This chart shows when the U.S. DOT expects Highway Trust Fund obligations to exceed revenues, which is a fancy way of saying “broke.” At that point, money from the U.S. Treasury will have to be transferred into the fund to keep road and bridge work nationwide from ceasing (they’ve already begun to slow down).
Congress has approved $50 billion over the last six years to keep the fund from going broke. While that tactic keeps projects going, it doesn’t solve the underlying problem: As assets age, the formula for feeding the trust fund will never meet U.S. DOT- estimated demand for repair and rehabilitation: $16 billion every year.
The authors of a bipartisan Senate proposal that would stop emergency transfers once and for all know it won’t happen by mid-August. They just hope their plan dovetails with work the House is doing in such a way as to increase the likelihood of their bill becoming law.
12 CENTS OVER 2 YEARS
The proposal comes from Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.):
- Add 6 cents to the price of a gallon of gasoline (currently 18.3 cents) and diesel (now 24.3 cents) this year and next.
Result: annual revenues increase from $34 billion annually to between $49 billion and $68 billion annually.
Asking Americans to pay more at the pump isn’t as crazy as you’d think, say Corker and Murphy. They cite a recent AAA survey in which respondents believe taxing fuel is the right funding mechanism and are willing to pay more to lower commute times and vehicle damage. (Americans also say they’ll pay more for water, but look what happens whenever you propose a rate increase.)
- Return to indexing the increase to inflation using the Consumer Price Index, like we did during the 1980s. The tax would now be 30 cents per gallon if it’d been indexed to inflation when President Bush added 4.3 cents 21 years ago.
Result: ensures there’s enough money to meet future need.
A Portland Cement Association analysis (request a copy), however, says the proposal would raise $46 billion more than the senators’ estimated $164 billion over 10 years: $210 billion.
That won’t matter, though, if the White House continues opposing any and all tax increases. The Obama administration’s solution:
- Raise $150 billion by reforming the corporate tax code.
- Let state DOTs collect tolls on interstate highways.
Realistic? Nope, say critics.
4 OTHER WAYS TO BEAT THE DEADLINE
- May 30 Cut Saturday postal delivery. The House of Representatives says delivering everything except priority and express mail just five days a week would raise almost $11 billion over the next decade and keep the Highway Trust Fund solvent until May 2015. Realistic? No: House Appropriations Committee killed the idea.
- Steal from another fund that the gas tax supports. Having collected 0.1 cents of fuel tax revenue per gallon sold since 1986, EPA’s Leaking Underground Storage Tank (LUST) program is sitting on almost $4 billion. It spends only $100 million annually, so the Senate figures that giving $3 billion to the Highway Trust Fund is a no-brainer. Realistic? Still under consideration.
- Give corporations a one-time tax break. Letting multinational companies deduct 85% of the income their overseas operations make would raise $20 billion to $30 billion in two years, say Sens. Rand Paul (R-Ky.) and Harry Reid (D.-Nev.) Realistic? No, not enough time to hammer out the details on something that critics say would end up costing money.
- Eliminate federal funding entirely. Introduced by Rep. Tom Graves (R-Ga.) and Sen. Mike Lee (R-Utah), the Transportation Empowerment Act lowers the federal gas tax to 3.7 cents over five years while transferring all authority over federal highway and transit programs to the states. Realistic? Maybe.
Everyone talks about how public roads should be paid for with public funds, but must that funding flow to the feds and then back to the states? Especially when more states (and municipalities) are taking matters into their own hands by increasing – with voter support – their fuel taxes?
According to the American Association of State Highway and Transportation Officials/U.S. DOT Center for Excellence in Project Finance, the Highway Trust Fund was established by the Federal-aid Highway Act of 1956 to build highways and help finance primary, secondary, and urban routes.
Our challenge today isn’t building roads and bridges; it’s maintaining them. So maybe the time has come to turn the system on its head.
What do you think? How would you keep the fund from going broke? Would you care if it did? Why (or why not)? E-mail me at email@example.com.
And have a safe July Fourth holiday weekend out on those roads.