House approves short-term bill to keep Highway Fund afloat

By Sara Wyant

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WASHINGTON, July 15, 2014 - Lawmakers voted overwhelmingly to approve H.R. 5021, the Highway and Transportation Funding Act of 2014, by a vote of 367-55, even though many Democrats and Republicans admitted the legislation serves as only a short-term fix to the nation's transportation woes.

The measure injects $10.8 billion into the nearly empty Highway Trust Fund, enabling surface transportation projects to continue through May 30, 2015.

In part, the bill offsets its ten months of spending over a ten-year period, increasing spending in the near-term with no certainty the funds will ever be fully recouped.  Specifically, the bill increases revenue by $6.4 billion through a mechanism called “pension smoothing,” which increases employers' taxable income by changing the calculation used to minimum pension contribution levels to some employees.  

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With transportation funding expected to start running low on Aug. 1, the White House endorsed the measure on Monday, while lamenting the lack of a longer-term fix. Federal funding makes ups about one-fourth of all transportation spending.


“With surface transportation funding running out and hundreds of thousands of jobs at risk later this summer, the administration supports House passage of H.R. 5021,” the White House said in a statement of administration policy. “This legislation would provide for continuity of funding for the Highway Trust Fund during the height of the summer construction season and keep Americans at work repairing the Nation's crumbling roads, bridges, and transit systems.”

Conservative groups such as Heritage Action and Club for Growth opposed the measure and included it as a key vote in its legislative scorecard. Yet, nearly as many Republicans as Democrats approved the measure. Supporters included 181 Republicans and 186 Democrats, while 45 Republicans and 10 Democrats opposed it.

“No one really believes today's bill, which is chock full of gimmicks and revenue raisers, represents good policy.  But the specter of a crisis, no matter how overstated, occasionally causes solid conservatives to cast votes based on factors other than the underlying policy,” noted Dan Holler, Communications Director for Heritage Action for America.

Democratic Leader Steny Hoyer, D-Maryland, described the bill as a “temporary, inadequate response to a longer-term problem. It's better than doing nothing but it does not do what we really need.”

Rep. Rodney Davis, R-Illinois said it was “absolutely imperative for the House to act today to patch the hole in the Highway Trust Fund.

“The fact remains that the Highway Trust Fund has fallen short every year since 2008, and the CBO estimates this shortfall to be about $167 billion over the next ten years. This is unsustainable. We must look for innovative funding options that shore up the Highway Trust Fund without sacrificing one job for another, and while this won't be easy, I know it can be done, just as this Congress has been able to come together to pass a five-year Farm Bill and a multi-year WRRDA bill.”

The Senate has yet to vote on a similar bill, but action is expected next week.

The Senate Finance Committee passed highway legislation week that also includes provisions to help finance water infrastructure improvements. The provision clarifies the tax treatment of member-owned mutual ditch and irrigation companies, making it feasible to upgrade aging and degrading water delivery systems. Specifically, it permits a greater percentage of non-member income to be received by these companies, provided that the proceeds are used for the operations, maintenance, and capital improvements of water infrastructure.

Current law says that mutual ditch and irrigation companies must receive 85 percent of their income from shareholder investments to maintain their nonprofit designation. However, a number of ditch companies have seen spikes in revenue, mostly from an upswing in oil and gas activity on land they own, and that increase in dollars has put them past the 85 percent threshold, leaving them to be taxed on the additional revenue.

“In order to solve infrastructure-funding challenges, it's clear that we have to make it acceptable for some of the capital for upgrades to come from additional sources other than tax dollars. Getting these provisions into the Act has been a real team effort,” says Brian Kuehl, Director of Federal Affairs for Kennedy and Coe LLC. “This bill will be a huge help for western irrigators and will help promote water conservation and sensible responses to drought and water scarcity.”

“U.S. Senators Orin Hatch of Utah, Michael Bennet of Colorado, Mike Crapo of Idaho, and Pat Roberts of Kansas deserve significant credit for getting this provision included in the highway bill,” says Lynn Fagerberg, President of Larimer and Weld Irrigation Company. “Our thanks go out to them and the many members of this coalition who've been working together to bring us to this point. The bill is not yet law so there is still work to do, but this is a tremendous step forward. If enacted, this bill will be a significant boost to mutual irrigation and ditch companies throughout the West.”

An amendment by Sen. Bob Casey, D-Pennsylvania, that would provide additional funding to the Inland Waterways Trust Fund (IWTF), was discussed in a Senate Finance Committee markup of the Highway Trust Fund bill last week, but no action was taken on the measure. Casey's amendment would have increasedthe barge fuel tax by 9 cents a gallon, to 29 cents a gallon, to help pay for new construction and for infrastructure improvements to locks and dams along the 12,000 mile Inland Waterways System. Around 300 users of the system that would directly pay the increase unanimously support the amendment

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