Highway Trust Fund is on fumes and time is running out

Highway Trust Fund is on fumes and time is running out
© Greg Nash

It’s Infrastructure Week, and if potholes, watermain breaks and failing bridges from coast to coast aren’t enough to motivate Congress into action, then maybe another piece of dire news will: America is once again hurtling toward a highway funding cliff that should sound alarms for lawmakers, particularly budget hawks.  

For decades, we have relied on the Highway Trust Fund (HTF) — which is financed primarily by the federal fuel tax that we all pay at the pump — to help repair and maintain our nation’s roads and bridges.  And for decades, this funding mechanism has received broad bipartisan support as the most efficient and effective way to fund and maintain our nation’s roads and bridges.  

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But the federal fuel tax has remained flat since 1993, and the HTF, unable to keep pace with demands, is now running on fumes. Estimates show the U.S. will need about $20 billion annually — in addition to current projected user fee revenue — to avoid reductions in highway, transit and safety investments.  If no action is taken by 2020, the Highway Trust Fund will be flat broke. 

At that point, lawmakers face some very difficult choices.  They can raid the general treasury — Americans’ hard-earned tax dollars — to keep the Highway Trust Fund afloat, as has been done several times since 2008. That option relies on us borrowing more money from overseas, driving up our national debt at the expense of future generations.  Alternatively, they could allow the HTF to fail, causing the cancellation or delay of critical transportation projects and throwing hundreds of thousands of people out of work.  This would force states to do Congress’ job, starting with the cancelation of projects even earlier than 2020 given all the uncertainty.

Conservatives will agree that adding more money to the HTF from General Fund subsidies is not fiscally responsible in the long term.  Reduced funding to states is also not desirable.   Many states — especially rural states in the heart of America with large land areas and small populations — simply do not have the tax base to replace their federal support.

The HTF was always intended to be a sustainable revenue source, financed by users of the system.  But the fuel tax has remained unchanged since 1993, when a loaf of bread was $1.57, and a movie ticket was only $4.00.

That’s why the American Trucking Associations is calling on Congress to endorse the Build America Fund — our solution to fund the modernization of our deteriorating network of roads and bridges. The BAF would be supported with a federal fuel usage fee built into the price of wholesale transportation fuels collected at the terminal rack, phased in at a nickel per year over four years. The fee would be indexed to both inflation and improvements in fuel efficiency, with a five percent annual cap.

The BAF is the most fiscally-conservative and viable solution. Of revenue collected from BAF, 99 percent goes directly to the Highway Trust Fund, compared to only about 65 percent of fees collected on some toll roads. We estimate that over the next decade, the BAF will generate $340 billion — which will not only shore up the highway funding gap, but also create an account to invest in the nation’s most urgent infrastructure needs, including projects at the state and local level. 

Most importantly, the BAF will help provide relief to America’s motorists who are currently shelling out $1,500 a year in wasted gas, time and vehicle repairs and a collective 6.9 billion hours lost in traffic due to our failure to add new highway capacity to meet the needs of a growing population.  By contrast, a 20-cent user fee would only cost the average motorist $100 per year.  As this program is implemented and our infrastructure is refurbished, motorists will see significant cost savings as their fuel and maintenance costs come down — a measurable offset. 

Roads and bridges are non-partisan. They are driven on by Democrats and Republicans alike. It falls on both parties in Congress to find a workable solution that shores up the Highway Trust Fund and averts yet another fiscal crisis for our nation. The Build America Fund is the most cost-effective way to generate actual infrastructure investment, and it adheres to the bedrock principal that users only pay for what they use.  Under this plan, America can achieve a 21st century transportation network that is worthy of the greatest nation in the world.   

Chris Spear is president and CEO of American Trucking Associations.