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AASHTO Journal

Transit Group: Tax Proposal a ‘Missed Opportunity’ to Fix Highway Trust Fund

The group representing U.S. public transit agencies said the House Ways and Means Committee's new tax reform plan is a "missed opportunity" to include measures that could put the Highway Trust Fund on a sustainable financial footing.

Richard White, acting CEO of the American Public Transportation Association, said in a Nov. 3 statement that the plan offered by House majority Republicans "fails to address key priorities of the public transportation industry."

The trust fund provides funding both for federal formula-based transit program distributions and for federal highway programs. In addition, state departments of transportation often either directly manage, help fund or interact with transit agencies in planning projects.

Various transportation groups – including the American Association of State Highway and Transportation Officials as well as APTA – have consistently urged Congress to take action as part of any tax plan to close a large gap between the trust fund's current dedicated excise tax receipts and the much larger amounts Congress authorizes the fund to pay out. Lawmakers have been periodically using general fund receipts to close the gap.

construction6-inside.jpgWhen a five-year surface transportation funding law expires in 2020, the nation's largest infrastructure investment account will face a major funding gap unless Congress finds a way to bolster it before then, and the tax bill offers a rare opportunity to raise new transportation revenues when lawmakers are already considering many changes to the tax code.

White noted that more than 250 House members already support taking action to fix the Highway Trust Fund, and said "the opportunity to address the long-term solvency of the HTF as part of a comprehensive tax reform is a glaring omission. This is a missed opportunity to do something meaningful and immediate to address our long-term transportation infrastructure challenges."

He added: "A predictable, long-term federal commitment to surface transportation investment is essential to the nation's economic growth and international competitiveness. With funding for the HTF running out in 2020, now is the time to move forward. This tax bill represents the best and most realistic opportunity to accomplish this goal."

APTA was not the only group to mention funding infrastructure as part of the tax plan.

Stephen Sandherr, CEO of the Associated General Contractors of America, said in a statement that the AGC will "continue to work with members of Congress to advocate for the inclusion of new infrastructure funding as part of the final tax reform measure. Tax reform provides an excellent opportunity for the president to deliver on his promise of rebuilding America's aging and over-burdened infrastructure."

And the American Road & Transportation Builders Association said it and some allied groups would also "keep pushing for a Highway Trust Fund solution as the tax reform process goes forward."

The trust fund was one of several tax measures APTA's White hoped lawmakers would address. "I urge Congress to use this once-in-a-generation opportunity to reform the tax code to encourage greater investment in our nation's infrastructure, not discourage it," he said.

White said APTA and its member agencies around the country were grateful that the plan would "maintain the tax-exempt status of municipal bonds, which is a vital financing tool for state and local government-sponsored public works projects." But, he said, "APTA is also disappointed" that the Ways and Mean bill would end the use of private activity bonds, "which are an important infrastructure financing mechanism."

As Congress and the Trump administration develop their promised infrastructure plan, White added, "preemptively removing PABs as a financing tool for infrastructure projects would undermine Congress' stated goal of leveraging a $1 trillion investment in our nation's infrastructure. Instead, this provision would have a chilling effect on private-sector investments in infrastructure projects."

The bill would also end employers' tax deduction for transportation fringe benefits, even though it would retain a pretax payroll deduction option for transit and parking costs. White said that "removing the option for employers to deduct the cost of those benefits could be a disincentive for employers to offer this critical benefit that helps defray costs for working families."

APTA also asked Congress to "renew and permanently extend the federal tax credits for alternative fuels and related infrastructure" that expired Dec. 31, 2016. A number of transit agencies have been investing in buses powered by natural gas or other fuels other than traditional diesel units.

White said a permanent extension of the former tax credits would "provide certainty for the small, medium- and large-sized public transit agencies that serve our nation's communities. Failure to renew these credits will discourage future investment in compressed natural gas or liquefied natural gas fleets. APTA also supports the inclusion of electric and hybrid electric vehicles within the eligible uses of this tax credit."

11/9/2017
Questions regarding this article may be directed to editor@aashtojournal.org.