Federal highway funds running out: California projects could be frozen this summer

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Freeway and bridge repairs in California could come to a grinding halt this summer when the Highway Trust Fund runs out of money.  There’s little agreement on Capitol Hill about how to pick up the slack for a shrinking gas tax.

Democratic Senator Barbara Boxer, head of the Environment and Public Works Committee, blames the popularity of fuel efficient vehicles for a shrinking pool of gasoline taxes to pay for infrastructure. "If we do not come up with additional revenues," she said, "for the first time in our nation’s history, we will not be able to fund any new projects." California relies on federal dollars for about half of its highway and transit projects.

Boxer was joined by representatives of concrete and gravel associations and construction unions who argue that highway construction projects mean jobs. They claim their industry is just recovering from the recession, when unemployment hit 27%. Janet Kavinoky, a lobbyist for the U.S. Chamber of Commerce said, "We really believe that there are certain things that government bears some responsibility for and that you actually have to pay for those things."

The gasoline tax hasn't been raised in nearly two decades. It was a toxic issue back then and even more so in a deeply divided Congress facing tough mid-term elections.

On Thursday, the Senate Finance Committee will consider a temporary proposal by Oregon Democrat Ron Wyden to come up with enough money to fund highway construction through the end of the year. It would raise taxes on heavy trucks and require those who inherit 401(k) retirement accounts to take the money out sooner, making the money taxable sooner. 

Boxer said that's a "patch that can get us through the construction season" and then a lame-duck Congress can tackle long-term funding after the November elections.

Both proposals face House GOP opposition. House Majority Leader Kevin McCarthy says raising the gas tax is a non-starter and suggests a new funding source: open up federal lands for oil and gas exploration. 

Senator Boxer said she would support a variety of different funding proposals, including a gradual increase in the gas tax or tracking vehicle miles traveled or moving the tax "upstream" replacing the gas tax with collection at the refinery level. 

Others were less diplomatic. Pete Ruane, head of the American Road and Transportation Builders Association, had a message for members of Congress unwilling to consider any increase in taxes: "Here's what I say: get  out of your stone-age cave and join the real world and what's going on with this economy!"

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