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Tom Block: Fund for highway infrastructure almost broke; something needs to be done


This is the Pikeville Cut-Through created by the U.S. Army Corps of Engineers nearly 30 years ago. One of the largest civil engineering projects in the Western Hemisphere, it required moving nearly 18 million cubic yards of soil and rock. Passing through it are a four-lane divided highway, a railroad line and the Levisa Fork of the Big Sandy River. (Photo from Wikimedia Commons)

This is the Pikeville Cut-Through created by the U.S. Army Corps of Engineers nearly 30 years ago. One of the largest civil engineering projects in the Western Hemisphere, it required moving nearly 18 million cubic yards of soil and rock. Passing through it are a four-lane divided highway, a railroad line and the Levisa Fork of the Big Sandy River. (Photo from Wikimedia Commons)

 
Any drivers who have been in and around downtown Louisville know that with the Ohio River Bridge project, road construction is one infrastructure program that is being funded, and jobs created.
 
Those in Northern Kentucky know that we need adequate funds available for infrastructure in the future to pay for a new bridge to replace the 50-year-old Brent Spence Bridge.
 
However, below the radar screen is an issue that could temporarily stop the work and have a very disruptive impact on the economy. The Highway Trust Fund, that finances most U.S. road and bridge construction is running out of money, and with no Congressional action the fund will run dry in August.
 
With fewer miles driven, and more efficient cars on the highways, less money has been coming into the fund. New funding needs to be found to ensure completion of current projects and finance bridge and road construction in the future.
 
The HTF receives its money from the federal fuel tax, which for gasoline has been set at 18.4 cents per gallon since 1993. The obvious answer would be to increase the tax.
 
While two senators, Bob Corker (R-Tennessee) and Chris Murphy (D-Connecticut), have introduced a bill to raise the tax by 12 cents over two years, it is unlikely to be accepted.
 
With rising oil prices the average driver has seen a huge increase in the pump price of gasoline, so there is next to zero chance that Congress would add to the cost through a higher tax in an election year.
 
Two years ago, when the highway program was running out of money, Congress appropriated $18 billion from the general Treasury to keep projects going. With the constraints of the budget agreement, new payments from the Treasury would have to be offset by cuts or new revenue, and getting Congress to agree on new taxes, or more cuts isn’t easy at any time in D.C. these days, but especially months before an election.
 
House Republicans recently suggested that the HTC could be funded for a few years with revenue gained from eliminating Saturday delivery of mail. Stopping Saturday mail service has been suggested by several sources including the Administration, but has never gained a great deal of traction in Congress.
 
In a truly odd couple pairing, Senate Democratic leader Harry Reid and Kentucky’s Republican Sen. Rand Paul have a bipartisan proposal to fund the HTF by providing a special, one time, reduced tax rate of between 5 to 10 percent, for the repatriation of built-up offshore corporate earnings.
 
It is estimated that U.S. corporations currently have $1.9 trillion in offshore cash. However, there is significant opposition from Democrats who oppose a corporate giveaway, and some Republicans want it to be part of a broad change in corporate tax policy. Hence, despite broad sponsorship it is not clear that this idea can pass.
 
There is a broad consensus that the HTF needs to be funded, but to date no agreement on how to achieve the goal.
 
With the Congress scheduled to be on recess break for July 4, and then for the month of August, there are only a few weeks to find a solution.
 
A worst-case scenario in which the funding does not come would impact up to 700,000 jobs.
 
With current jobs on the line, and critical infrastructure programs like Brent Spence waiting for action, Congress needs to resolve funding for the Highway Trust Fund.
 

Tom Block is a public policy consultant who had a 21-year career with JP Morgan Chase where he served as head of government relations in New York City and created a Washington research product. He also created the bank’s EU Government Relations program and developed a new position as U.S. Government Policy Strategist focusing on how U.S. government policy impacts capital markets. He has an extensive government and banking background, has worked on political campaigns and as a speech writer. He is a family trustee of Bernheim Aboretum in Louisville and holds a bachelor’s degree in political science from American University. He and his wife make their home in Kentucky. He is a regular contributor to KyForward. Contact him at tomblockct@aol.com.
 

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