Bloomberg News

Transit Tax Switch to Roads Passed by U.S. House Panel

February 09, 2012

(Updates with vote on reinstating Build America Bonds in seventh paragraph.)

Feb. 3 (Bloomberg) -- A U.S. House committee voted to stop letting gasoline-tax revenue be used for mass-transit projects, over opposition from groups including the U.S. Chamber of Commerce and the International Brotherhood of Teamsters.

The Ways and Means Committee today voted 20-17 for a proposal to stop devoting 2.86 cents of the 18.4-cent gasoline tax paid by U.S. motorists to public transportation. The money would instead go toward keeping a U.S. account for road and bridge construction solvent.

The bill also would finance highway and bridge construction with revenue from expanded oil and natural-gas drilling on government land and offshore. The committee, before approving the bill, rejected an attempt by Democrats to strike the gasoline-tax provision.

“This is a dead end; this can’t pass” the Republican- controlled House, said Representative Sander Levin of Michigan, the panel’s ranking Democrat.

Fuel-tax revenue has been critical for building bus, metro and light-rail systems, said the American Public Transportation Association and Transportation for America, which advocates for alternatives to driving. Removing that funding and replacing it with a one-time $40 billion sum would make it impossible for the U.S. Federal Transit Administration to honor grant agreements, the two Washington-based groups said in a letter signed by more than 500 organizations.

Record Ridership

“With record transit ridership, now is not the time to eliminate guaranteed funding for our nation’s public transportation systems,” groups including the Chamber, the National Association of Realtors and the American Society of Civil Engineers said in the letter to the committee.

The committee rejected an attempt to reinstate Build America Bonds for five years. The bond program, created in President Barack Obama’s 2009 stimulus plan, let municipalities to go straight to investment banks to raise revenue for local transportation projects with the U.S. government paying 35 percent of the interest for up to 30 years.

The committee proposes transferring $40 billion from the U.S. Treasury’s general fund to a new “alternative transportation account” to pay for transit improvements and projects that help reduce air pollution and road congestion.

State Transportation Agencies

Reserving almost all gas-tax revenue for highway and bridge projects would cost transit agencies about $25 billion over five years, said Mantill Williams, a spokesman for the American Public Transportation Association.

The U.S. government accounted for 19 percent of transit funding in 2010, according to the FTA’s National Transit Database.

The American Association of State Highway and Transportation Officials, which represents 50 state transportation departments, said in a letter it “strongly” opposes the committee plan.

The Ways and Means committee is responsible for setting the revenue levels for the five-year highway and transit bill considered by the House Transportation and Infrastructure Committee yesterday.

Without additional income, the Highway Trust Fund may be insolvent as soon as October, the Congressional Budget Office predicted this week.

The $260 billion, five-year transportation bill must be reconciled with a Senate committee’s $109 billion two-year bill before any of the provisions can take effect.

The Ways and Means committee bill is H.R. 3864. The House transportation committee bill is H.R. 7. The bill to renew Build America Bonds is H.R. 992

--With assistance from Carol Wolf, Jeff Plungis and James Rowley in Washington. Editors: Andrea Snyder, Michael Shepard

To contact the reporter on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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