Legislative Notice: Highway and Transportation Funding Act of 2014 (H.R. 5021)
Background: The Highway and Transportation Funding Act of 2014, H.R. 5021, was introduced in the House on July 8, 2014, and passed on July 15 by a 367-55 vote. On July 16, 2014, a hotline notice was issued informing all Senate offices of a unanimous consent request regarding Senate consideration of H.R. 5021. Under the suggested unanimous consent agreement, H.R. 5021 would be considered under a limited time agreement, with four first-degree amendments in order, all needing 60 votes for adoption.
Floor Situation: It is anticipated the Senate will vote on the bill by the end of this work period.
Executive Summary: The bill authorizes approximately $10.8 billion to extend highway, highway safety, motor carrier safety, transit, and other programs funded out of the Highway Trust Fund. The costs would be offset by various provisions, including pension smoothing ($6.4 billion), customs user fees ($3.5 billion), and a transfer from the Leaking Underground Storage Tank ($1 billion) account.
Overview of the Issue
The Highway Trust Fund provides money for transportation programs across the country. The fund is unsustainable and is projected to run out of money next month. In 2012, Congress authorized $105 billion for surface transportation programs, including the trust fund.
Congress created the Highway Trust Fund in 1956 to fund surface transportation projects. The fund is comprised of two accounts: the highway account, which funds programs administered by the Federal Highway Administration, the Federal Motor Car Safety Administration, and the National Highway Safety Traffic Administration; and the mass transit account, which funds programs through the Federal Transit Administration.
Federal motor fuel taxes – set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel – and related truck excise taxes are the major sources of income for the fund.
Considerations on the Bill
In early August, the Highway Trust Fund is expected to stop making payments to states in order to avoid a negative balance. In the past, Congress kept the fund solvent primarily with general fund money – transferring $54 billion since 2008. Without a fix, federally backed transportation projects could face funding challenges this summer. Since funds would still be coming into the Treasury, projects could be delayed until revenues are sufficient to pay costs.
In H.R. 5021, the cost to extend the Highway Trust Fund would be offset by various provisions, including: pension smoothing ($6.4 billion); customs user fees ($3.5 billion); and a transfer from the Leaking Underground Storage Tank ($1 billion) account.
For pension funding purposes, plan liabilities are calculated by using a two-year average of corporate bond interest rates to determine plan liabilities. The lower the interest rate, the higher the liability and the greater the required pension contribution, which results in a correspondingly larger business tax deduction. In 2012, MAP-21 (P.L. 112-141) included pension smoothing as a pay-for. Since 2012, the funding interest rate has been adjusted to align with a “corridor” that was 10 percent above and below the 25-year historic average of interest rates in 2012. The corridor expands in five percent increments each year until 2016, when it reaches 30 percent above and below the 25-year historic average, reducing the smoothing effect going forward. The effect of interest rate smoothing, given the current low-interest rates, has been to raise revenue by raising interest rates for funding purposes, and thereby lowering minimum required pension contributions.
The House-passed bill would retain the 10 percent limit for five additional years, through 2017. The Wyden/Hatch amendment would retain the 10 percent limit for three additional years, or through 2015, before incremental increases begin.
Customs user fees were previously extended through September 30, 2023, under the Bipartisan Budget Act of 2013. Before the BBA, the fees for various customs services would have expired on two different dates: October 22, 2021, and October 29, 2021. JCT reports that the one-year extension in this bill will raise $3.54 billion in 2024 compared to a current law baseline.
Additional funds to pay for this bill would come from a transfer of gas taxes in the Leaking Underground Storage Tanks accounts. The account also was used in MAP-21, and it is included in the Wyden/Hatch amendment (though the amendment transfers $750 million, while H.R. 5021 transfers $1 billion).
Notable Bill Provisions
Section 1001 – Extension of federal-aid highway programs
Extends the funding of Highway Trust Fund-aided highway programs from October 1, 2014, to May 31, 2015.
Section 1002 – Administrative expenses
Authorizes administrative costs of $292,931,507.
Section 1101 – Extension of National Highway Traffic Safety Administration highway safety programs
Extension of NHTSA highway safety programs to May 31, 2015. Authorizes extension of national priority safety programs, national driver registry, high visibility enforcement program, law enforcement campaigns, and cooperative research.
Section 1102 – Extension of Federal Motor Carrier Safety Administration programs
Extension of Federal Motor Carrier Safety Administration programs to May 31, 2015. Authorizes extension of motor carrier safety grants, commercial driver’s license program improvement, border enforcement grants, performance and registration information system, commercial vehicle information systems and networks deployment program, and safety data improvement grants.
Section 1203 – Authorizations for public transportation
Extension of public transportation programs to May 31, 2015. Authorizes extension of research, development demonstration and deployment projects, transit cooperative research program, technical assistance and standards developments, and capital investment grants.
Section 2001 – Extension of Highway Trust Fund expenditure authority
Amends MAP-21 to extend Highway Trust Fund.
Section 2002 – Funding of Highway Trust Fund
Appropriates approximately $7.8 billion to the Highway Account in the Highway Trust Fund. Appropriates $2 billion to the Mass Transit Account in the Highway Trust Fund. Funds additional increase to the Highway Account in the Highway Trust Fund by transferring $1 billion from the Leaking Underground Storage Tank Trust Fund.
Section 2003 – Funding stabilization
Extends for five years the pension smoothing provision enacted in 2012 as a part of the MAP-21 legislation so that the phase-out starts in 2017.
Section 2004 – Extension of customs user fees
Extends all customs user fees collected by the federal government for one additional year, through September 30, 2024.
The Obama administration has issued a Statement of Administration Policy supporting the bill.
CBO estimates that H.R. 5021 “will reduce direct spending and increase revenues.” In sum, these changes would reduce budget deficits over the 2014-2024 period by an estimated $9.9 billion. H.R. 5021 would “transfer about $9.8 billion from the general fund of the Treasury to the Highway Trust Fund.”
The cost provisions come from pension smoothing ($6.4 billion), customs user fees ($3.5 billion), and a transfer of money in the Leaking Underground Storage Tanks account ($1 billion), totaling $10.8 billion.
The suggested unanimous consent agreement calls for consideration of the following:
- Wyden amendment replacing title II with a different $11 billion offset package reported by the Finance Committee.
- Carper/Corker/Boxer amendment shortening the funding extension by amending title I of H.R. 5021 from May 31, 2015 to December 19, 2014.
- Lee amendment adding text mirroring S. 1702. The amendment would phase the federal gas tax down over five years from 18.4 cents per gallon to 3.7 cents. The amendment would also transfer highway authorities proportionally from the federal government to the states.
- Toomey amendment streamlines construction of bridges, roads, and highways damaged during disasters. The amendment would exempt the reconstruction of bridges, roads, and highways destroyed during declared emergencies from federal environmental permitting if reconstructed within the footprint of the original structure.
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