A Transportation Infrastructure Fix?

A bold step was taken last week toward fixing how the United States finances the core of its surface transportation infrastructure. Will Congress pick up the ball and enact a bill with sufficient funding, or will the Highway Trust Fund (HTF) be faced with bankruptcy in less than a year? The HTF funds virtually all Federal investment in the nation’s highways and bridges, and 80 percent of Federal investment in transit. HTF bankruptcy through Congressional inaction would bring work on this infrastructure to a grinding halt.

Congressman Earl Blumenauer (D-OR) introduced two bills to address the core of Federal investment needs. The first bill (HR 3636) raises fuel taxes, specifically to fund transportation infrastructure investment, by 15 cents per gallon over a three-year period. When fully implemented after three years, the increase would cost the average driver about $80 a year. This would bring the tax rates to the level they would have reached had they been indexed to inflation since 1993 (the last year that federal fuel taxes were raised). The schedule would replenish the HTF and enable investment to halt the deterioration of the nation's road and transit infrastructure.

The second bill (HR 3638) would establish a $30M grant program for state, local and regional road usage fee pilots based on vehicle miles traveled, rather than fuel consumption.

These bills, pursued concurrently with those proposing innovative funding mechanisms (i.e. private-public partnerships, infrastructure bank) may yet enable substantial infrastructure improvements, and enable the nation to reach the light at the end of the proverbial tunnel.

In the 50 years prior to 2008, 85-90 percent of HTF revenues came from fuel taxes. Since 1993, rates have remained at 18.4 and 24.4 cents per gallon of gasoline and diesel fuel, respectively. With the intervening inflation, and the volume of fuel purchases falling due to Americans driving fewer miles in increasingly fuel efficient vehicles, this has forced Congress to divert more than $50B of general funds into the HTF since 2008. The undersized level of investment has resulted in deteriorating roadway conditions, prompting a “D” rating by the American Society of Civil Engineers.

An effective and efficient national surface transportation network is essential for national mobility and for the access to markets needed for interstate and international commerce. Wyoming, Virginia, Maryland, Florida, Pennsylvania, and many other states have acted recently to bolster their share of transportation infrastructure investments. The states are counting on a more robust Federal investment, one that helps ensure the transportation network best serves the nation as a whole.

Author: Paul Haven

For more detail about transportation infrastructure funding see our August 2013 issue brief.