Policy: Budgets & Deficits

Key House chairman rejects Senate highway aid plan

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News,Business,Dave Camp,Budgets and Deficits

WASHINGTON (AP) — House Republicans won't support a plan by Senate Democrats to prevent states from facing a cutoff of federal highway and transit aid this summer, a key House committee chairman warned Wednesday, saying the proposal would force a tax increase.

Rep. David Camp, a Michigan Republican and chairman of the House Ways and Means Committee, said the Senate appears to be "heading down a partisan road on highway funding."

"There is no way tax hikes to pay for more spending will fly in the House," he said in a statement. He said he's looking at policies that have had bipartisan support in both chambers in the past and hopes to have his own bill ready by early July.

Sen. Ron Wyden, an Oregon Democrat and the Senate Finance Committee chairman, has proposed a $9 billion plan that would raise taxes on heavy trucks to keep the federal highway trust fund solvent through the end of the year. Trucks over 97,000 pounds would pay $1,100 a year; the current cap is $550 for vehicles over 75,000 pounds. The measure also tightens reporting requirements for the mortgage interest deduction and toughens the rules for requiring payment of taxes when people under-report income from property sales.

The finance committee is scheduled to take up the measure Thursday.

The trust fund, which pays for highway and transit aid, is forecast to go broke in late August. The government might have to slow down payments to states as early as next month in order to handle cash flow problems as the balance in the fund dwindles. The fund has been teetering on the edge of insolvency for the past six years. Revenue to the fund from the 18.4-cents-a-gallon federal gasoline tax and the 24.4-cents-a-gallon diesel tax hasn't kept pace with government spending on transportation. At the same time, states are under increasing pressure to spend more on transportation construction as roads, bridges and tunnels age and traffic increases.

But Congress hasn't been able to find a source for more money that can attract win enough support from both parties.

Last week, Sens. Chris Murphy, D-Conn., and Bob Corker, R-Tenn., proposed a plan to raise gas and diesel taxes each by 12 cents over the next two years, and then index the taxes to keep pace with inflation. The increase would be applied in two increments of 6 cents each. But many lawmakers in both parties are reluctant to raise fuel taxes fearing a backlash from motorists.

House Republican leaders previously offered a plan that would have cut funding for the U.S. Postal Service and used the savings to shore up the fund, but senators rebuffed the proposal and it became clear that there weren't enough GOP votes to pass the measure in the House, either.

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