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As Congress fights over highway funding, roads feel pinch

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35E construction
Construction on Interstate 35E in St. Paul, Minn. Thursday, July 10, 2014.
Jeffrey Thompson/MPR News

This is a story about LUST in Washington.

Not that kind. This is about the Leaking Underground Storage Tank fund, which is not sexy at all but still has many politicians worked up. 

LUST money comes from a tiny tax on motor fuel that's used to help clean up leaking gas station tanks, and it has some extra cash in it. It's one of the places House Republicans and Senate Democrats plan to scrounge to keep the highway trust fund from going broke in a few weeks.

The U.S. House Tuesday passed an $11 billion bill to keep the federal highway program funded into next year. The Senate is considering a similar approach and President Obama says he backs the House bill. The bills also tap into fees on travelers and change pension rules to come up with 10 months worth of funding for transportation. That means Minnesota and the rest of the states won't have to worry about losing federal highway funds at the peak of summer construction season.

Even as the process crawls forward, however, many questions about transportation programs remain unanswered. Raiding LUST and other nickel-and-dime programs is no way to run the nation's transportation business, observers say.

"I think that's when you're at the point where you're scrounging for quarters in your couch to go buy a burrito down the street," said Adie Tomer, an infrastructure researcher at the Brookings Institution.

Building roads and bridges is one of the central duties of government. And there's a fair amount of self-loathing about these funding gimmicks from members of Congress themselves, including Minnesota 1st District Democrat Rep. Tim Walz. 

"This is the epitome of pretty much how things are done right now around here," said Walz.

Minnesota 8th District Democrat Rep. Rick Nolan was even more scathing, especially about the pension part of the bill that allows companies to contribute less to workers' pensions so that the companies will pay more in taxes.

"It's pretty shameful," Nolan said. "We've known this bill was expiring for, well, we've known it all year and the committee hasn't met on it, and now they're just going to do an extension with pension smoothing?" 

The 18.4 cents per gallon federal gas tax has remained unchanged and not indexed to inflation for the past 21 years, and there's no longer enough revenue from it to maintain the federal highway system. Raising the tax has long been seen by most transportation analysts as the most practical long-term way of keeping the system funded. 

Nolan said he's prepared "to consider a gas tax or a sales tax on petroleum or additional general revenue funds. We simply have to fund our transportation and infrastructure." Walz also says he's willing to vote for a gas tax increase, if necessary.

It's a hard vote, though, for many lawmakers, especially Republicans, said Walz, who sits on the House Transportation Committee. "I cynically see it as getting past the election for some folks and then supposedly we'll take it on again," he said. 

Minnesota 3rd District Republican Rep. Erik Paulsen, who sits on the tax writing Ways and Means Committee that approved the plan, said he isn't thrilled that Congress is taking a short-term approach to highway spending, but he defends the bill's money sources as "bipartisan. They've been used before."

In other words, they're not controversial enough to prevent the bill from clearing both chambers of Congress.

Paulsen says Republicans won't back an increase in the gas tax to fund transportation spending long-term and that lawmakers should look at other ideas, including "energy royalties." That's a plan that would open offshore oil drilling on federal property and use the revenues to pay for transportation, but it's likely a non-starter with many Democrats. 

Also, expanded drilling likely still wouldn't come up with enough revenue to plug the widening gap, currently around $10 billion annually, between what the gas tax takes in and current transportation spending, said Tomer.

While taxes complicate the issue for House Republicans, "the Democrats in the Senate don't have a plan either," Paulsen added. The Obama Administration has also not endorsed an increase in the gas tax.

Lawmakers are trying to find a long-term funding solution that doesn't involve raising gas taxes, said Minnesota DFL Sen. Amy Klobuchar.

"I think that people know that we have to be creative when it comes to highways and bridges" she said. "Democrats and Republicans have been willing to talk about other ways to do things and that's what we have to do in a longer-term plan."

Klobuchar mentioned offering a tax holiday for American companies with billions in profits parked overseas to bring that money back to the U.S. and invest it in a public-private infrastructure bank to fund transportation projects. 

That's not a long term solution, said Tomer, who likened the tax holiday revenues as another one-time injection of funds into the system rather than a stable, long-term source of money

The real issue here, he added, is that the public may not see the need for more spending on transportation. "It's not actually having what the tradition is in federal transportation — sustained, direct funding from users of various kinds."