Congress Messes With Your Vacation as Highway Trust Fund Runs Low

Photographer: Kevork Djansezian/Getty Images
Construction workers on Interstate 405 in Los Angeles.

Your summer road trip holds good times, beautiful vistas and some really breathtaking potholes.

The federal Highway Trust Fund, which sends $35 billion a year to states as their primary source of funding for road construction and repair, isn't collecting enough revenue from gasoline taxes. It shrank from $10.5 billion last October to $8.1 billion on June 1 and could be drained to zero by late August. That has prompted officials to warn that the U.S. is approaching a transportation "fiscal cliff."

"If the trust fund is not replenished, the gridlock in Washington is going to reach Main Street America," U.S. Transportation Secretary Anthony Foxx said in an interview with Bloomberg News. "We're expecting that by late June, maybe middle July, some of the states will already start to pull back projects and slow other projects down and even stop some." The American Association of State Highway and Transportation Officials predicts that as many as 6,000 projects across the country could be halted this summer.

That's because 32 states receive most of their transportation funding from the federal Department of Transportation, according to a tally by Transportation for America, which advocates greater spending. The median amount is 52.6 percent. No state receives less than one-third of its transportation money from the capital, with only six states below 40 percent -- Florida, Georgia, Massachusetts, New Jersey, Utah and Washington. Four states receive more than 80 percent of their transportation budget from the federal government -- Alaska, Nebraska, Rhode Island and Vermont.

The main reason for the Highway Trust Fund shortfall is that the federal gas tax, which accounts for 72 percent of the fund, hasn't been raised in two decades. Because Congress didn't index the tax to inflation, it has been stuck since 1993 at 18.4 cents per gallon for regular fuel and 24.4 cents for diesel, while its purchasing power has decreased by about 40 percent. Even with general revenue transfers of $12 billion into the highway fund this fiscal year, the money is all but spent.

"The situation remains dire," Secretary Foxx warned all 50 state departments of transportation in a letter last Friday. "If the trust fund becomes insolvent, DOT will likely need to delay some reimbursements to your agency."

Foxx sees the depletion of the Highway Trust Fund as symbolic of the nation's underinvestment in transportation. DOT rates 65 percent of U.S roads in subpar condition and 25 percent of bridges as deficient, meaning they need significant repairs or weren't designed to handle their current traffic volume. Meanwhile, 45 percent of Americans don't have access to mass transit.

"We do have an infrastructure crisis. I would define it as an infrastructure deficit. It's been estimated in the trillions of dollars," Foxx said in the interview. "Even when we are our most aggressive, we're talking about just trying to get the funding levels back where they were last year."

Two U.S. senators on the tax-writing Finance Committee, Democrat Chris Murphy of Connecticut and Republican Bob Corker of Tennessee, are now pushing a gas tax hike of 12 cents per gallon over the next two years, or six cents a year on regular and diesel fuels, and indexed to inflation afterward.

"There is no white knight coming to rescue the transportation fund," Murphy said, unveiling the idea last week. "The best option is staring us straight in the face."

The bipartisan proposal is backed by labor unions, the U.S. Chamber of Commerce and the Automobile Association of America. AAA points to a national poll it commissioned last month that found 52 percent of Americans are willing to pay higher gas taxes for better roads and 68 percent believe the government should invest more in roads, bridges and mass transit.

But it may have to wait until after the November election, leaving Congress to scramble to pass a temporary highway funding measure before its August recess.

"It's likely that Congress will do the same cowardly thing that it's done year after year after year," Corker said, "and that is, play chicken, at the last minute come up with some gimmick that we know does not pay for the program, and kick the can down the road."

For a gas tax increase to be passed, it will need to be paired with equivalent tax cuts in order to the win the votes of Republicans in both houses who have signed the Americans for Tax Reform pledge never to vote to raise taxes.

Corker is the first congressional Republican to go public with his support. He said of his colleagues, "I don't know of any person that I have talked to that doesn't understand this is what we should do."

In the meantime, to veer away from the cliff, Senate Finance Committee Chairman Ron Wyden (Dem., Oregon) today offered a bill to immediately transfer $9 billion from the general fund to the Highway Trust Fund to keep it solvent through the end of the year. The measure would be paid for with a mix of tax proposals that the non-partisan Joint Committee on Taxation predicts would raise the $9 billion over the next decade. Only one idea, doubling the cap on the annual heavy vehicle tax from $550 to $1,100, is related to transportation. Republicans are looking for commensurate spending cuts. If the the bill passes the committee, it would need to pass a Senate floor vote and the House of Representatives.

"Failure to act now could lead to a transportation shutdown, leaving our roads in disrepair and putting thousands of hard-working Americans out of their jobs," Wyden said.

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