The Repercussions Surrounding the Highway Trust Fund

Will Brown - Director of Government Affairs for NUCAThe current funding levels for the Highway Trust Fund (HTF) will run out at some point this summer, likely before the authorizing legislation (MAP-21) expires. This is not just bad; it’s cataclysmic for our infrastructure and our economy.

Every day, every American relies on our Highway Transportation system. Hundreds of millions of Americans use the highway system to get to work, go on vacation and go to school. But even if you don’t find yourself on the highways daily, think about what you use every day that utilized our interstate system to get to you. The television you turn on in the morning likely got to Best Buy on a truck that traveled on the highway. The same is true for the soap you use, the books you read and the food you eat. This magazine was delivered to you utilizing the interstate highway system.

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None of us are strangers to how poorly maintained roads impact our lives. Crumbling roads cause congestion, accidents and damage to products being shipped and the vehicles carrying them. Is it unreasonable to think the roads could be responsible for even a single day of delayed deliveries? It’s not unreasonable at all. But just think about what that one-day delay does to our economy. That’s one day’s worth of lost revenue for American companies that can’t get their products to the store. What if one day turns into five days? In addition to the economics, what if you account for the added individual stress that comes with sitting in traffic or the financial burden of maintaining your vehicle that is more often damaged or in need of repair as a result of poorly maintained roads. Decrepit roads and highways cost just as much as fixing them.

No matter what happens, it will cost money. This is the central problem surrounding the issue and explains the extreme cowardice the majority of our elected officials exhibit in matters of federal infrastructure spending.

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In order to extend the current funding levels, Congress would need to find $16 billion to close the annual gap between $50 million in authorized highway project funding and the $34 billion (and declining) revenue from the federal gas tax. This means Congress will need to find $16 billion this year, a little more the next year, a little more than that the following year and so on until a sustainable funding plan is put in place to cover the entirety of the authorized levels. If this doesn’t happen, the HTF will not be able to fund any new projects and our highways will fall further behind.

Keep in mind that the $50 billion authorized level represents what has been enacted by the law, not necessarily what the country needs to invest to maintain the roads or remain economically competitive with international competitors. This also does not account for additional infrastructure needs of the country such as water, electricity and gas which could add substantially to the level needed for investment in infrastructure as a whole.

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Repercussions Surrounding theHighway Trust FundSo you may be asking how Congress is proposing to pay for this shortfall. Two primary ideas are monopolizing most of the conversation. Unfortunately, both of these proposals are only viable short-term solutions. House Republicans have proposed to fund the HTF until late spring of 2015 by ending Saturday delivery by the US Postal Service. Ending Saturday delivery would raise $10.7 billion, but not for a decade. This means that when the funding runs out, probably around May 2015, Congress would need to find a new and different way to fund the next extension while maintaining the moratorium on Saturday delivery. Interestingly, Postmaster General Patrick Donahoe has advocated for an end to Saturday delivery as a way to address USPS’s significant financial shortfalls between revenues and obligations (mostly attributed to pensions).

The other proposal making waves in the discussion of funding the HTF is increasing the gas tax. Last increased in 1993, the current gas tax is 18.4 cents per gallon. Several lawmakers have advocated increasing the gas tax. Senators Corker (R-Tenn.) and Murphy (D-Conn.) have introduced a plan to increase the gas tax 6 cents this year and another 6 cents next year. Representative Blumenauer (D-Ore.) has proposed nearly doubling the gas tax to 33.4 cents per gallon. Both proposals would also index the gas tax to inflation allowing automatic increases as inflation rises.

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Transportation groups like the American Trucking Association have supported increasing the gas tax. Yet there remains significant opposition to the proposal particularly from Main Street which makes the gas tax a politically difficult topic. Republicans, who are hoping to gain seats in both the House and Senate, are hesitant to raise the gas tax which could cause public backlash and thwart their push for control of the Senate.

The truth of the matter is that an increase in the gas tax is a short-term solution for the HTF. With vehicle fuel efficiency continually increasing, an increase in the gas tax would be regressive because revenues from the gas tax would continually decrease as cars run further and further on a gallon of gasoline. Simply increasing the gas tax will leave us right back in this same position at some point because there will come a time when the revenues from the gas tax will again not cover the obligations, let alone the needs, of the HTF.

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Opponents to increasing the gas tax largely argue for the disbanding of the HTF in favor of a state-centric approach. Arguing that the states can more efficiently and appropriately manage the maintenance of their highways is simply transferring the responsibility and problem from the federal government to the states. States don’t have the financial capability to repair and rebuild roads any more than the federal government does. Additionally, pushing highway funding and maintenance to the states will invariably create a system where each state has a different system and therefore inconsistent level of operability or maintenance across the nation. Besides, roads and infrastructure have been a responsibility of the federal government ever since George Washington created the Patowmack Canal, a series of interstate commerce canals between Virginia and Maryland in the 1780s.

The gas tax may be the best solution for the short term, but it will not carry the HTF into the future. For the future, the federal government must find a way to bridge the gap between the short-term funding and the politically toxic ability to fund it for the long term.

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Will Brown is the Director of Government Affairs for NUCA.