Every little bit helps

News AASHTO Journal August 02, 2001
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Senate Finance Committee Chairman Max Baucus (D-Mont

Senate Finance Committee Chairman Max Baucus (D-Mont.) intends to introduce legislation that would transfer 2.5 cents per gallon of the tax on ethanol from the General Fund into the Highway Account of the Highway Trust Fund, starting in FY 2004. Rep. Ron Portman (R-Ohio) plans to work a corresponding bill in the House of Representatives.

Currently, the 2.5 cents is being used for deficit reduction. The shift would equal $400 million in additional revenue into the Highway Account each year.

Baucus said his bill, titled the Highway Trust Fund Recovery Act of 2001, may eventually be wrapped into a comprehensive energy tax bill, which will be considered in September.

Concern about the potential impact of the ethanol on the Highway Trust Fund is mounting, as states move to ban the additive MTBE because of its pollution of groundwater. To date, 11 states have moved to restrict or ban the use of MTBE.

Elimination of MTBE as a fuel oxygenate would leave ethanol as the only viable replacement in reformulated gasoline. The Clean Air Act mandates the use of reformulated gasoline in clean air non-attainment areas. Until recently, MTBE constituted 85% of the market for reformulated gas. Elimination of the additive is expected to double the demand for ethanol, with California alone requiring 580 million gallons annually.

Because of the reduced tax paid for ethanol fuels analysts indicate that this alone would translate into a loss of approximately $458 million annually to the Highway Trust Fund.

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