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Senate Committee Approves $304B Highway Bill

Monday, June 7, 2021

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Last Wednesday (May 26), the U.S. Senate Environment and Public Works Committee unanimously voted in favor of a five-year, $303.5 billion highway bill.

The vote has been touted as a rare case of congressional bipartisanship as the White House and Senate negotiators continue its efforts to land on a new, broader multi-sector infrastructure package.

Republican Shelley Moore Capito (West Virginia)—who also is the GOP’s lead negotiator in the White House talks—foresees the new bill as an anchor in the ongoing discusses and could become part of the more in-depth infrastructure efforts.

Highway Legislation

According to reports, the last highway legislation to be passed was the Fixing America’s Surface Transportation (FAST) Act, which former President Barrack Obama signed in 2015. Differing from the FAST Act, the latest legislation represents an increase of roughly 34% in additional funding and is noted to be the largest component of a surface transportation package.

levkr / Getty Images

Last Wednesday (May 26), the U.S. Senate Environment and Public Works Committee was reported to have unanimously voted in favor of a five-year, $303.5-billion highway bill.

Major points in the legislation as it continues to be developed are the $18 billion its outlined for climate emission reduction in the transportation sector. The allotted funding includes $2.5 billion to construct charging stations for electric vehicles and fueling stations for hydrogen cell-powered vehicles as well.

In addition, the bill is also projected to provide $500 million to rehabilitate and retrofit infrastructure to better withstand the weather effects of climate change, such as more powerful hurricanes and increased wildfires, among others.

Like the popular INFRA grant program (formerly TIGER grants), the bill outlines a $2 billion Rural Surface Transportation Grant program, which plan to be awarded via competitions among the states and other applicants and creates a separate discretionary grant program for bridges.

Committee Chairman Tom Carper (D-Delaware) has also reported that the legislation will address transportation “inequity,” or in his terms, past transportation projects "that have divided and harmed too many neighborhoods across our nation.”

“We know that past investments in transportation programs have left far too many Americans, especially those in communities of color, behind.”

Because of this, Capito pointed out that 90% of the highway bill’s funding plans to be distributed via formula to the states and that additional provisions plan to speed federal regulatory approvals for transportation projects. That provision will give states “the flexibility and the certainty necessary to get those projects,” she said, but it also codifies the “One Federal Decision” initiative created in a 2017 executive order signed by former President Donald Trump.

On the provision, Linda Bauer Darr, American Council of Engineering Companies' President and CEO, said that One Final Decision “is crucial for engineering firms conducting environmental reviews, advising on mitigation measures and acting as trusted advisors for clients navigating federal and state regulatory requirements.”

However, state representatives are still ironing out sections associated with transit and highway safety. The Banking, Commerce and Finance committees are also reported to be working on revenue aspects for the legislation as well. Banking Committee Chairman Sherrod Brown (D-Ohio) is currently working with Republican Patrick Toomey (Pennsylvania) on those efforts, specifically.

Additional efforts from the House will also be required prior to the bill’s passing. Legislators will have to act quickly though, as the existing FAST Act extension is slated to lapse by Sept. 30.

“I’ll be marking up my own bill in the coming weeks that will make transformational investments to move our infrastructure out of the 1950s and into the modern era in a way that creates jobs, restores America’s global competitiveness, and reduces pollution from the transportation sector,” said House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Oregon) in a statement.

“We still have plenty of work to do but one hell of a lot of work has been done,” concluded Carper.

Targeting Infrastructure

At the end of March, President Joe Biden released the “American Jobs Plan,” a $2 trillion spending proposal that aims to invest in the nation by creating millions of good jobs, rebuilding the country’s infrastructure, and positioning the United States to out-compete China.

Priced at $2.25 trillion and working in tangent with Biden’s coronavirus relief package, the initiative intends to give the federal government a bigger role in the U.S. economy, accounting for 20% or more of annual output. As for how the plan will be paid for, a senior administration official reported that the plan will increase the corporate tax rate to 28% from 21% and change the tax code to close loopholes that allow companies to move profits overseas.

Although, the plan does not include expected increases in the top marginal tax rate or to the capital gains tax and instead, would spread the cost for projects over an eight-year period and aims to pay for it all over 15 years.

Looking at specific investments, the plan allots $621 billion to rebuild the nation’s infrastructure; $689 billion for buildings and utilities; and $500 billion for worker training, research and development and domestic manufacturing initiatives. To further break things down on the transportation front, the proposal includes:

  • $174 billion for electric vehicle incentives;
  • $115 billion for roads and bridges;
  • $85 billion for public transit;
  • $80 billion for passenger and freight rail;
  • $50 billion in disaster resilience of infrastructure;
  • $25 billion for airports;
  • $20 billion to improve road safety;
  • $20 billion to mitigate infrastructure impact on underserved communities; and
  • $17 billion for waterways and ports.

Other notable initiatives for buildings and utilities include:

  • $100 billion for electric grid and clean energy;
  • $66 billion for water systems; and
  • $45 billion to eliminate lead pipes.

According to an article published by The Hill, Biden hopes the package is passed by Congress by this summer. White House Press Secretary Jen Psaki noted that the longer timeline could allow for more negotiations with congressional Republicans and Democrats as it doesn’t require the same type of urgency as the prior relief plan.

If bipartisan support is not achieved, the White House has not ruled out using budget reconciliation to get the bill through Congress without any GOP votes.

More recent efforts include Biden’s announcement to build up the Internal Revenue Service so that the association can more aggressively collect unpaid taxes throughout the nation to achieve funding for the multimillion-dollar infrastructure plan.

The potential solution for government funding comes as Republicans refuse to raise taxes on corporations and Democrats refuse to raise taxes for people making less than $400,000 annually.

In an estimate by the White House, should the IRS receive more resources, the increased collection of taxes and audits of businesses, estates and the wealthy could raise $700 billion in over 10 years.

The IRS reports that those making annual incomes of $25,000 or less are audited at a rate of 0.69%, while those making incomes up to $500,000 are audited at 0.53%. In 2019, the audit rate for millionaires plunged from 8.4% in 2010 to 2.4%. Despite the numbers, the IRS denies the notion of unfair audit treatment.

Previously, the IRS has estimated that the tax gap is somewhere around $440 billion per year, however, in a recent Senate hearing IRS Commissioner Charles Rettig reported that that number was much higher: roughly $1 trillion annually. Rettig attributed this increase to the recent boom in income made by self-employed “gig” workers, in which income made by this type of work could be underreported, in addition to concealed offshore income and increased use of cryptocurrency.

All factors are reported to be difficult for the IRS to identify third-party transactions.

While many seem to be in favor of the proposed collection of infrastructure funding and some speculating the plan, another issue looms for the IRS in particular. According to reports, funding for the IRS has been cut 20% since 2010. To mediate this issue and increase the push for tax collection, Biden has since outlined an extra $80 billion over 10 years to bolster IRS audits.

However, in appropriating the funding for the IRS to conduct these audits of upper-income individuals and corporations, the Penn Wharton Budget Model—a research organization associated with the University of Pennsylvania—predicts that only $480 billion would be brought in from 2022-31.

While the proposal is debated, other experts are claiming that if approved, the use of the IRS would be necessary to further narrow the tax gap.

   

Tagged categories: Bridges; Bridges; Funding; Government; Mass transit; NA; North America; Program/Project Management; Project Management; Public Transit; Rail; Roads/Highways

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