Michigan Legislature Adjourns Without Gas Tax Increase; Cantor Loss Clouds Future for Transportation Bill

The Michigan Legislature adjourned Thursday for most of the summer without voting on a plan to increase the gas tax to fix deteriorating roads and bridges. Also this week, following Tuesday’s loss by U.S. House Majority Leader Eric Cantor in a Virginia primary race, the jury is out on how it will impact getting a new federal surface transportation authorization bill and a Highway Trust Fund bailout in place this summer but most signs appeared to point toward a short-term solution with hopes that lawmakers could tackle something more long-term in a lame duck session following the election. I’ve also got the usual roundup of items and links on reauthorization, the trust fund, state activity on transportation revenues, public-private partnerships and tolling, and state multi-modal strategies.

No Vote on Gas Tax Proposals as Michigan Lawmakers Adjourn Until Fall

Legislative leaders in Michigan are promising to study the issue further over the summer after adjourning Thursday without a vote on a gas tax increase to fund road improvements. They could take up the issue again this fall, the Associated Press reported.

Senators were unable to reach agreement on a plan to double fuel taxes over a period of five years to raise at least $1 billion. A more modest proposal to boost fuel taxes to keep pace with inflationary road construction costs was also unable to win support despite the bipartisan success of a similar plan in the House last month. It would have let the 19-cents-a-gallon gas tax rise each year by the lesser of 5 percent and the annual change in highway construction costs (with a cap at 32.5 cents a gallon). But it wouldn’t have come close to raising the minimum $1.2 billion to $2 billion more a year that Gov. Rick Snyder and others say is needed.

Michigan is in the unique position of spending less per driver on roads than any other state while also having the country’s highest taxes at the pump. The state’s sales tax on motor fuel goes mostly to schools and local governments.   

Cantor’s Loss Clouds Already Murky Future for Transportation Bill

U.S. House Majority Eric Cantor’s loss in Tuesday’s Virginia primary to a political novice not only sent shockwaves through political circles and House leadership, it could have ramifications for getting a new highway bill this summer, The Hill reported.  

“This could inject even more toxicity into relations between Democrats and Republicans on the larger issues,” Transportation Trades Department AFL-CIO President Ed Wytkind told the newspaper. “Any long-term solution to the Highway Trust Fund situation is going to have to involve compromise over funding and probably tax reform. Republicans and Democrats must move on and not let the Cantor election derail a responsible package that funds our surface transportation needs.”

Cantor was one of the voices behind the plan recently floated by House leaders to use potential savings from eliminating Postal Service Saturday delivery and put it towards shoring up the rapidly dwindling Highway Trust Fund.

“Under current House rules and under recent practice, a transfer of general funds into the Highway Trust Fund must be offset,” Cantor said in defending the proposal to his fellow House Republicans in a recent letter. “Given the limited window for action, we believe it is important that an offset be simple and have the support of the Administration and Congressional Republicans. … The move to eliminate the mandate for full six-day postal delivery has been requested by the Obama Administration, the Postal Service, and has been included in the postal reform bill reported by … the Oversight and Government Reform Committee.”

The plan hasn’t won much support since first mentioned two weeks ago, Politico reported Friday.

The newspaper quotes one Republican on the House Transportation and Infrastructure Committee as saying the postal plan is “beyond dead and it never should have had life. It’s a pathetic, sad commentary on our unwillingness to face our bigger responsibility.” The proposal reportedly didn’t go over well in a House Republican Caucus meeting this week either.  

Now with one of its primary supporters stepping down from the House leadership, it seems unlikely to muster a groundswell of support.

The plan may have even less support on the Senate side. Senate Budget Committee Chair Patty Murray said the House postal plan is “the wrong way to go” in a speech on the Senate floor this week, The Hill reported.

“There are better ways to address both Postal Service reform and the Highway Trust Fund shortfall,” she told her colleagues.

Murray made it clear she supports tapping money from closing corporate tax loopholes to close the transportation funding shortfall.

“We can use the revenues generated by closing just a few of them to avoid an unnecessary crisis, shore up the Highway Trust Fund, and make the critical investments we need in our roads and bridges across the country,” she said. “States deserve more certainty in the Highway Trust Fund.”

Top Senate Democrats and Republicans are also reportedly considering offering American companies a one-time tax break if they repatriate profits stashed abroad and using the expected windfall of revenue to fund transportation projects. The Joint Tax Committee has said however that such a plan could cost $95 billion and some believe it should only be undertaken in connection with comprehensive tax reform. Jonathan Weisman of The New York Times had more on the repatriation plan in a piece this week.

Senate Finance Committee Chairman Ron Wyden meanwhile reiterated that his goal is still to get a bipartisan highway bill with a funding plan out of his committee by the end of the month. But he also warned there may not be time to find consensus on a longer-term bill. “It’s hard to make the case that you can put all that together in three weeks,” he reportedly said.

