WASHINGTON — The trade group that represents state departments of transportation has told Congressional leaders they should use tax reform “to address the nation's transportation investment crisis,” but instead have proposed bills that not only miss the opportunity but would make it "nearly impossible" to later fund a major infrastructure package.
The American Association of State Highway and Transportation Officials, in separate letters to House and Senate leaders, emphasized “the need to address the nation's transportation investment crisis through tax reform, and we ask you to carefully reconsider taking steps that impede the ability to do so.”
AASHTO said that “the most significant tax reform effort in 31 years . . . is the prime opportunity to address the looming solvency crisis facing the federal Highway Trust Fund (HTF), which provides much-needed transportation investments across the country.”
But neither the House nor Senate bills include any tax provisions to increase the HTF's dedicated revenue stream.
In a November 14 letter to Senate leaders AASHTO said: "We are extremely disappointed that it appears, once again, that Congress will not address this funding crisis."
In fact, unless Congress shores up the trust fund before its current five-year authorization law expires in 2020, AASHTO said federal highway spending would shrink by 40 percent in 2021 while new HTF transit funding would dry up completely for three years.
“Addressing the HTF funding crisis is AASHTO's highest priority in any tax reform legislation, and we view it as a missed opportunity to leave this out of the current Senate tax reform measure,” the letter said.
The association also said that only major tax legislation offers the vehicle to come up with funds for the big infrastructure investment program President Trump has promised.
Administration and congressional officials have said they plan to introduce an infrastructure plan after they pass tax reform, and are waiting to say how they would pay for it.
AASHTO indicated that course is not likely to succeed. “We need to be honest with the American people," the association said. “Failure to find the revenue for an infrastructure initiative now, as part of tax reform, will make passage of such a package nearly impossible in the future.”
The association also said it has “serious concerns” with the Senate bill's provision that would stop states and other government agencies from refinancing their debt to cut interest costs. Communities and states often use advance debt refunding to lower their debt service costs and plow the savings into other transportation projects.
In a November 9 letter to House leaders, AASHTO made similar points about the trust fund and setting aside revenue to pay for an additional infrastructure package. And it said the tax bill in that chamber would hurt the use of several types of bonds used to finance transportation projects.
As previously reported, the House bill would end tax-exempt private activity bonds that investors have used for toll roads, intermodal freight terminals, passenger train facilities and transit projects. The bill would also prohibit advance bond refunding and eliminate tax-credit bonds.
“Rather than making project financing more difficult, Congress should instead encourage the leveraging of scarce resources wherever appropriate,” AASHTO said.