President's Corner

January 2018 Building Opportunities for the Next Generation

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Republicans Hint Toward Potential Compromise on Federal Road Funding

This week, House Transportation Chairman John Mica signaled that his chamber would seek an additional $100 billion in funding to fund a six-year federal transportation plan that would maintain current funding levels. The previous proposal from Mica would have slashed investments by nearly one-third from the current average of around $55 billion per year.

The Senate has discussed a two-year proposal that would extend current funding, and while that alone made the Senate plan an easy favorite compared to the previous House plan, a term of only two years makes planning for future needs far more difficult for state transportation departments.

The last federal transportation funding package expired in September of 2009, and has since been granted eight short-term extensions while the political will of Washington has been focused on healthcare and other economic priorities. These extensions are merely a Band-Aid, and critics suggest that Congress must signal its long-term commitment to infrastructure spending with a new spending plan of at least six years.

Additionally, ratings agencies have indicated that further short-term extensions could damage the credit rating on the bonds sold to fund the projects, reducing purchasing power when investment is already at critically low levels.

The American Society of Civil Engineers grades the nation’s infrastructure at a “D” and forecasts that an immediate $2.2 trillion would be needed just to catch up with the rest of the modernized world. 

Where the additional funding would come from is still uncertain. The federal motor fuel tax of just over 18 cents per gallon is not close to enough to fund this program, but Republicans and the White House have signaled that an increase is not an option. A House staffer claimed that directing future royalties on domestic oil and natural gas drilling could fill the void, but a formal plan has not yet emerged.

The most recent extension will fund transportation through early 2012, so it is hoped that real progress toward a long term extension will come in the next several months.



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