Wyden too didn’t describe the House proposal in the most glowing terms.

“That one is a real head scratcher,” he told reporters this week. “The math, even by Washington, D.C. standards, strikes me as awful.”

At a transportation construction industry rally Tuesday on Capitol Hill, hundreds of supporters heard Congressman Earl Blumenauer say the best and quickest fix for the Highway Trust Fund was to raise the gas tax. While many seemed to support that view, according to reports, others including Senate Environment and Public Works Committee Ranking Republican David Vitter said the time is just not right to do that as we’re in the midst of a slow economic recovery.

But many appear to be conceding that limited time and divisive politics are making it much more likely that a short-term fix for the trust fund is about the best states can hope for this summer.

“I worry that any solution that can pass this Congress will again be a short-term fix,” Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller said this week, The Hill reported. “This will do very little to improve our infrastructure needs and support our economic future.”

But that may be exactly where things are headed.

“We may need a short-term extension to get all the pieces in place in order to create a long-term surface transportation bill,” House Transportation and Infrastructure Committee Chairman Bill Shuster said at Tuesday’s rally.

Such a development would be something of great concern to both the construction industry and to states.

“Short-term solutions and patches aren’t going to work,” American Road and Transportation Builders Association President and CEO Pete Ruane said at the rally. “Then we just have to keep revisiting this. We can’t go through the delays again like we did several years ago. We need a long-term transportation bill—a six-year bill that is paid for is what we want.”

If a short-term patch is the only option to get the Highway Trust Fund through the summer and past the election, many hold out hope that a long-term bill could be in the offing in a post-election lame duck session. And, as Politico reported Thursday, Cantor’s defeat might actually make lame duck success a possibility. With Cantor’s immigration bill likely off the table for now, it could clear the decks for a transportation bill to be the last big legislative splash for this Congress.

Count Blumenauer among those who believe a lame duck session may represent the best chance for a long-term bill.

“If we limp into the next Congress, it will be three years before you get a full six-year reauthorization,” he said at a conference this week. 

MAP-21 Reauthorization & the Future of the Highway Trust Fund

  • The Congressional Budget Office released a new presentation on the status of the Highway Trust Fund.
  • The U.S. Chamber of Commerce and the National Retail Federation are among the organizations behind a letter to members of Congress opposing the use of revenues gained in the process of tax reform for anything other than lowering the tax rate. Tax reform has been mentioned as a possible source of funding for President Obama’s proposed transportation bill and other measures.
  • Speaking of the President’s four-year, $302 billion GROW AMERICA Act, it was officially introduced in the House of Representatives this week, The Hill noted.
  • In a speech this week at the National Association of Regional Councils’ annual conference in Louisville and a subsequent blog post, U.S. Transportation Secretary Anthony Foxx argued that GROW AMERICA would offer greater local control over federal-aid highway funds.
  • The Hill noted that Foxx didn’t rule out the House plan to use post office cuts to fund a highway bill. Postmaster General Patrick Donahoe said he’s also not necessarily opposed to the plan, The Hill reported elsewhere.
  • Oregon Congressman Peter DeFazio was among those who addressed the road construction industry’s Capitol Hill rally this week and he used the opportunity to unveil his latest proposal for federal transportation funding: replacing the 18.4 cents-per-gallon gas tax with a per-barrel levy on oil companies, The Oregonian reported.
  • American Society of Civil Engineers Executive Director Patrick Natale made the case for fixing the Highway Trust Fund in a guest post this week on Fast Lane: The Official Blog of the U.S. Department of Transportation.
  • The Senate Commerce, Science & Transportation Committee this week considered the nominations of Victor Mendez to be Deputy Secretary of Transportation and Peter Rogoff to be Under Secretary of Transportation for Policy. At Wednesday’s nominations hearing, Rogoff told Senators “we must have a fix” for the trust fund before lawmakers leave town on their August break. He warned about what would happen if Congress fails to act and USDOT managers are forced to slow reimbursement payments to states. “This has a trickle-down effect on suppliers throughout the country, down to every sand and gravel pit we’ve got in the United States,” he said. 
  • Delaware: MSNBC had a recent piece on how a fix for a key interchange on congested I-95 is in jeopardy if Congress fails to act on the Highway Trust Fund.
  • Iowa: The Iowa Transportation Commission this week approved a $2.7 billion road construction program for the next five years even as state officials were warning that the plans could be in jeopardy because of uncertainty surrounding the federal highway program, The Des Moines Register reported.
  • Nebraska: The director of the state’s Department of Roads on concerns about the shrinking Highway Trust Fund in the Omaha World Herald: “We’ve seen it coming like a slow-motion train crash.” Members of the state’s Congressional delegation also weighed in on the postal funding plan in the recent article.
  • Oregon: The state department of transportation announced this week the uncertainty about federal transportation funding is prompting it to postpone new road construction projects for at least a year. The agency also will delay updating its Statewide Transportation Improvement Program, The Oregonian reported.
  • Robert Puentes and Joseph Kane of the Metropolitan Policy Program at the Brookings Institution assess “Infrastructure’s Long-Term Role in the Jobs Recovery” in a recent post.

