The Future of the Highway Trust Fund

July 2014

NSPE TODAY: POLICY PERSPECTIVES
The Future of the Highway Trust Fund

BY ARIELLE EISER

The March 2014 edition of Policy Perspectives posed a vital question to the professional engineering community: “Will 2014 be a landmark year for infrastructure?” After all, professional engineers play a vital role in planning, designing, implementing, constructing, operating, and maintaining our nation’s infrastructure systems. More than halfway through the year, it appears that the answer is an unabashed yes. With the two most significant pieces of infrastructure legislation at the forefront of the congressional agenda, infrastructure is garnering almost unprecedented media attention.

However, as important as the reauthorizations are of the Water Resources Reform Development Act (WRRDA) and the Moving Ahead for Progress in the 21st Century (MAP-21) Act, the single greatest concern in Washington, DC, and in states and local districts is the Highway Trust Fund. The HTF, which is a major component of MAP-21, funds a significant portion of the construction and repair of the nation’s surface transportation system. The HTF is financed by an 18.4 cents-per-gallon gas tax, which has not been increased since 1993. The Congressional Budget Office estimates that the purchasing power of those taxes is about 40% below what it was in 1993.

highwaySince 2008, Congress has relied on $54 billion in general fund transfers simply to keep the HTF solvent. With MAP-21 set to expire at the end of September, the Senate and the House of Representatives are working on proposals to reauthorize a long-term surface transportation bill. However, the Department of Transportation has alerted federal and state transportation officials to the alarming fact that the Highway Trust Fund will dip below critical levels as early as this month. According to the DOT, the HTF is projected to dip below $4 billion this month, slowing down, and in some cases halting, reimbursements to states. The HTF is on track to fall below $1 billion by October of this year.

According to the Obama administration, allowing the HTF to become insolvent could result in 700,000 lost jobs as the trust fund cannot pay its bills, and 112,000 roadway projects and 5,600 transit projects that could be delayed or halted. State DOTs are already slowing and cancelling new projects as they face a tremendous degree of uncertainty with federal reimbursements.

Yet, despite the urgency of the situation and the near unanimous agreement that immediate action must be taken to invest in our crumbling national infrastructure, the precise funding method continues to elude lawmakers. In the short-term, an increase in the gas tax would likely be the simplest solution and provide immediate relief for the HTF. However, increasing the gas tax has proven politically unpalatable and would not serve its function in the long term, as vehicles continue to become more fuel efficient.

In 2009, the National Surface Transportation Infrastructure Financing Commission issued a unanimous report that called for an increase in the gas tax, as well as greater use of tolling and an eventual transition to a fee based on vehicle miles traveled. Five years later these same options are still being considered, but none have gained enough political support to be enacted.

Therefore, with time all but out before the Highway Trust Fund faces insolvency, expect yet another general fund transfer to keep the HTF afloat, lasting at least until the midterm elections, if not into early 2015. Unfortunately, this means a return to short-term extensions, which have plagued surface transportation authorizations for much of the last decade. MAP-21 provided a dedicated authorization for 27 months. House and Senate legislators hope that a brief extension will provide enough time to come to an agreement on a six-year deal that will also address the long-term solvency of the Highway Trust Fund. Infrastructure may very well end up being a top legislative priority in 2015 as well.

Arielle Eiser is NSPE’s government relations manager.

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