Mr. CARDIN. Mr. President, I rise today to speak about the Highway Trust Fund (HTF) and the Conference Report we will be considering shortly to accompany the surface transportation reauthorization bill, which is called the “Fixing America’s Surface Transportation Act (FAST Act).
First, I am pleased to see that this bill provides five years of funding for our Nation’s transportation infrastructure. That is the kind of long-range certainty our state and local officials and the private sector need to plan transportation infrastructure projects in a thoughtful and responsible way.
While there are many excellent provisions in the bill, I do have significant concerns about the way our Nation’s surface transportation infrastructure is being funded.
First, I will speak about the policy within the bill. I am pleased that the Conference Committee has retained this Nation’s commitment to transportation alternatives. This bill includes more than $4 billion for bike and pedestrian infrastructure, making our roads safer for everyone who uses them. My bill creating a dedicated program for non-motorized safety is also included in the reauthorization, which will support things like bike safety training programs for both bicyclists and drivers, again making our streets safer for all who use them.
Furthermore, the Section 5340 bus program has been kept intact. This program is for high-density areas like Baltimore and Washington, DC, which cannot simply widen a road to accommodate extra travelers. The FAST Act provides more than $2.7 billion to high density areas. This is significant for Maryland in particular. Over the life of this bill, Maryland should receive more than $4.4 billion in Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) funding combined. That is an extraordinary amount of funding for a State that sorely needs it.
I am concerned, however, that the FAST Act undermines the public input, environmental analysis, and judicial review guaranteed under the National Environmental Policy Act (NEPA). If Congress wants federal agencies to approve more permits faster, then we should appropriate the requisite funds for sufficient staff and other necessary resources. We should not undermine the integrity of important project reviews. Moreover, the argument that the permitting process takes too long is a red herring. More than 95 percent of all FHWA-approved projects involve no significant impacts and, therefore, have limited NEPA requirements. If we really want to speed project development, we should recognize the known causes of delay and not use this bill as a Trojan horse to dismantle our Nation’s foundational environmental laws. So while I support many of the policies in the bill, I am still very concerned about the impact it will have on our environment.
While I have mixed feelings about the policies in this bill, I am not conflicted with regard to how it is funded. I am extremely disappointed in the hodgepodge of questionable “pay-fors” that we are using in this bill. We certainly needed to address the problem of funding our Nation’s highway and transit systems beyond the myriad short-term extensions that Congress has approved in the past. But instead of opting for a reliable and permanent future revenue stream to pay for this critical government function, the FAST Act falls back on provisions completely unrelated to highways and mass transit. It relies on one-time “pay-fors” that are simply digging a deeper hole for the next reauthorization. That is a troublesome precedent.
I think we have missed an opportunity here to stick to the “user pays” principle with regard to the federal gasoline excise tax, which hasn’t been raised since 1993. According to the Congressional Budget Office, a 10-cent per gallon increase in the tax would fully fund the bill for five years.
Gasoline prices are plunging around the country, with the national average falling in 24 out of the past 30 days, according to the American Automobile Association (AAA) earlier this week. The price of a gallon of regular gasoline now stands at $2.04 nationally, down 14 cents compared to one month ago and 74 cents lower than this time last year. AAA officials and others anticipate that the national average price will dip below the $2.00 threshold within a matter of days.
So, as I said, I think we may be missing an opportunity here to put surface transportation infrastructure funding back on a solid foundation, appropriately based on the “user pays” principle.
It’s also important from a policy perspective that we price carbon more appropriately to reflect its total costs, promote fuel efficiency, and accelerate the absolutely essential shift from fossil fuels to cleaner, more sustainable sources of energy. Lower gasoline prices let motorists keep more money in their pockets in the short-term. But we have to think about the long term, too, and if we needlessly delay making that inevitable shift, the long-term costs to human health and the environment will dwarf any perceived short-term gains.
