July 13, 2018

The infrastructure legislation that House Transportation and Infrastructure chairman Bill Shuster (R-PA) has quietly been working on for weeks could be unveiled by the end of this month.

And it is possible – though not yet guaranteed – that the bill will be bipartisan. Ranking member Peter DeFazio (D-OR) was invited to contribute proposals from his side of the aisle for possible inclusion in the legislation (such proposals were supposed to be submitted by Shuster’s staff this week).

But the T&I bill is not expected to have much in common with President Trump’s infrastructure initiative, at least not in terms of the broad strokes. The Trump plan proposed to spend $200 billion in money from the general fund to leverage another $800 billion, or more, in non-federal funding. But the Trump plan was silent on the future of the Highway Trust Fund, which will need about $20 billion per year in additional taxes or other financial resources – forever – after 2020 in order to continue paying current commitments and future commitments at the current spending levels.

The T&I plan is expected to take the opposite approach. Instead of leading with new programs and ignoring the solvency of the existing Highway Trust Fund programs, Shuster’s bill will make continued Trust Fund solvency its top priority.

This is also why the Shuster bill is not expected to go anywhere, at least before the fall elections. Because under federal budget rules, trust funds can only be supported by taxes. Taxes are in the jurisdiction of the Ways and Means Committee, which has not expressed any interest in getting involved in a tax increase in an election year. Trust funds, as well, are also Ways and Means jurisdiction, since they are written into the Internal Revenue Code and are places where tax receipts are deposited.

In terms of raising money, the T&I Committee does have jurisdiction over hypothetical user fees on transportation – real user fees as defined by the Supreme Court in the U.S. Shoe decision, not excise taxes. But since the beneficiaries of most federal surface transportation programs are state and local governments, not private entities, real user fees would be difficult to levy in many cases. And real user fees are recorded in the federal budget as negative spending, not as receipts, so they can’t be deposited in a trust fund account.

Any effort to reform the Highway Trust Fund revenue situation would also have to deal with the question of cost allocation. Trust funds are based on the user-pay, user-benefit model, so in theory, the taxes levied to support a trust fund should hit classes of users in the ratio that the programs benefit those users. This was the case the last time Highway Trust Fund taxes were raised for the Trust Fund, in 1982,  the Transportation Department had just released an authoritative cost allocation study, and the blend of new taxes in the highway bill was designed to that address the imbalance between single-unit trucks drastically overpaying and heavy tractor-trailers drastically underpaying for the wear and tear they put on roads.

(The problem is, there hasn’t been an authoritative highway cost allocation study done since the 1997 study, and that was based on 1993-1995 data. That study found that pickup trucks and vans, and commercial vehicles under 25,000 pounds, significantly overpaid taxes into the Trust Fund versus their percentage of wear-and-tear they put on the roads, and that the heaviest tractor-trailers significantly underpaid. So the trucking industry, naturally, has fought against having DOT perform any more cost allocation studies in the 21st Century.)

However, even though the Shuster bill is expected to deal with the revenue side of the Highway Trust Fund, it is not expected to deal with the spending side. There has long been a realization in Congress that the FAST Act of 2015, which sets spending levels and policies for Highway Trust Fund programs through the end of 2020, was the result of many different deals and negotiations. If Congress decides to pull one thread by changing something agreed to in the FAST Act, the whole thing may unravel. So mid-course corrections to the FAST Act are not likely to be included in the legislation.

The legislation is expected to have an extensive selection of new infrastructure policy proposals that do not involve re-opening deals that were agreed to in the FAST Act. However, with aviation and water resources legislation pending in House-Senate negotiations later this year, it is not certain what provisions in those fields of infrastructure might be included in Shuster’s legislation. (The water bill in particular had been viewed as a logical vehicle for some of the permitting reforms proposed by the Trump Administration, since Clean Water Act permits are required for so many projects. But Shuster and DeFazio agreed to keep Clean Water Act issues out of the water resources bill in order to keep it bipartisan, and since Shuster wants DeFazio on board with the new infrastructure bill if possible, it is unclear how much permitting reform could be included in the new bill.)

Shuster is retiring at the end of this Congress, and the odds are against any overall infrastructure package becoming law this year. But the legislation is expected to serve as a legacy item for Shuster and as a possible starting point for discussions of infrastructure legislation early next year.