Highway Trust Fund crisis only years away

By 2015, the Highway Trust Fund, responsible for funding critical investments in our nation’s federal transportation system, will be broke. According to the Congressional Budget Office, the Highway Trust Fund (HTF) will be in the red, with a negative balance of $7 billion by 2015, according to current law.

This forecast shouldn’t come as a shock. Gas tax revenues that fund the HTF only cover 62 percent of what we spend to repair and maintain our transportation infrastructure. This gap has required past infusions of $34.5 billion from the general fund to the HTF in order to meet basic obligations. And since the gas tax was last raised, in 1993, the HTF has lost 33 percent of its purchasing power because it wasn’t indexed for inflation. Recently, the prolonged economic slowdown, an increased use of fuel-efficient vehicles and an aging population that is less inclined to drive has meant our overall gas consumption, and gas tax revenue, has drastically fallen since 2007. 

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As the revenues feeding the HTF have diminished, the costs for rebuilding or maintaining our critical infrastructure have skyrocketed. In fact, construction costs have escalated so significantly the federal gas tax buys about half the concrete, steel and other materials it did 20 years ago, according to experts.
Our lack of adequate revenue has hindered our ability to maintain our transportation system, which has received poor marks, most notably from the American Society of Civil Engineers, which gave America’s roads a grade of D- and our overall infrastructure, including transit, a grade of D.

These D-grades are generous. We have 140,000 bridges in the federal system in need of substantial rehabilitation or replacement. Our transit systems have a $78 billion backlog of critical infrastructure investment needed for light rail, subways and buses. More than 40 percent of the pavement in the national highways system need substantial rehabilitation. Each year we neglect deteriorating infrastructure creates “cost acceleration” — meaning repairs and/or replacement costs rapidly increase over time. One study notes a project that costs between $5 million and $6 million to repair today could cost $30 million to repair just two years from now.

Our inability to properly maintain existing infrastructure, let alone enhance capacity, is setting the U.S. behind our international competitors. The Urban Land Institute reports that China currently spends 9 percent of its gross domestic product on infrastructure, including transportation; India spends 5 percent. Yet the U.S. spends less than 1 percent of its GDP on similar investments.

Two bipartisan commission reports initiated under the George W. Bush administration recommended that we double current investments in our transportation system just to bring it up to a state of good repair. The National Surface Transportation Infrastructure Financing Commission said our transportation system has deteriorated so much, “our safety, economic competitiveness and quality of life are at risk.”

This leaves policy leaders with the following question: Can we make the HTF whole so we can begin addressing the accelerating deterioration of our transportation assets and ensure we can maintain our economic competitiveness in the future?

We can, and do so in a way that has minimal impact on consumers. As ranking member on the House Transportation Highways and Transit subcommittee, I am proposing an idea that would fully fund the HTF and allow significant transportation investments that would begin to address our critical needs.
In order to keep the HTF whole over time, the federal gas tax could be indexed both to fleet fuel economy and construction cost inflation. By indexing the gas tax to these measures, the trust fund would not lose value when construction costs rise or when new standards kick in that require new cars sold in America to be more fuel-efficient. Double indexation could generate up to an estimated $177 billion in additional revenue over the next 10 years.

We should also take advantage of the record-low interest rates to borrow more than $100 billion in short-term bonds, paid back over 10 years with the indexed portion of the gas tax, to jump-start the trust fund, put millions of people back to work immediately and quickly begin to meaningfully address our most urgent transportation infrastructure needs.

If Congress allows the HTF to fall in the red, we would be forced to choose between borrowing money to continue this vital investment or cutting off funding and jeopardizing millions of Americans jobs, our economic competitiveness and safety. That is unacceptable. In the coming months, I will work with my colleagues and build bipartisan support for my long-term funding solution. The looming Highway Trust Fund crisis can, and must, be avoided.

DeFazio is a member of the House Transportation and Infrastructure Committee.