The American Road & Transportation Builders Association (ARTBA) outlined a detailed proposal it believes could end the political impasse over how to fund future federal investments in state highway, bridge and transit capital projects. The “Getting Beyond Gridlock” plan would marry a 15-cents-per-gallon increase in the federal gas and diesel motor fuels tax with a 100% offsetting federal tax rebate for middle and lower income Americans for six years. The plan, ARTBA said, would fund a $401 billion, six-year highway and mass transit capital investment program and provide sustainable, user-based funds to support it for at least the next 10 years.
“If our national leaders think they need to use budget gimmicks or ‘one-offs’ again to pass the surface transportation investment program the states need and the business community has been pleading for, then use those devices to provide a $90 tax rebate to middle and lower income tax filers to offset the cost to them of a 15-cent-per-gallon increase in the federal gas tax,” ARTBA President & CEO Pete Ruane said in announcing the plan. “Don’t use them to just prop up the program for a few years. That won’t resolve the structural damage that’s been done to the Highway Trust Fund, nor will it allow states to do the long-range capital planning that the nation needs.”
ARTBA has long maintained that an increase in user fees, specifically the federal motor fuels excise rate, is the most efficient way to resolve the Highway Trust Fund (HTF) cash flow problem—now about $15 billion per year—and raise revenue needed to fund expanded capital investments in freight mobility and traffic congestion relief over the next decade. That also has been the recommendation of two blue ribbon commissions mandated by the Congress and the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles) appointed by President Obama.
ARTBA proposes marrying the first increase in the federal gas and diesel motor fuels tax rate in 22 years with, if necessary, an offsetting annual gas-tax rebate for middle and lower income tax for the length of the next surface transportation program reauthorization bill, which is due May 31.
Under the ARTBA plan, a single tax filer with an Adjusted Gross Income (AGI) of $100,000 or less would receive a $90 per year tax rebate—the average annual cost to them of a 15-cent-gas-tax increase. Joint filers with an AGI of $200,000 or less would receive a $180 rebate. ARTBA’s analysis shows the rebate would completely offset the gas-tax increase for 94% of American tax filers.
Ruane said it’s up to the Senate Finance and House Ways & Means committees to figure out how to pay for the tax rebate. But the association offered one possible mechanism that has been elevated over the past year in the political discussion on highway and transit funding—a one-time federal repatriation transition tax.
In modeling its plan, ARTBA used the U.S. Energy Information Administration’s 2014 forecast for domestic motor fuel consumption and vehicle-miles traveled over the next six years, the Federal Highway Administration’s (FHWA) data on the volume of motor fuel taxed, the U.S. Bureau of Labor Statistics inflation forecast, the U.S. Census Bureau’s population projection, and U.S. Treasury Department and Internal Revenue Service tax collection and filing data.
ARTBA said a 15-cent-motor-fuels increase would generate an additional $27 billion per year for HTF investments.
With the additional revenue, ARTBA said, the existing core highway and transit programs would keep pace with forecasted inflation. Given that the FHWA forecasts truck traffic will increase 56% between now and 2040, ARTBA recommended using a significant portion of the remaining newly generated user revenue—about $12 billion per year—to fund federal investments in multimodal capital projects that upgrade the U.S. freight network and help reduce traffic congestion bottlenecks on it.
