Obama Sounds Alarm on Infrastructure Funding

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Highway Trust Fund Running on Empty

Repairs to highways, bridges and transit cost more than the gas tax takes in – and the HTF is set to run dry around August 1, 2014.

The Highway Trust Fund (HTF) is running out of money this summer. For the states tasked with infrastructure upkeep this will mean a graduated cutback in money, beginning as early as August 1, according to the U.S. Secretary of Transportation Anthony Foxx.

This is not a new or surprising problem. The HTF is funded by federal gas taxes, which have been locked in at 18.4-cents per gallon of automobile gas since 1993 (trucks are taxed differently and higher). Given the increasing fuel efficiencies of all motor vehicles juxtaposed with cost inflation and progressive deterioration of aging roads, decreasing reserves of the HTF have been long anticipated. Receipts from the tax are believed to reach a net negative balance against expenses before the summer concludes.

This is particularly impactful to states because about 45 percent of their funding comes from the federal government. Secretary Foxx explained that as of August the fund will essentially pay out funds to the states as gas receipts are received, an amount almost certain to be less than what those states have budgeted for.

One proposed fix is the simplest, which is to raise the federal gas tax rate. A bipartisan proposal from Senators Bob Corker (R-TN) and Chris Murphy (D-CT) is to increase the tax rate/gallon, a plan that is supported by the U.S. Chamber of Commerce and the AAA. To do so would require no expenditures in bureaucracy, just a change in numbers at the gas pump. But in a mid-term election year, the chance of success of this or any other tax hike proposal falls somewhere between slim and none.

President Obama has publicly asked Congress to instead find funding through closing a tax loophole used by many companies that offshore profits, beyond the reach of the Internal Revenue Service. This is in addition to a previously announced plan that would raise $302 billion for transportation by way of a gas tax increase, a business tax reform measure, and by permitting states to charge tolls on interstate highways. Senator Ron Wyden (D-OR) has been promoting an increased tax on heavy trucks that could raise an additional $9 billion. As reported previously on Pothole.info, a vehicle miles traveled (VMT) scheme involving electronic trackers would more fairly gauge individual vehicle road usage; however, neither the Obama administration nor the vast majority of members of Congress from both parties supports the VMT plan.

The predicted cutbacks will mean less money to repair roads, bridges and public transit projects. Following the brutal winter of 2014, a few extra billion potholes have made this a critical issue in a majority of states. Short of Congressional action, more than 700,000 jobs related to 100,000 projects are at risk, says Obama. Organizations in support of shoring up the HTF by any means possible include the American Association of State Highway and Transportation Officials, the Coalition for America’s Gateways and Trade Corridors, the National League of Cities and its affiliated 49 municipal leagues.