The US House has passed a $10.8 billion short-term fix to keep the Highway Trust Fund afloat through May next year, temporarily averting an imminent nationwide transportation shutdown.
In a 367-55 vote, the House representatives passed the bill, the Highway and Transportation Funding Act of 2014, which will transfer $7.8 billion from the General Fund of the Treasury Department to the Highway Account of the Highway Trust Fund and $2 billion to the Mass Transit Account of the Highway Trust Fund.
The bill will also transfer $1 billion in gas-tax-funded monies in the Leaking Underground Storage Tank Trust Fund to the Highway Trust Fund.
The Highway Trust Fund was on course to run out of money in August because tax revenues have not kept pace with spending over the years. It would have had to operate on a cash basis if no bill or Congressional action had been taken in Washington DC.
Offsets for the transfer of funds from the Treasury Department’s General Fund come from two sources – pension smoothing and customs user fees, according to the House website.
Pension smoothing means the bill allows single-employer defined benefit pension plans to use higher interest rates when calculating future liabilities. This will reduce the minimum required tax-deductible employer contribution for pension plans, which will in turn increase revenues and reduce outlays. This provision will provide a total of $6.4 billion in deficit reduction.
Customs user fees mean this legislation extends the passenger and conveyance processing fees and the merchandise processing fee through September 30, 2024. This provision will provide $3.5 billion in offsetting receipts.
With this having been a seemingly last-ditch effort, Democratic politicians have been calling for the creation of a long-term measure to shore up the trust fund on the grounds of keeping the US economically competitive and ensuring public safety.
“Although I supported the short-term patch to the Highway Trust Fund because jobs depend on the Highway Trust Fund remaining solvent through the busy summer construction season, this patch is nothing to celebrate,” said Congressman John Delaney (MD-D) in a statement after the passage of the bill.
In the same statement, Delaney announces his intention to introduce legislation this autumn that would provide funding for a long-term highway bill at increased levels of investment.
The Delaney bill would provide additional transportation revenue through international tax reform and provide a long-term solution to funding the Highway Trust Fund.
Delaney’s proposal provides enough funding for six years of solvency for the Highway Trust Fund, even at higher levels of investment, and creates a new American Infrastructure Fund to finance additional projects using revenues from overseas earnings.
His Partnership to Build America Act, which is currently the most bipartisan economic bill in Congress, with 37 Republican and 33 Democratic co-sponsors in the House, uses the same framework where companies can repatriate tax-free a portion of their overseas earnings to buy 50-year bonds issued by a national infrastructure bank.