Congress Sends Highway Bill to President — Without the LNG Tax Inequity Fix

The $10.8 billion Highway Trust Fund bill (HR 5021) passed the House and Senate on Thursday, just before lawmakers left Washington for the five-week August recess. The House passed the bill by a 272-150 vote, while the Senate voted 81-13 to send the bill to the President’s desk for his signature. The bill raises revenue from a controversial budget technique called pension smoothing as well as boosting customs fees. That money then gets directed into the Highway Trust Fund, which can no longer maintain program funding at status quo levels on the 18.4 cents-per-gallon gas tax. This is the 10th short-term extension of the program in the past half-decade.

Unfortunately, the final version of the bill did not include a provision to fix the LNG tax inequity. The original House highway funding bill did not include the provision to fix the LNG tax penalty. However, the Senate version of the bill did. When the House version was sent to the Senate, the Senate substituted its version of the Highway bill for the House version, and sent it back to the House for reconsideration. The House rejected the Senate version. The official reasons were that the House Leadership objected to the short time frame for action (the House bill would extend the funding until May. 2015 while the Senate would only go until Dec. 2014) and, as it turned out, a $2 billion funding error in the Senate version of the bill. On top this, if Congress did not act before the end of August, the Highway Trust Fund would run out of money, and Congress had planned to begin its five week August recess. So, to avoid a Highway Trust Fund shutdown, Congress needed to complete action by Friday. Therefore, the House leadership urged its members to summarily reject the Senate bill, which it did. The House then sent its original bill (without the LNG provision) back to the Senate. The Senate receded to the House, and passed the highway funding bill last night and sent it the President.

Clearly, we are disappointed that the LNG penalty was not corrected in this bill. Many Senators have publically supported the LNG tax penalty fix, and the Senate is now on record as voting overwhelmingly (79-18) for a bill that included that fix. We also have had lots of bipartisan support in the House. It appears that the next best opportunity to achieve the LNG tax penalty fix is in an tax extenders bill (in which we are also working to include an extension of the 50 cent fuel tax and infrastructure credit). While that could happen before the election, we anticipate that that bill will be brought up in the lame duck session.