July 14, 2015

At 7:43 p.m. last night, House leaders introduced a new bill extending Highway Trust Fund programs – the “Highway and Transportation Funding Act of 2015, Part II” – and placed it on the House calendar for consideration later this week. The bill is H.R. 3038.

The chairmen of the House Ways and Means Committee and the House Transportation and Infrastructure Committee issued a joint statement saying that “This country needs a long-term plan to fix our roads, bridges, and other infrastructure, and this bill gives us our best shot at completing one this year. By providing resources through the end of the year, we can ensure construction continues while we work toward a package that could close the trust fund’s shortfall for as many as six years. We urge all members who want some long-sought stability in our highway and transit programs to support this critical extension.”

Title I of H.R. 3038 would extend all Highway Trust Fund programs and contract authority through the end of fiscal 2015 at the MAP-21 FY 2014 levels and would then provide a pro-rated amount at those levels enough to get those programs through December 18, 2015 (79/366ths of an the annualized total because 2016 is a leap year). Section 2001 of the bill would also extend HTF expenditure authority in 26 U.S.C. 9503 from midnight on July 31, 2015 to midnight on December 18 (which is a Friday).

In order to keep the HTF solvent over that time period, section 2002 of H.R. 3038 would transfer $8.07 billion from the general fund of the Treasury to the HTF, effective immediately – $6.07 billion to the Highway Account and $2.00 billion to the Mass Transit Account. The bill also contains provisions designed to offset that $8.07 billion over a ten-year period.

$4.91 billion of the GF to HTF transfer would be offset by a variety of revenue-raising changes in the Ways and Means Committee’s jurisdiction:

• A requirement that mortgage information reporting include origination date and principal (sec. 2003) – $1.806 billion;
• A clarification of the 6-year statute of limitation on overstatement of basis (sec. 2005) – $1.206 billion;
• Consistent basis reporting in certain estate transactions (sec. 2004) – $1.542 billion;
• Changes in the due dates for tax filing for partnerships, S corporations and C corporations (sec. 2006) – $314 million; and
• A modification of rules about transferring excess pension assets to retiree health accounts and for life insurance benefit purchases (sec. 2007) – $172 million.

$3.16 billion of the GF to HTF transfer would be offset by extending the aviation security fee increase from section 601 of the 2013 Ryan-Murray law (which went to general fund deficit reduction under Ryan-Murray instead of towards offsetting TSA expenses) for two more years – FY 2024 and 2025 – in section 3001 of the House bill. The Ryan-Murray law increased the aviation security passenger fee on one-way tickets – the fee levied on one-way passengers who changed planes at a hub went from $5.00 to $5.60, but the fee charged on one-way nonstop trips went from $2.50 to $5.60. That fee increase was originally estimated to gross $12.6 billion in savings over ten years, but the legislation also gave back $3.8 billion by lowering security fees charged directly to airlines, for a net “pay-for” of $8.9 billion towards the discretionary spending cap increase in the Ryan-Murray law.

(Ed. Note: It is worth pointing out that if things like the two-year extension of the Ryan-Murray aviation security fees and the innocuous Ways and Means compliance revenue provisions are signed into law in the next few months to pay for HTF solvency – whether in the five-month House bill or in a longer Senate bill – those pay-fors won’t be around later in the year to pay for the increase in the Budget Control Act’s spending caps sought by the White House, Senate Democrats and appropriators in general – a deal modeled after the original Ryan-Murray package.)

There is one Ways and Means provision in H.R. 3038 that costs money rather than raises revenue, and it directly pertains to HTF revenue. Section 2008 which would change the method in which HTF taxes are levied on propane gas and liquefied natural gas when being used as highway fuels – at present, propane and LNG are taxes per gallon but compressed natural gas is taxes on a Btu energy equivalent basis. Section 2008 of the House bill switches the tax scheme for propane and LNG to a Btu energy equivalent basis, which will cost the Treasury an estimated $90 million.

The deficit-increasing and deficit-reducing parts of H.R. 3038 line up like this:

A Ways and Means Committee summary of the “pay-fors” is here.

Senate Majority Leader Mitch McConnell (R-KY) is expected to discuss his proposed list of “pay-fors” for the much larger and longer Senate HTF bill at the regular GOP policy luncheon on Tuesday. If that strategy gets general agreement from the Senate GOP, McConnell could move to proceed to a bill to use as a legislative vehicle by the end of this week.

The sudden release of the House bill – without any committee markup in Ways and Means or Transportation and Infrastructure – may suggest that House leaders are trying to preempt the Senate by putting their proposal on the table first.