There is one so-called “offset” in the bill that I adamantly oppose: the use of private collection agencies (PCAs) to collect tax debt. I oppose this provision not only because it simply will not raise revenue, but also because it is terrible tax policy that puts a target on the back of low-income and middle-class families. The Treasury Department, the Internal Revenue Service (IRS), and the National Taxpayer Advocate all join me in opposing this provision.
The Joint Committee on Taxation (JCT) scores this provision at over $2.0 billion over 10 years. But since JCT only takes into account incoming and outgoing tax revenue, its score doesn’t take into account the IRS’s implementation and oversight costs and the opportunity costs of farming collections out to private collectors.
Twice before, from 1996 to 1997 and from 2006 to 2009, Congress required Treasury to turn over some tax collection efforts to PCAs, with miserable results. The first attempt resulted in the loss of $17 million and contractors participating were found to have violated the Fair Debt Collections Practice Act. Under legislation enacted in 2004, the IRS again attempted to use PCAs to collect federal taxes in 2006. In September of that year, the IRS began turning over delinquent taxpayer accounts to three PCAs who were permitted to keep between 21-24 percent of the money they collected. While the program was supposed to bring in up to $2.2 billion in unpaid taxes, data from the IRS showed that the program actually resulted in a net loss of almost $4.5 million to the Federal Government after subtracting $86.2 million in administration costs and more than $16 million in commissions to the PCAs.
In analyzing the PCA offset last year, the IRS prepared a preliminary estimate of the percentage of individual taxpayers who have “inactive tax receivables” that would be subject to private debt collection and who are low-income. After reviewing collection data for Fiscal Year (FY) 2013, the IRS found that 79 percent of the cases that fell into the “inactive tax receivables” category involved taxpayers with incomes below 250 percent of the federal poverty level. So nearly four-fifths of delinquent taxpayers were almost surely in the “can’t pay” category and would be unlikely to make payments when contacted by a PCA instead of the IRS.
Not only are low-income taxpayers more vulnerable to begin with; PCAs actually provide fewer options for them to meet their tax obligations. IRS employees, unlike the PCAs, have a variety of tools at their disposal they can use to help delinquent taxpayers meet their tax obligations, especially those facing financial difficulties. These tools include the ability to postpone, extend, or suspend collection activities for limited periods of time; making available flexible payment schedules that provide for skipped or reduced monthly payments under certain circumstances; the possibility of waiving late penalties or postponing asset seizures; and Offers In Compromise (OIC), which are agreements between struggling taxpayers and the IRS that settle tax debts for less than the full amount owed.
In contrast, the PCAs’ sole interest is to collect from a taxpayer the balance due amount they have been provided. They have no interest in whether the taxpayer owes other taxes or may not have filed required returns. They cannot provide any advice or use any of the tools IRS employees have, such as extensions or offers in compromise.
In October, I joined 15 other Senators – including several of my Finance Committee colleagues and Ranking Member Wyden – in signing a letter the senior Senator from Ohio (Senator Brown) sent to leadership on the dangers and shortcomings of this provision. Unfortunately, our message was not heard. And so, because we refuse to turn to obvious and commonsense financing solutions for our transportation infrastructure problems, we have decided instead to use an offset that has historically LOST money, all on the backs of low-income taxpayers.
Mr. President, the FAST Act Conference Report is a bipartisan, bicameral achievement. I congratulate the House and Senate conferees for reaching an agreement; I know it has been an arduous process. The reauthorization contains many good provisions and provides five years of desperately needed funding for our Nation’s crumbling transportation infrastructure. I will vote for the Conference Report. But I will do so with serious reservations about how this bill is funded. Our surface transportation infrastructure is a crucial component of our national security and economic competitiveness. Reauthorizing our surface transportation programs used to be a relatively routine matter; now, it is becoming harder and harder to do and we are relying more and more on gimmicky funding mechanisms. These are worrisome precedents.