July 31 transportation funding deadline looming

CEDAR RAPIDS — The U.S. Senate has voted to take up a highway funding bill, but unless it acts before the end of the month, state and local transportation construction projects in Iowa could be jeopardized.

The House has approved extending highway funding, set to expire July 31, until Dec. 18.

However, the Senate prefers a six-year highway bill with three years of funding. It may vote Sunday on amendments, including reauthorization of the Export-Import Bank and the repeal of the Affordable Care Act, and take up, what Senate Majority Leader Mitch McConnell called 'the hard work to pass a bipartisan, fiscally responsible, multiyear highway measure that doesn't raise taxes or increase the deficit.'

A long-term, predictable highway funding stream would be preferable, but Dan Franklin of the Iowa Department of Transportation said Friday he would settle for a short-term extension because 'the main thing is we want Congress to ensure that the current construction season is not disrupted.'

About half of the Iowa DOT annual construction budget is paid for with federal funds, according to Franklin, the director of the DOT's Office of Policy and Legislative Services. That amounts to about $328 million for the state this year and another $150 million for cities and counties.

If Congress doesn't act before the end of the month, the federal funds would not run out until closer to September, Franklin said, but federal transportation agencies wouldn't be able to ensure reimbursement to state and local governments. If there is no extension, he added, the state and local governments would likely delay future projects.

Staffers in the offices of Republican Sen. Chuck Grassley and Joni Ernst said the Sunday vote likely will be on a short-term extension to give the House and Senate time to agree on a long-term approach.

Grassley and Ernst favor a long-term extension of highway funding, but not if it involves raising the 18.4-cent a gallon federal motor fuel tax.

'That simply is not part of the discussion,' Ernst said Thursday.

Grassley seconded that viewpoint earlier in the week when he's hoping the Senate will approve a highway funding bill, 'but I'm very much in favor of finding a non-gas tax way of financing it.'

In order to do that, Congress is looking at a variety of options to offset the cost. They include tightening compliance with current tax laws, changing government fee structures, selling assets, indexing customs user fees to inflation and cutting some spending.

Ernst and Grassley are, for the most part, supportive of these 'pay-fors.'

Over in the House, 1st District Republican Rep. Rod Blum said he doesn't like the 'smoke and mirrors' approach to replenishing the Highway Trust Fund.

'Campaigning in Eastern Iowa, whether it's a highway and heavy construction contractor or a city planner or a county planner or county board, they say 'We need to be able to plan. We need longer-term bill legislation,'' he said.

As a businessman, he said, 'I understand this short-term, kick-the-can-down-the-roads stuff is bad.'

Blum, a member of the House Budget Committee, objected to increasing taxes years from now to pay near-term transportation costs.

'Roads are important to our economy, so I'm all for having really good infrastructure,' he said. 'But let's pay for it, not use accounting gimmicks like increasing taxes on homeowners though mortgages fees and increasing TSA fees on airline travelers.

'That's just smoke-and-mirrors accounting,' Blum said.

Franklin isn't endorsing any of the funding plans, but said most state transportation officials, and the transportation industry in general, have embraced fuel taxes as a reliable funding source. He estimated fuel taxes account yield about 90 percent of the Highway Trust Fund revenue.

'Most people really like the benefit of a user-pay concept,' he said. 'The best measurement for the user is the use of the gas tax. That's why it's sustained federal program for over 50 years as well as most state programs.'

He acknowledged that fuel taxes may not pay the bill in the future because Americans are driving less and choosing more fuel-efficient vehicles.

'Revenue continues to go up, just not as fast,' he said.