Congress Rallies for Short-Term Highway Trust Fund Patch

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Congress passed a bill (HR 5021) to provide a short-term funding patch for the Highway Trust Fund (“HTF”), just one day before the United States Department of Transportation was scheduled to begin slowing reimbursements to states for eligible highway, bridge, and mass transit projects.  A failure to act by Congress had the potential to slow-down or stop any number of transportation construction projects across the country in the midst of the construction season.

After volleying the bill back and forth between the chambers over the course of this week, Congress passed a final bill that adopts the House of Representative’s original language, allowing existing surface transportation programs to continue through May 2015 and topping up the HTF with transfers from the General Fund equaling $9.8 billion and $1 billion from the Leaking Underground Storage Tank fund (for a total patch of $10.8 billion).  The General Fund transfer will be offset using pension smoothing and customs user fees over the 2014 to 2024 period.  Congress acted as its members counted down the hours to a five-week recess.

The passage of HR 5021 averts delays in payments from the HTF, delays that were the subject of multiple warnings from Secretary of Transportation Anthony Foxx.  The crisis drew so near that Secretary Foxx released cash management procedures to state departments of transportation in early July 2014.

It is anticipated that President Barack Obama will sign HR 5021 into law.

This short-term funding fix to the HTF is only the first transportation hurdle facing Congress.  In addition, the most recent surface transportation authorization bill (Moving Ahead for Progress in the 21st Century) expires on October 1, 2014.  Congress must act to pass a new surface transportation authorization or an extension of MAP-21 in order to extend surface transportation policy beyond that date.  Additionally, Congress will need to address the federal transportation funding mechanism (which has primarily been the federal gas tax, last raised in 1993), which currently does not raise enough revenue to cover the backlog of transportation projects.

Topics:  Department of Transportation, Highway Trust Fund, Highways, Infrastructure

Published In: Elections & Politics Updates, Finance & Banking Updates, Transportation Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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