Road fund solvent despite gas tax concerns: LaHood

Reuters Business News
Posted: Mar 10, 2011 12:39 PM
Road fund solvent despite gas tax concerns: LaHood

WASHINGTON (Reuters) - A multibillion-dollar highway and transit construction fund is healthy enough to support current and future projects despite its dependence on gas tax revenue, the transport secretary said.

Senators this week expressed concern to transport chief Ray LaHood over the impact rising gas prices, now at an average $3.50 per gallon, could have on the trust fund that was bailed out in 2008 after it nearly ran dry.

La Hood told a senate hearing on Thursday the Highway Trust Fund should remain solvent through September 2012. He did not envision the need for another bailout.

Gas tax revenues were under pressure before the recent spike in gas prices due to less driving by motorists in a difficult economy and more fuel efficient vehicles.

Gas tax receipts recovered following the recession but analysts expect them to fall again.

There is broad agreement in Congress the trust fund is inadequate to support the Obama administration's proposal to spend $556 billion over six years on road and bridge repair, transit and high speed rail.

LaHood, testifying before the Appropriations Committee, again ruled out any increase in the 18.4-cent per gallon federal gas tax or establishing motorist tax on vehicle miles traveled to boost funding for construction programs.

He cited high unemployment and rising pump prices for the administration's anti-tax position.

LaHood in hearings this week backed a handful of funding approaches -- like a creation of an infrastructure bank and the revival of popular bond finance and grant programs -- but offered little on other possible approaches.

"We want to work with Congress on a path forward," he said on Thursday.

But Patty Murray, chair of the appropriations transportation panel in the Democratic-led Senate, grew impatient and sharply told LaHood that "we need more than grand ideas" to fund infrastructure investment.

"Unfortunately, this budget proposal does not offer us real solutions for the challenges we face today," Murray said.

(Reporting by John Crawley; editing by James Dalgleish and Andrew Hay)