Federal Highway Bill Still in Limbo

Published September 8, 2004

Throughout the summer, 75 U.S. House and Senate conferees–the largest conference committee in federal government history–have been working feverishly to hammer out a new, six-year federal transportation spending plan.

Agreement on the bill’s final size and shape has remained elusive, and Congress has instead passed a series of temporary “continuing resolutions” that keep highway funding at existing levels. The previous highway bill cost $218 billion over six years and expired on September 30, 2003.

Bush Veto Scare Keeps Price Tag Down

President Bush’s repeated veto threats have dramatically reduced the bill’s potential price tag. House Transportation Committee Chairman Don Young (R-Alaska) originally asked for $375 billion and a $.05 hike in the gas tax over six years. The conference is now hung up on whether to fund at levels closer to the Senate’s $318 billion or the House’s $284 billion. Either amount would be a higher price tag than the $256 billion Bush desires and may still draw his veto.

“A successful veto would be a big win for taxpayers and a huge pre-election boost for fiscal responsibility,” said National Taxpayers Union President John Berthoud. “However, if Bush caves to the big-spenders in his own party, it could cause the President’s base to stay home in droves on Election Day. It is quite possible that, in order to stave off such an intra-party showdown, Congress will once again sign a funding extension and postpone the final decision until 2005.”

According to USA Today, Bush is not without supporters in the dispute. Ronald D. Utt, senior research fellow at The Heritage Foundation, said the president’s advisors were “absolutely correct” in threatening a veto of a bill that perpetuates what Utt called the “nation’s largest spoils system.”

Earmarks a Huge Problem

Several unresolved issues lurk beneath the surface, the most urgent of which is the number of earmarked projects–where funds are dedicated for specific purposes–in the bill.

The House version was introduced with a record-breaking 2,800 earmarks, and hundreds more were added on the House floor. In 1981, the legislation that reauthorized the federal highway program contained just 10 earmarks.

Critics of earmarking argue it increases spending by pushing projects that will benefit various politically favored groups and individuals, a process known as pork-barreling. “Taxpayers and motorists alike would be better off if earmarks were eliminated, and along with them the political favoritism that taints the funding process,” noted Berthoud.

“On the other hand,” added Bethoud, “the proposed creation of tax-exempt private-activity bonds for road building contained in the Senate version of the bill is an initiative that taxpayers can support.”

Trouble Over Toll Roads

“In his original highway reauthorization proposal, President Bush proposed that Congress allow a limited number of highway projects involving private-sector partnerships to issue up to $15 billion of tax-exempt bonds,” Berthoud noted. “The plan to allow the use of such bonds for privately built and funded toll roads is sensible as long as these bonds are free of any restrictions, particularly Davis-Bacon wage rules that inflate construction costs.”

Tolling also has been a hot topic during recent highway bill negotiations. Tolls can serve as powerful catalysts for moving the public sector toward a market-based economic model, but if used for non-highway purposes, tolls could simply turn America’s roads into cash cows to be milked by big government for spending in other areas of the federal budget.

With that dynamic in mind, Representative Mark Kennedy (R-Minnesota) offered an amendment to the House bill that would allow tolls only on new voluntary-use lanes, with revenues dedicated to new highway capacity. The tolls would be removed once the roads were completely paid for. If the federal government seeks to access new revenue sources, Kennedy argued, motorists should benefit from additional capacity instead of being forced to pay tolls for existing capacity.

“If Congress chooses to go ahead and act this year, hopefully it will make palatable lemonade out of some very sour lemons by adhering to the president’s funding request, by tossing out the thousands of wasteful and inefficient earmarks, and by backing the carefully crafted tolling policy contained in the House bill and bonding provisions in the Senate bill,” concluded Berthoud.

“If, on the other hand, action is delayed once again,” said Berthoud, “Congress should seize the opportunity to defederalize transportation policy entirely, and better serve taxpayers as a result.”

Paul J. Gessing ([email protected]) is director of government affairs for the 350,000-member National Taxpayers Union (http://www.ntu.org).