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Raising Gas Tax Is Best Way to Fund Highways, Donohue Says

Wednesday, 12 February 2014 02:07 PM EST

Raising the U.S. gasoline tax above 18.4 cents a gallon is the “simplest and most straightforward” way to fund a long-term highway bill, the president of the nation’s largest lobbying group for businesses told Congress.

Lawmakers need to embrace a higher gas tax despite the backlash over a similar proposal two years ago that prevented approval of a six-year highway funding bill, Thomas Donohue, the president and chief executive officer of the U.S. Chamber of Commerce, said today. The Chamber has endorsed legislation that would boost the tax by 15 cents a gallon over three years.

“For once, let’s do what’s right, not what’s politically expedient,” Donohue told members of the Senate Environment and Public Works Committee at a hearing in Washington.

A lack of consensus on how to continue funding about $50 billion-a-year in highway, bridge and mass transit projects beyond Sept. 30 led the Congressional Budget Office to warn that the federal government may have to delay some payments to states before the fiscal year ends. Committee Chairman Barbara Boxer, a California Democrat who has proposed replacing the gas tax with a levy paid on oil at refineries, said she will advance highway legislation in April, though it won’t address funding.

“I’m hoping for a five- or six-year bill,” Boxer said.

Boxer said she will look to the Senate Finance Committee to decide how to fund the legislation.

Lack of Consensus

The Highway Trust Fund, which pays for road and transit projects, is projected to have a shortfall of about $13 billion for fiscal 2015, the CBO said last week. Business groups have said infrastructure spending is needed to boost U.S. economic growth, while benefiting construction companies including Caterpillar Inc.

House Transportation and Infrastructure Chairman Bill Shuster, a Pennsylvania Republican, said last week that he doesn’t think there’s enough support in Congress to raise the gas tax, and he suggested spending cuts or revenues from oil and gas exploration on federal lands to fund projects. He also discussed the possibility of user fees to fund future highway construction that could include a vehicle mileage tax.

“I just don’t believe the American people, there’s a will out there in the American public or in Congress,” he said when asked whether the gas tax should be raised at a Bloomberg Government Infrastructure event. “Even our president has said, you know that we’re not going to do that.”

Trumka’s Position

The gas tax makes up the lion’s share of financing for the highway trust fund, which had about $37 billion in revenue in 2013. That amount included a few smaller sources of revenue, including a trucking diesel tax.

Boxer has said a higher levy paid on oil at refineries, which has been floated by research groups including Rand Corp. and the Carnegie Endowment for International Peace, could generate enough revenue to fund highways and mass transit for six years.

At today’s hearing, AFL-CIO President Richard Trumka warned lawmakers of a dire impact on the economy if a long-term measure isn’t approved by Congress this year. He told the panel that employment in the construction industry has fallen by 1.6 million from pre-recession levels.

While other forms of financing could help, including public-private partnerships, “most of these ideas have limitations and cannot raise enough revenue to replace the gas tax,” Trumka said in his written testimony.

State Control

Senators in both parties on the committee said that they want to see a five- or six-year bill, rather than a short-term extension of the current two-year law. At the same time, Donohue drew fire from Senator Jeff Sessions, an Alabama Republican, who said spending cuts are more appropriate than a gas-tax increase.

“You want to raise taxes on Alabamians who need to commute to work, and you can spend the money however you want,” Sessions said.

In both congressional chambers, lawmakers affiliated with the Tea Party movement have sought measures that would turn authority for funding highway projects to the states. Senator Mike Lee, a Utah Republican, introduced such a plan in November and five other senators have signed on so far. A similar bill introduced by Representative Tom Graves, a Georgia Republican, has 39 co-sponsors.

© Copyright 2023 Bloomberg News. All rights reserved.

Raising the U.S. gasoline tax above 18.4 cents a gallon is the "simplest and most straightforward" way to fund a long-term highway bill, the president of the nation's largest lobbying group for businesses told Congress.
Wednesday, 12 February 2014 02:07 PM
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