Road Builders map fuel tax, rebate plan to fund six-year, $400 billion highway bill

Sources: American Road and Transportation Builders Association (ARTBA), Washington, D.C.; CP staff

As members and their customers approach the current federal surface transportation program’s May 31 sunset, ARTBA has outlined a plan it believes could end the political impasse over how to fund Washington, D.C.’s share of state highway, bridge and transit capital projects, while seeding a $401 billion, six-year highway and mass transit capital investment program.

Getting Beyond Gridlock weds a 15 cents-per-gallon federal gas and diesel motor fuels tax increase with a 100 percent offsetting federal tax rebate for middle and lower income Americans for six years. It would likewise provide sustainable, user-based funds—at inflation-adjusted levels—to support the federal surface transportation program for at least a decade. Under the plan, a single tax filer with an adjusted gross income (AGI) of $100,000 or less would receive a $90 per year tax rebate—the average annual cost to them of a 15 cent gas tax increase. Joint filers with an AGI of $200,000 or less would receive a $180 rebate. The association’s analysis shows the rebate would completely offset the gas tax increase for 94 percent of American tax filers.

“If our national leaders think they need to use budget gimmicks or ‘one-offs’ again to pass the surface transportation investment program the states need and the business community has been pleading for, then use those devices to provide a $90 tax rebate to middle and lower income tax filers to offset the cost to them of a 15 cent per gallon increase in the federal gas tax,” ARTBA President Pete Ruane said in announcing the plan. “Don’t use them to just prop up the program for a few years. That won’t resolve the structural damage that’s been done to the Highway Trust Fund, nor will it allow states to do the long-range capital planning the nation needs.”

ARTBA has long maintained that an increase in user fees, specifically the federal motor fuels excise rate, is the most efficient way to resolve the Highway Trust Fund (HTF) cash flow problem—now about $15 billion per year—and raise revenue needed for expanded capital investments in freight mobility and traffic congestion relief over the next decade. That has also been the recommendation of two blue ribbon commissions mandated by the Congress and the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles) appointed by President Obama.

Ruane says it is up to the Senate Finance and House Ways & Means committees to figure out how to pay for the tax rebate. The association cites one possible mechanism that has been elevated over the past year in the political discussion on highway and transit funding: A one-time federal repatriation transition tax.