State Activity on Transportation Revenues

  • Teddy Lederer writes in a recent post for Transportation for America that “In state elections, voters decline to punish pols for raising transportation taxes.” He examines the results of elections in Pennsylvania and Virginia following the passage of major transportation packages in both states last year.
  • California: Two labor groups in the state—the California Alliance for Jobs and Transportation California—are asking state leaders to consider redirecting revenue from truck weight fees from the general fund to the transportation fund, Go By Truck News reported recently.
  • Connecticut: Lawmakers are arguing with Gov. Dannel Malloy about whether the state’s transportation fund has become a piggy bank for non-transportation related initiatives, the Associated Press reported.
  • Georgia: Gov. Nathan Deal recently issued an executive order suspending a gas tax increase that was scheduled to take effect July 1. The Georgia Department of Transportation sets the motor fuel tax rate based on the average of prices every six months. A $0.45 increase in the average price of gas per gallon since January would have meant a 15 percent increase in the gas tax.
  • Nebraska: Gov. Dave Heineman said this week that new funding provided by a portion of state sales tax revenue is helping the state address some road construction needs and that he is still opposed to bond financing for highways. “Nebraskans prefer a pay-as-you-go approach,” Heineman said at a news conference, according to The Columbus Telegram. The state legislature earlier this year rejected a bill that would have authorized up to $200 million in highway bonds for road construction. The governor also said Nebraskans are not supportive of a gas tax increase, the use of tolling or mileage-based user fees.

Public-Private Partnerships & Tolling

  • Indiana: The East End Crossing, which will connect Kentucky and Indiana over the Ohio River near Louisville as part of the $2.6 billion Ohio River Bridges project, continues to win awards for P3 projects, Nossaman’s Infra Insight blog noted. The bridge is set up as an availability payment-type P3 project.
  • Ohio: Gov. John Kasich has signed legislation to allow tolls on a new $2.5 billion Ohio River bridge to replace the 51-year-old Brent Spence Bridge in Cincinnati, the Associated Press reported. But it will likely still be a long time before any tolls can be collected. Construction on the new bridge won’t begin until 2016, won’t be finished until 2019 and Kentucky still needs to approve legislation to allow tolling on its side of the river, something lawmakers in Frankfort were unable to do during the 2014 legislative session. Josh Pichler of The Cincinnati Enquirer took a look at the opposition to tolling in Northern Kentucky and why he thinks it’s time for the state to act in a recent column.
  • Texas: The Dallas Morning News has a piece this week about how the “Era of the toll is about to dawn on Dallas-area highways.” Transportation writer Brandon Formby writes: “Virtually every major Dallas-Fort Worth highway project includes plans for new tolls, in many cases replacing what have traditionally been free carpool lanes. By the time billions in planned construction is done, most of the area’s major corridors will either be toll roads or feature some sort of toll component. In large part, the growing network of toll highways can be attributed to living in a state with a booming population and a Legislature that dodges solving transportation funding shortfalls. Texas lawmakers haven’t raised the state gas tax, the primary revenue source for transportation funding, in decades. They also haven’t developed a meaningful, long-term alternative funding source. … Also this week, the Texas Turnpike Corporation announced a proposal to build a new toll road northeast of Dallas that would be entirely built and operated by the private sector. It would be the only such facility in the state and one of the only such highways in the country, The Texas Tribune said.
  • The Nossaman law firm’s Infrastructure Practice Group has developed model legislation for social infrastructure public-private partnerships such as education facilities, hospitals and courthouses. The Infra Insight blog has a link to the model bill.
  • InfraAmericas U.S. P3 Infrastructure Forum: I’m off next week to New York for the 2014 InfraAmericas U.S. P3 Infrastructure Forum. Indiana, Ohio, Texas and social infrastructure will all be on the agenda for the meeting which takes place June 17-18 at the Grand Hyatt. Adam Sheets, the Deputy Director of Innovative Delivery at the Ohio Department of Transportation will join a panel on the TIFIA program and changes the P3 industry would like to see under the next authorization bill. The Indiana Finance Authority’s Kendra York and Texas DOT CFO James Bass will be among the panelists at a session on what’s next for some of the nation’s P3 pioneers. Another session will examine social infrastructure as an emerging sector for the P3 industry. The InfraAmericas conference brings together state and federal public officials, infrastructure developers, investors, financiers and regional transportation authorities for a variety of panel discussions on the state of the P3 industry and networking opportunities. Registration for the event is now closed but you can read more about the meeting on the InfraAmericas website here and read my recent Capitol Ideas E-Newsletter article previewing the forum here. CSG is proud to be a supporting organization for the forum for the fourth year in a row. Look for a full report on the conference here on the blog when I return from the Big Apple.

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