Transportation money in doubt
By Neal P. Goswami
VERMONT PRESS BUREAU | January 24,2014
MONTPELIER — State transportation officials say they may have to cut back on projects unless Congress acts soon to replenish the federal fund that provides the lion’s share of money for state work.
U.S. Rep. Peter Welch was at the State House on Thursday to meet with the Senate Transportation Committee and discuss the concern shared by lawmakers and Shumlin administration officials over uncertain federal funding. The third-term Democrat said a multiyear bill setting federal transportation priorities appears likely but a parallel plan to replenish the trust fund and cover costs remains questionable.
The Federal Highway Trust Fund, supported by a tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel, is projected to be insolvent by the fall as demand grows and project costs soar. A proposal to raise the federal gas tax, which hasn’t been raised since President Bill Clinton’s first term, has gained little traction.
“The funding is a tougher issue because the funding is scheduled to be exhausted in (2014). There’s real resistance to the gas tax,” Welch said Thursday. “I think it’s more politics than it is policy.”
That resistance is creating headaches for states trying to plan their own transportation budgets. Vermont Transportation Secretary Brian Searles said the trust fund is the major source of money for the state’s projects and programs.
“Without money in the fund, the (federal) money will not flow to states and we won’t be able to obligate coming construction projects,” Searles said.
Sue Minter, deputy secretary of transportation, said the agency is unable to commit to projects in the 2015 fiscal year and will soon have to decide whether to put projects out to bid for the coming summer construction season.
“For us, a risk starts to build in spring,” she said. “We’re looking at May saying, ‘Well, if we don’t know what the future is, we may have to delay. That’s what we’re trying to avoid.”
If Congress opts not to raise the gas tax, Searles said, it could decide to transfer money from elsewhere to refill the trust fund. Congress has done that to the tune of about $40 billion in recent years to keep the trust fund afloat, he said.
“Short of that, we’ll have to delay the advertisement of some projects this spring in anticipation of running out of money at the end of the federal fiscal year,” he said.
Because of its small tax base, the impact in Vermont could be even more harmful, he said.
“We’re probably more dependent on federal funds as a smaller state than some of the larger ones,” Searles said.
The state may have to reduce its transportation budget by as much as $60 million. Minter said officials would look to scale back new projects rather than affect ongoing ones.
Senate President Pro Tem John Campbell, a member of the Transportation Committee, said the panel may have to start creating a fallback plan.
“I think we have to either do a parallel budget, in a way, or actually start canceling some projects, or else we’re going to be coming back for a special session, and I don’t want to do that,” Campbell said.
Welch told the committee that Congress is aware of the potential fiscal crisis brewing in Vermont and other states. House Transportation Committee Chairman Bill Shuster, a Pennsylvania Republican, “has a bipartisan reputation,” he said.
Still, despite some signs of cooperation between the two parties in Congress, including a recent bipartisan budget deal, obstacles remain that could prevent action on restoring the trust fund, Welch said.
“There’s an element in the Congress that will not consider (raising) any kind of revenue under any circumstances. There’s another element in Congress that is arguing that the states should bear much more of the burden, in effect, of the transportation policy. That’s not realistic. There has to be a significant federal participation here,” Welch said.
State Sen. Dick Mazza, the Democratic chairman of the Transportation Committee from Colchester, was incredulous that Congress won’t consider raising the gas tax “a few pennies.”
“We bit the bullet last year and we raised the gas tax,” Mazza said of the state-level hike last year.
Welch, a former member of the Vermont Senate and its Transportation Committee, noted that Vermont lawmakers have been willing to take the plunge together when raising the gas tax to help the state’s infrastructure.
“The only way it worked was when we held hands and jumped off together,” he said. “It’s tough on people that are driving in rural areas and they’re having a hard time paying their bills. It’s tough on folks who are living paycheck to paycheck, and that happens to be the majority of Vermonters and the majority of Americans.”
If the gas tax is raised it will be only a temporary fix, Welch said. As cars become more fuel-efficient, the tax revenue will decline.
“It’s just not a revenue model that continues to work,” he said.
Welch offered no real assurances to assuage the concerns of legislators or administration officials. But pressure from states and constituents, who are all seeking needed improvements to infrastructure, may help, he said.
“The best argument that we have for some kind of optimism is that once you get past the political rhetoric and the ideology and the positioning, the bottom line is that America’s roads and bridges need help,” Welch said. “Whether you’re a Republican or a Democrat in the Congress, you’re hearing from folks back home, ‘What are you guys doing?’”