crafted by his committee would allow localities to use funding for lead pipe replacement but also for other needs if necessary.
Asked about Carper’s concerns Thursday, White House Press Secretary Jen Psaki said it’s typical for lawmakers to speak up about what they want in the final deal.
“Everybody who has initiatives, who has priorities, is going to make their voice heard,” Psaki said. “That’s a part of the process. We respect that.”
Another member of the committee, Sen. Benjamin L. Cardin, D-Md., said Republican and Democratic negotiators seem to have differing views about how much money in the bipartisan package represents above-baseline spending, which is the amount the government spends to sustain existing infrastructure.
“The feedback I get is that they wanted to honor the work of our committee and they thought they did,” Cardin said. “So I don't think it was an intentional effort, but I think if it's not above baseline, it doesn't honor the work of our committee, and we tried to make that point and I think we've made that point pretty clearly and we'll see how it comes out.”
Asked if the gap between the committee’s legislation and the bipartisan package could be made up in a budget reconciliation bill, Cardin said his understanding from the Biden administration is that traditional infrastructure issues will not be revisited as part of reconciliation, and that the bipartisan bill is their only shot.
“I think that was what we've heard, so we don't think this can necessarily be fixed in reconciliation,” Cardin said. “It’s always possible, but we don't want it to be fixed in reconciliation. We want it in the bipartisan package.”
He downplayed the idea that the water issue could cause him to oppose the final product.
“I fully expect I'll be supporting the package,” Cardin said. “Doesn't mean I'm not going to fight for changes; doesn't mean I'm going to like everything that's in it.”