March 16, 2010

Oberstar proposes federal loan to fill highway funding gaps

Chairman of House Transportation and Infrastructure Committee floats plan for $130 billion loan from general treasury to cover highway trust fund budget shortfall.

By Mark B. Solomon

The chairman of the House Transportation and Infrastructure Committee has proposed Congress authorize a four-year $130 billion transfer of funds from the general treasury to the Highway Trust Fund as a way to cover the projected shortfall in funding for the nation's infrastructure projects.

Speaking at a transportation and infrastructure conference late last week in Washington, Rep. James L. Oberstar (D-Minn.) floated the idea of a loan from general obligations to the trust fund. The fund would not have to repay the loan for four years, but would begin full principal and interest repayments in the fifth year, he said.

Oberstar offered no specifics other than saying the concept had been brought to his attention a couple of years ago by the American Association of State Highway and Transportation Officials (AASHTO). Oberstar was initially lukewarm about the proposal but warmed to the idea as he gave it further thought, he told the gathering.

The proposal is one of several mechanisms designed to move the country toward a multiyear reauthorization of the highway program while at the same time addressing the reality of funding the budget shortfalls. Fuel excise taxes, which support the trust fund, are expected to bring in about $325 billion, leaving the $125 billion to $130 billion gap that the Oberstar proposal might fill.

"There is no simple answer to funding the shortfall, but the fact that he floated the idea at a public gathering indicates that this solution shows a lot of promise," said Jim Berard, spokesman for the committee. An AASHTO spokesman did not return a request for comment.

Key players like Oberstar, the American Trucking Associations, and the shipper group the National Industrial Transportation League support an increase in federal motor and diesel fuel taxes to fund infrastructure improvements. Fuel taxes haven't been raised since 1993. However, the White House opposes such an action on grounds that it is a regressive levy that could do damage to a still-fragile economy.

Oberstar is seeking a six-year reauthorization schedule totaling $500 billion, $450 billion of which would be funded through the trust fund. The Obama administration wants only an 18-month reauthorization schedule.

Since September, the highway program has been operating on a series of short-term continuing resolutions. The current extension is set to expire on March 28. It is expected that Congress will eventually extend the program to the end of the calendar year.

About the Author

Mark B. Solomon
Senior Editor
Mark Solomon has spent 25 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. Mr. Solomon graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

More articles by Mark B. Solomon

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