President Barack Obama and the Republican-controlled Congress he addressed Tuesday night agree they need to fix the country’s infrastructure funding problem before the money runs out on May 31. But so far, they’ve found little agreement on how to get there.
Though the national infrastructure funding crunch predates Obama’s presidency, it hasn’t improved under it. The American Recovery and Reinvestment Act in 2009, known as the stimulus, provided $27 billion in funding for road and bridge repairs. That provided a temporary boost, while leaving the overall infrastructure challenges unaddressed.
Since 2008, Congress has shifted more than $50 billion in general funds to the Highway Trust Fund to make up for declining federal gasoline tax revenue. Last year, the U.S. Department of Transportation warned states that it would begin rationing payments to states if Congress didn’t approve new legislation by Aug. 1.
Congress did approve a 10-month, $11 billion extension before the deadline, but states could face the same predicament again in four months if Congress doesn’t act.
States have used creative approaches to bridge the gap. They’ve entered public-private partnerships, they’ve turned to tolls, they’ve raised their own gas taxes and enacted special sales taxes. But states can only gain so much mileage that way.
“They’re using them as best they can within their political climates,” said Andy Herrmann, past president of the American Society of Civil Engineers. “They’re trying.”
On average, according to the American Road and Transportation Builders Association, states rely on federal funds for 52 percent of their highway and bridge spending.
“If the new Congress is serious about proving to the American people it can govern and if the president wants to accomplish something that has been on his agenda for years,” said Pete Ruane, the trade group’s president and CEO said in a statement Tuesday, “then new investments in surface transportation are an area ripe for bipartisan consensus and action.”
The federal gasoline tax of 18.4 cents a gallon for regular gasoline and 24.4 cents a gallon for diesel fuel, are unchanged since President Bill Clinton’s first year in office. Gasoline prices are lower now than they’ve been in years, raising talk, even among some Republicans, of increasing the tax and tying it to inflation.
But Obama has been cool to that approach, and didn’t endorse it Tuesday. Instead, renewed his call to fund infrastructure investment through corporate tax reform.
Last year, he proposed a four-year, $302 billion infrastructure bill, about half of which would come through the closing of tax loopholes. But it’s not a long-term solution. Even the White House’s own fact sheet called the money “one-time transition funding.”
On Friday, Obama proposed a change in the tax code to encourage the private sector to invest in infrastructure through low-interest municipal bonds.
The AAA motor club, which supports a gas-tax increase, welcomed the president’s ideas, but said they don’t go far enough.
“The president’s proposal to leverage corporate tax reform or private investment structures to support transportation funding would provide a welcome shot in the arm for our nation’s infrastructure,” said AAA CEO Robert Darbelnet in a statement Tuesday, “but this will not provide a sustainable fix to the looming funding crisis at hand.”