Wednesday, July 30, 2014

The U.S. Senate yesterday sent the highway funding extension bill back to the House of Representatives with suggested changes with only three days left before the August recess.

By a 66-31 margin, the Senate voted to amend the House’s $10.9 billion funding bill so that the funding extension will only last until December 19. Earlier this month, the House, by a 367-55 margin, voted to extend highway funding until May of 2015. The Senate and House must now resolve the differences between the two pieces of legislation prior to adjourning for the August recess.

Without congressional resolution, federal funding for roads and bridges will be exhausted next month which will result in many construction projects across the country being idled. State departments of transportation are responsible for planning road and bridge construction projects that occur in their state. The departments will select and pay contractors to perform the work. Much of this work is reimbursed by the federal government. State departments of transportation will invoice the federal government for work performed on eligible projects. The U.S. Department of Transportation will then reimburse the states. Without the certainty of reimbursement from the federal government, state departments of transportation are going to refrain from moving forward with a number of planned transportation enhancements.

In some areas of the country, agricultural products are more reliant upon the inland waterway system. Other areas are more rail dependent. However, every farmer in the United States and every bushel of soybeans and grain produced by that farmer is dependent upon a well maintained road and bridge system. Without that system, agricultural supply will not connect with agricultural demand.

It’s frustrating that Congress has been unable to provide an extension of funding to ensure the Highway Trust remains solvent. When considering road and bridge construction and maintenance, predictability of funding is almost as important as volume of funding. State departments of transportation often will have five year plans for the system under their jurisdiction. Given the expense and time required to construct and maintain roads and bridges, it is essential that funding is provided in a predictable manner. Unfortunately, the federal government has been unable to provide this certainty. Our transportation system and the broader economy suffer as a result.

We are hopeful that Congress will provide this extension prior to the August recess, but is is incumbent upon constituents to continue to urge our elected officials to come to an agreement.

If Congress does enact a short term extension of highway funding, the more consequential task remains – developing an approach that will provide sustainable funding for our nation’s transportation network. An extension of highway funding would prevent the Highway Trust Fund from becoming insolvent, but the primary need for our surface transportation system is a funding approach that provides robust and predictable funding.

The Soy Transportation Coalition (STC) recently released our analysis on the fuel tax. On the Soy Transportation Coalition website (www.soytransportation.org) the full report as well as the memos for the 12 states that comprise the STC can be accessed. The problem of inadequate funding of our surface transportation system is not confined to the federal government. The problem is manifest in individual states as well. With this research project we aspire to explore a concept that: 1.) would provide sustainable revenue for the nation and individual states and 2.) arguably has a more realistic prospect of achieving support by policymakers.

The United States Highway Trust fund is a transportation fund comprised of three accounts: the Highway Fund, the Mass Transit Account, and the Leaking Underground Storage Tank Trust Fund. The Highway Trust Fund is financed via a federal fuel tax of 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel fuel. The fund generates approximately $35 billion annually. The taxes are distributed as follows:

Gasoline:
15.44 cents – Highway Fund
2.86 cents – Mass Transit Account
0.1 cents – Leaking Underground Storage Tank Trust Fund

Diesel:
21.44 cents – Highway Fund
2.86 cents – Mass Transit Account
0.1 cents – Leaking Underground Storage Tank Trust Fund