What you need to know about the Long-Term Highway Bill(s)

Jim Berge

By Jim Berge Business Development at King Solutions

semi truckFederal transportation funding is expiring. In fact, it should have already expired. The original cutoff date for highway and infrastructure was October 29. However, after a desperate scramble on both sides of the party lines, an extension was given until November 20 so that the federal government can hopefully figure out a more long-term solution.

The good news is this means states won’t lose the federal funding their infrastructure systems rely on. The bad news is this has been going on for a while. Federal highway, bridge, and railway funding has revolved around short-term solutions for years. In fact, it’s been 10 years since congress passed a transportation bill that’s lasted longer than two years, which makes it difficult for states to plan bigger projects.

The recent trend, it seems, has been to prolong any decision process altogether. This is the 35th extension placed on the current funding program. Though it’s currently set to expire on November 20, many believe it’ll inevitably be pushed till the new year.

Why such a delay? Part of the reason is because a drastic overhaul of the U.S.’s infrastructure is needed. And while senators and congressmen on both sides seem to agree that action is needed, it seems they are reluctant to commit a policy that will do it.

The American Society of Civil Engineers says about $106 billion a year is needed for 10 years to upgrade the nation’s highways and bridges to where they need to be. Currently, the federal government gives about half of that.

Plans that didn’t make the cut
Different ideas have been proposed to fix the budgeting issues. One of the more recent ones was the DRIVE Act which was a six year plan designed to commit the federal government to infrastructure updates. However, this funding would have only covered the first three years of projects, while the remaining three year was unknown.

Currently, gasoline tax goes towards infrastructure as an addition to the federal funding. Some transportation advocates have proposed raising taxes on gasoline, however opposition to that is fairly strong.

What’s currently being proposed?
The house is working on a bipartisan bill that would cost upwards of $325 billion for transportation projects over the next 6 years. However, much like the DRIVE act, this funding would only cover the first three years or so.

The senate has a similar bill they just passed that would cover three years and give the senators until 2018 to figure out how to cover the remaining three years.

Where will this remaining money come from? As we mentioned in a previous post about the U.S. infrastructure, the presidential administration proposed a bill that would place a 14% tax on the $2+ trillion that American corporations have overseas. In exchange, these corporations would be allowed to bring their funds to American holdings.

A lot of projects are in the works, but with November 20 coming quickly, it’s hard to see any of these bills going through by then.

What will happen?
Currently, it seems uncertain what bill (if any) will eventually pass through and become law, but it seems like change is on the horizon. One thing is certain: the U.S. infrastructure is in need, and the federal government is needed to fix it up.

A poll by AAA shows that 70% of U.S. residents believe the government should invest more in their infrastructure. Currently, the U.S. ranks 28th in the world for infrastructure spending.

If a major long-term highway bill passes, that ranking would certainly change, and more importantly, our roads would receive the upgrade they need.

Want to know more about how the state of the U.S. infrastructure affects your supply chain? Can you implement a logistics strategy to mitigate the risk? Contact us today to learn more.