Feds: Highway funding runs out in July

Feds: Highway funding runs out in July
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Transportation Secretary Anthony FoxxAnthony Renard FoxxTo address America's crumbling infrastructure, follow Britain's lead Report: Chao has used government planes seven times this year Week ahead in tech: Lawmakers turn focus to self-driving cars MORE said Thursday that the federal government would run out of money for infrastructure projects in July, two months later than expected.  

The new deadline comes as lawmakers are scrambling to find a way to pay for an extension of a transportation funding bill that is currently scheduled to expire in May.

Foxx said the Transportation Department would have a cushion of about two months if Congress misses the deadline, but after that he said the agency would have to start cutting off payments to state and local governments. 

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"The latest I have is that the extension will run out in May. There will still be funding available through probably late July or early August," he said of the Transportation Department's Highway Trust Fund. 

"But probably in the July timeframe, we would have to start to go into cash management," Foxx continued. "That's the score as I see it."

Foxx attributed the expanded time frame to the fact that construction projects were slowed down by bad weather this winter, leading to fewer than expected reimbursements for highway work from the federal government.

Lawmakers are struggling with how to replenish the DOT's Highway Trust Fund, which is used to pay for construction projects across the nation. 

The traditional source of transportation funding has been the 18.4-cents-per-gallon federal gas tax that was established in the 1930s. The tax has not been increased since 1993, and improvements in car fuel efficiency have greatly sapped its purchasing power in recent years. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in $34 billion.

Lawmakers have turned to other areas of the federal budget in recent years to close the $16 billion-per-year gap, and they are already talking about passing another extension now to prevent a construction shutdown this summer.  

Foxx said Thursday that the Obama administration could accept a short-term transportation bill, but only if it is used as a bridge to a broader infrastructure funding plan. 

"I'm concerned if the effort is to continue a spate of short-term extensions," he said. "If on the other hand there's a purpose and it's tied to getting us to a long-term bill, that's a different situation. I'm concerned because we've had 32 short-term extensions in the last six years and the system is slowing down." 

Lawmakers in both parties have expressed a desire to pass a long-term transportation funding bill this year, but consensus on a way to pay for it has been elusive. Foxx and other transportation advocates have said the repeated patches that have been approved in recent years while lawmakers look for a more permanent infrastructure funding source have made it difficult for local governments to plan long-term construction projects. 

The administration has sent a six-year, $478 billion bill to Congress that relies largely on funding it says can be drawn from taxing corporate overseas profits. The proposal, known as repatriation, would require companies to bring back earnings to the United States at a 14 percent tax rate, generating an estimated $238 billion in revenue that administration officials say could be used to pay for infrastructure improvements. 

Republicans have said they are open to using tax revenue from oversees corporate profits to finance transportation projects, but have expressed concerns about making the repatriation mandatory instead of voluntary. GOP leaders have suggested it would be more effective to offer companies a one-time "tax holiday" to entice them to move money back to U.S. rather than forcing them to do it. 

Transportation advocates in Washington have meanwhile pushed for a gas tax increase to solve the infrastructure funding problem, but lawmakers have been reluctant to ask drivers to pay more at the pump.

Foxx said Thursday that it was important for Congress to reach an agreement on paying for a transportation funding extension quickly, however they decide to do it. 

"This is a problem Congress has got to solve," he said. "We can't keep short-terming our way into the future."