Maximum
Economic Growth for America through The Highway Trust Fund: The
MEGA TRUST ACT (bill summary)
Next year
the Congress must reauthorize highway and transit programs and the
system of Federal financing for them. This is a very important issue
for the nation. Highway and transit programs are crucial in every
state. These are our methods for moving goods and people. They are
key to our economy and our ability to connect to one another. This
country needs good, safe highways in order to cross great distances
and highway and transit construction and maintenance is an important
part of every state's economy.
In order to
facilitate our work in reauthorizing these programs, I plan to
introduce a series of bills concerning important issues that
Congress must address in that legislation. This will be the first of
those bills, a proposal concerning revenues for the Highway Trust
Fund. This bill will represent how this country will help pay for
our highway and transit needs over the next several years.
The MEGA
TRUST Act represents an important step in the effort to strengthen
our Nation's economy, and improve its quality of life, by investing
in transportation. It would increase revenues into the Highway Trust
Fund by several billion dollars annually by making some needed
corrections in the way Federal revenues are credited to the Highway
Trust Fund.
Nothing
in the bill increases any tax.
Federal
dollars to help states and localities improve their highways and
transit systems are derived largely from the Federal Highway Trust
Fund. Under the system today, revenues from highway user taxes are
deposited into The Highway Trust Fund - more specifically into
separate accounts within the Fund for highways and for transit.
These revenues are, in turn, distributed to States and localities
for transportation investments that truly do improve our lives,
create jobs, and make our economy work. This Trust Fund mechanism
has been widely regarded as successful. But, as always, we must make
adjustments to meet new challenges.
This bill
would improve and extend this important financing mechanism,
principally by making sure that certain revenues not currently
credited to the Highway Trust Fund are placed in the Fund.
The MEGA
TRUST Act does several things:
1. Section 2 would
ensure that taxes paid on gasohol are fully credited to the
Highway Account of the Highway Trust Fund. Today, when gasohol is
taxed, the Mass Transit Account of the Highway Trust Fund receives
its full share of revenues, as if the fuel were gasoline. But 2.5
cents of the tax per gallon that is imposed on gasohol is credited
to the General Fund of the Treasury, not to the Highway Account.
Thus, this section of the bill would ensure that those 2.5 cents
per gallon go to the Highway Account.
2. Section 3 would
ensure that the highway system does not bear the cost of our
national policy to develop and promote the use of gasohol.
Gasohol, as a fuel, is taxed 5.3 cents per gallon less than
gasoline, even though there is no difference in the wear and tear
imposed on the roads from gasohol fueled vehicles as opposed to
gasoline fueled vehicles. This tax rate preference is part of our
general national policy to advance the use of gasohol. So, it is
clear that the General Fund of the Treasury should shoulder the
cost of the gasohol tax preference, not the Highway Account of the
Highway Trust Fund. Accordingly, this section of the bill would
leave the gasohol tax rate preference in place but credit the
Highway Account of the Highway Trust Fund with revenue equal to
that forgone to the Treasury by the gasohol tax preference.
According to the US
Treasury this 2.5 cent transfer would result in an increase in
Highway Account revenues of approximately $700,000,000 per year.
The transfer of funds equivalent to the 5.3 cents would increase
Highway Account Revenues by about twice that amount annually. So
the gasohol changes would properly credit the Highway Account with
at least $2.1 billion annually. As the use of gasohol rises, so
will the revenue to the Highway Account of the Highway Trust
Fund.
3. Section 4 would
credit the Highway Account of the Highway Trust Fund with interest
on its balance.
4. Section 4 the bill
would credit the Mass Transit Account of the Highway Trust Fund
with interest on its balance.
Today, the
Highway Trust Fund is one of the few Trust Funds in the Federal
budget that is not credited with interest on its unspent balance.
This is inappropriate. The MEGA TRUST Act would change this in order
to make sure that collected highway user taxes are to be put to work
for better transportation for our citizens. Estimates are that these
two reforms regarding interest would increase the revenue to the
Highway Account by over $550 million in the first year of
reauthorization and would increase the revenue to the Mass Transit
Account by over $200 million in the first year of reauthorization.
How much interest would accrue to the accounts in later years will
depend upon the balances that we leave in the accounts but, in any
event, these reforms can provide important additional revenue for
the highway and transit programs.
5. Section 5 would
extend the basic highway user taxes and the Highway Trust Fund, so
that they do not expire.
6. Section 6 would
require an important study concerning the future financing of our
Federal highway and transit programs. While the current mechanism
has worked well, we know that cars may become more fuel efficient,
or not use gasoline at all. Other changes are possible as well in
our dynamic economy. While major changes will not occur overnight,
we have to be ready for change. We have to understand what is
likely to happen so we can consider making adjustments in the
Highway Trust Fund and its revenue streams, so that we are not
caught off guard and unable to adequately fund our transportation
system. The bill would establish a commission to review these
issues and report with recommendations.
In sum,
through this MEGA TRUST Act we pursue ways to increase revenue into
the Highway Trust Fund without raising taxes. We will need increased
Highway Trust Fund resources to help us all structure a successful
reauthorization bill. This bill responds to that need.
|