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Congress Passes Bill to Temporarily Fund the Highway Trust Fund
Practical Law Legal Update 3-576-8985 (Approx. 2 pages)
Congress Passes Bill to Temporarily Fund the Highway Trust Fund
by Practical Law Finance
| Published on 04 Aug 2014 • USA (National/Federal) |
Congress passes bill to avoid the insolvency of the Highway Trust Fund.
On July 31, 2014, Congress approved a stop gap measure, the Highway and Transportation Funding Act of 2014, to prevent the insolvency of the Highway Trust Fund (HTF) and to finance federal highway and other transportation projects through May 31, 2015. President Obama is expected to sign the bill.
The bill funds the HTF with about $11 billion by:
- Transferring $1 billion from the Leaking Underground Storage Tank fund.
- Raising $6.4 billion from pension smoothing measures that allow companies to defer some of their pension contributions, thereby increasing their taxable income in the near term.
- Raising $3.5 billion from user fees paid to the US Customs Service for goods, vehicles and people entering the US.
This bill does not address the inherent limitations of the HTF. Historically, the HTF was funded only with the revenues from fuel taxes (18.4 cents per gallon gasoline tax and a 24.4 cents per gallon diesel tax). With vehicles becoming more fuel efficient and US transportation infrastructure needing significant modification or rehabilitation, these taxes have not been sufficient to meet the US's infrastructure needs. (According to the American Society of Civil Engineers, more than $3.6 trillion is needed by 2020 to improve US infrastructure.) However, despite repeated calls to increase these taxes, which have remained unchanged since 1993, there is little political will or appetite to do so. As a result, since 2008, Congress has needed to pass legislation to fund the HTF.