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Congress OKs 11th-Hour Highway Bill

Monday, August 4, 2014

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With backs to the wall and less than three hours to act, the U.S. Congress agreed Thursday night to put a 10-month, $10.8 billion Band-Aid on the near-empty federal fund that pays for highway and bridge repairs.

President Obama is expected to sign the new Highway Trust Fund package as approved, but reluctantly.

Obama and transportation advocates from across the political spectrum have been urging lawmakers for months to develop and fund a multiyear program to protect and maintain the nation's aging infrastructure network.

Milton-Madison Bridge Project

Infrastructure advocates still want a long-term plan to support construction and repair of highways and bridges. The new Milton-Madison Bridge (pictured), connecting Kentucky and Indiana, opened in April.

Still, Thursday's action provides a death-row reprieve for the Trust Fund, which was on course to go broke this month while Congress takes its legally mandated five-week summer recess.

The U.S. Department of Transportation was already planning cuts in disbursements from the fund beginning Aug. 1. Infrastructure funding would have been cut by 28 percent at the peak of the summer construction season.

Who Blinked

The end game over the long-embattled highway bill was fractious. Agreement looked unlikely as late as Thursday (July 31) evening, after the House voted 272-150 to kill an $8.1 billion Senate proposal that would have ended the extension in December.

The Senate strategy was aimed at allowing lawmakers to defer action until after midterm elections, then pressuring them to develop a long-term package.

Not until after 9 p.m. Thursday did the Senate decide to "hold its nose," as one report put it, and accept the House proposal on a 81-13 vote rather than allow the fund to go bankrupt.

Rep. Nick Rahall Pete Ruane
Official photos

Rep. Nick Rahall (left), the top Democrat on the House Transportation Committee, said he supported the bill only to keep current construction projects going. ARTBA president Pete Ruane said the final measure offered "no reason to celebrate."

"We do not have the luxury of time to deliberate or trade further ideas," said Rep. Nick Rahall (D-WV), the top Democrat on the House Transportation Committee. Rahall said he would support the measure only to keep construction projects going.

Senate Finance Committee Chairman Ron Wyden (D-OR) said the House position amounted to "our way or no highway."

Who Pays: Pensions and Tanks

Money for the highway bill will come from three disparate sources: pension adjustments, U.S. Customs fees, and a fund for underground storage tanks.

First, the bill will allow a budget maneuver known as pension "smoothing," which allows companies to reduce their current contributions to pension funds and make up the difference later. Because pension contributions are tax deductible, companies would owe more tax in the next few years but recoup the expense when they resume contributions, as CBS News explains.

Leaking UST
Illinois EPA

The $10.8 billion highway bill will transfer $1 billion from the 1986 Leaking Underground Storage Tank (LUST) Trust Fund.

The "smoothing" provision is expected to raise $6.4 billion. Critics are concerend that if federally insured pension plans cannot meet their obligations, the taxpayer-supported Pension Benefit Guaranty Corp. will have to cover them.

About $3.5 billion will come from a one-year extension (to 2024) on U.S. Customs Service user fees, which affect goods, vehicles and people entering the U.S. According to CBS, critics call the provision "a gimmick that allows lawmakers to spend the money now and not pay it back for 10 years."

Finally, $1 billion would be transferred from the federal Leaking Underground Storage Tank (LUST) Trust Fund, established in 1986 to clean up sites contaminated by those tanks. The tank Trust Fund is financed by a 0.1 cent tax on each gallon of motor fuel sold nationwide.

What's Next

Although the highway bill quells this month's crisis, calls for a long-term solution will surely continue.

Transportation and infrastructure advocates are certain to continue their demands for stable, multiyear funding for repairing and maintaining the nation's highways and bridges.

The clock is still ticking on the current two-year budget plan, known as MAP-21, which was the first long-term highway authorization enacted since 2005. That funding will expire Oct. 1.

Highway construction

The Department of Transportation was prepared to cut 28 percent from Highway Trust Fund-supported highway and bridge projects as of Aug. 1.

The Senate introduced a six-year MAP-21 Reauthorization bill in May, but it made little progess. Nor did the Administration's four-year, $302 billion, DOT funding plan known as GROW AMERICA, which was proposed earlier this year.

'No Reason to Celebrate'

Transportation groups found the final plan better than nothing, but not much else.

“We commend the House and Senate for preserving the continuity of federal highway and transit funding to the states with a short-term revenue patch," American Road & Transportation Builders Association president and CEO Pete Ruane said in a statement.

"That, no doubt, temporarily saved many Americans their jobs.  We want to be clear, however, that we find no reason for anyone to celebrate what amounts to a last-minute first-down pass."

Ruane warned, however, that Congress should be ready to tackle the issue again well before the May deadline.

"Otherwise, we’ll no doubt see a repeat of this same process next spring, with yet another package of budget gimmicks, while the 2015 construction season hangs in the balance," he said.   

“Americans deserve better than this on a core responsibility of the federal government.”

“We commend the House and Senate for preserving the continuity of federal highway and transit funding to the states with a short-term revenue patch.  That, no doubt, temporarily saved many Americans their jobs.  We want to be clear, however, that we find no reason for anyone to celebrate what amounts to a last minute first down pass,” American Road & Transportation Builders Association (ARTBA) President & CEO Pete Ruane said in a statement. - See more at:*#sthash.wOFYO70f.dpuf


Tagged categories: Bridges; Construction; DOT; Economy; Government; Government contracts; Program/Project Management; Rehabilitation/Repair; Roads/Highways

Comment from Jim Johnson, (8/4/2014, 10:41 AM)

It should be a criminal offense for our government to lie to the US people. They highway trust fund would not be broke, it would only get in the fuel tax money, which is not a minor amount. What they would run out of is extra money over and above the fuel tax. What they are not telling you is there is joy all through the beltway over the pork projects being funded by the bill they passed. There are green energy projects,rail projects and numerous other giveaways. Had the bill funded just highways and bridges very little money would have been needed.

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