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Rubber not meeting the road on highway bill

Construction crews work on a freeway overpass along Highway 101 on March 26, 2012 in Novato, Calif. The highway bill is in a standoff in the House, threatening highway projects if an agreement can't be reached by this weekend.

Kai Ryssdal: Congress is -- once again -- on the brink of missing a deadline, and in so doing threatens a major federal program.

The showdown this time is over how to pay for highway and mass transit projects. The law currently in force goes away Saturday night.

Marketplace's Nancy Marshall Genzer reports on the many twists and turns of the federal highway bill.


Nancy Marshall-Genzer: If Congress misses the deadline, federal funding for highway and mass transit projects will be frozen.

Joshua Schank heads the Eno Center for Transportation in Washington. He says, at first, Federal Highway Administration workers would be furloughed. If the funding freeze lasted more than a week...

Joshua Schank: Then states are going to start to say, look, we have to stop these projects, and we can’t afford to pay people, and you’re going to see construction people laid off.

Schank says tens of thousand of people would lose their jobs.

The Laborers’ International Union of North America represents about 400,000 construction workers. David Mallino is the union’s chief lobbyist.  

David Mallino: You’re essentially playing chicken with people’s jobs and people’s lives and the American economy.

The larger economy would be affected because construction companies are reluctant to buy new equipment if states are waffling on highway projects.

There’s one industry, though, that would benefit if Congress blows by the Saturday deadline. The feds wouldn’t be able to collect the gas tax. Big Oil charges the tax when it delivers crude to refineries and would normally pass the money on to Washington.

John Horsley is CEO of the American Association of State Highway and Transportation Officials.

John Horsley: Every day that the program is not extended, the oil companies will get to keep their money.

And we’re talking about $110 million a day.

In Washington, I’m Nancy Marshall-Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.
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I am the Manager of Tax Policy with the American Petroleum Institute and wanted to comment on the last portion of this story. This is a complex area and I wanted to potentially clarify a couple of points. Among those are the following:

1) The gas tax is charged by the federal government which requires the companies selling the product to collect and remit it back. The total amount of tax imposed by the federal government will not expire on Saturday - as there will still be a 4.3 cpg tax on the books. However, the companies selling the product will not be able to charge the tax.
2) Also the tax applies as the product leaves the terminal - after the refining process - and is usually coupled with a state tax at that point as well. It should be noted that some states may react to a lowering of the tax as well. California's excise tax on gasoline would, for example, immediately be raised to the extent the federal tax was lowered.
3) While there is no clear understanding what may happen to prices if 14.1 cpg (gasoline) or the 20.1 cpg (diesel) were to expire, there will be concern in the marketplace of whether Congress will come back in and retroactively require the full tax to have been collected. This is what happened when the aviation tax expired last year. Therefore, dealers, retailers and jobbers (who may purchase the product at the terminal) will have to determine whether the companies otherwise required to collect the tax will be coming back to them in the future pursuant to Congressional mandate.

While I appreciate that it makes a nice sound bite, I am not sure what Mr. Horsley is categorically referring to or who in the process (refiners, jobbers, dealers, retail owners) he is considering in making his statement.

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