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Bill transfers $8 billion from general fund to highway fund
Move saves an estimated 379,000 jobs in highway construction
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Published: September 12, 2008
WASHINGTON
Congress sent President Bush an $8 billion rescue package yesterday for the federal Highway Trust Fund. The infusion comes as the trust fund, which relies on declining revenue from the federal gas tax, verges on going broke, threatening road and bridge projects in every state.
The House passed the bill on a 376-29 vote yesterday, a day after the Senate overcame objections from conservative senators and passed it on a voice vote. The legislation transfers $8 billion from the Treasury's general fund to the highway fund, ensuring that construction projects will not be interrupted.
The White House had previously threatened to veto the bill, calling it "both a gimmick and a dangerous precedent that shifts costs from users to taxpayers at large."
But the administration changed its position after Transportation Secretary Mary Peters disclosed last week that the trust fund will run out of money this month, which will delay payments to states for infrastructure projects and threaten the jobs of hundreds of thousands of construction workers.
"We must act," said Rep. John Lewis, D-Ga. "The trust fund is broke, out of money. Our state and local governments, drivers, construction workers and many others suffer when highway projects are delayed." He and others said that in 1998 the government moved $8 billion from the trust fund, then enjoying a large surplus, to the general fund for deficit reduction, and that this bill returned borrowed money.
It has long been anticipated that the 52-year-old trust fund would move into the red next year, a result of the reluctance of Congress to raise the gas tax, unchanged since 1993 despite inflation and higher construction costs. The federal fuel tax is 18.4 cents a gallon, or 24.3 cents for diesel.
But the fund, which had a $10 billion surplus just three years ago, has had a rapid change in fiscal fortune as drivers, responding to higher gas prices, have curtailed their driving and switched to more fuel-efficient vehicles.
Peters commended the Senate on Wednesday for its swift action to deal with the immediate crisis but added in a statement that "Congress must eliminate the billions in wasted spending, thousands of unneeded earmarks and hundreds of conflicting and contradictory special-interest programs in order to make sure states don't face this situation again."
Stephen E. Sandherr, the chief executive director of the Associated General Contractors of America, expressed relief that Congress had finally acted.
"We knew this shortfall was coming, and we have made this a priority for the last two years," Sandherr said. "The money was set to run out, states were going to be left holding the bag, and contractors would have been forced to lay people off."
The few opponents of the bill attributed the crisis to the 6,300 earmarks -- legislators' pet projects -- worth about $24 billion, included in the $286 billion highway bill Congress passed in 2005. That bill will expire next year.
"Part of the reason we are having to steal money from the general fund," said Rep. Jeff Flake, R-Ariz., is "we just went hog-wild in 2005. We've got to stop this earmarking process."
Democrats in turn thanked the White House and Republicans for letting the stalled bill move forward.
"I'm glad the Republicans came to their senses -- you can't play politics with 300,000 jobs when we're in a recession," said Sen. Barbara Boxer, D-Calf., the chairwoman of the Senate Committee on Environment and Public Works.
The American Road and Transportation Builders Association, using Transportation Department figures, said that without the fix, federal highway aid to the states would drop from $35 billion in the fiscal year ending Sept. 30 to $24 billion in the next fiscal year 2009. It estimated that 379,000 jobs would be lost without congressional action.
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