The federal highway fund goes towards patching roads as well as mass transit.
The federal fund that pays for the upkeep of the nation’s roads, bridges and intercity passenger rail systems is heading toward insolvency in late summer. The highway trust fund distributes about $50 billion annually to maintain and rebuild crumbling bridges and pothole pocked roadways among other aging transportation infrastructure. The debate over how to replenish it is about to begin.
U.S. Secretary of Transportation Anthony Foxx announced he would start a national bus tour next week that will highlight the Obama administration’s emphasis on infrastructure investment and its plan to use corporate tax reform to finance it.
Raising the profile of infrastructure spending
The tour will begin in Columbus, Ohio, weave through eight states, and end in Dallas. Along the way, Foxx will visit highway projects, freight rail facilities, and manufacturers to underscore the connections among transportation, economic growth, and quality of life.
“We feel like this is a very important moment for infrastructure in this country,” said Foxx.
The administration is proposing a four-year, $302 billion transportation program that would replenish the highway trust fund plus an additional $90 billion. The push for corporate tax reform has some bipartisan support, as the chairman of the House Ways and Means Committee, Congressman Dave Camp (R-MI), has proposed a one-time tax on corporate profits held overseas to save the fund from insolvency.
Raising the federal gas tax to pay for transportation is a non-starter. Neither the administration nor Congress supports it, even though the tax that covers nearly all the trust fund’s expenditures has remained at $.18 per gallon since 1993. With no long-term, sustainable funding ideas on the table, Sec. Foxx said the president’s plan, with its proposed increase in both highway and transit spending, would lay a foundation for a more comprehensive transportation program later on.
“Let’s just understand the context we are working in. There have been 18 continuing resolutions over the last five years and nine extensions of the authorization bills that have been in place,” said Foxx, referring to the short-term patches Congress has approved to keep the highway trust fund afloat.
“A lot of the conversation in Washington has been about trying to get the highway trust fund stabilized, but the point that I am going to make over this bus trip is getting the highway trust fund back to solvency is not going to be the panacea for this country. It is going to get us to a point where we can continue what we are doing, but what we are doing is insufficient when we compare it to what the future demands of us,” Foxx added.
“We are not in a political environment where Congress has shown an incredible willingness to think 10, 20, 30 years out. Our proposal would get us not only restoration of the highway trust fund at current levels, but we also would invest $90 billion additional dollars over a four-year period. We think it is very important to have growth in our infrastructure investment.”
With the federal government having moved from one trust fund crisis to another, state departments of transportation have been unable to continue the planning of long-term, long-needed projects.
“The crisis is not that we are going to stop spending money on transportation,” said Joshua Schank, the president of the Eno Center for Transportation, a D.C.-based think tank. “The crisis is we can't make smart, long-term investment decisions when we don't know where the money is going to come from.”
Finding a solution that is politically palatable
Schank expects Congress to use agree to at least another short-term fix to replenish the trust fund, if not a four-year spending program.
So if the nation’s roads are crumbling, bridges structurally obsolete, and commuter rail systems desperate for expansion to meet the demand for increased capacity, why is spending on transportation such a tough sell?
“If you look at the issues people voted on in past elections — the top issues for voters — you will notice that transportation, not surprisingly, is not on the list. But gas prices are,” Schank said. “Every time gas prices go up people feel it.”
The last time the federal gas tax was raised to directly pay for transportation was in 1982 under President Reagan. The following two increases under Presidents Bush and Clinton were directed toward deficit reduction.
So if a gas tax increase is politically impossible, especially in an election year, the administration must tap another argument to convince the public that their roads need more money. To Sec. Foxx, the cost of inaction is prohibitive.
“You can calculate it several ways. One is the sheer cost of maintaining your car. The potholes in those roads today — we've seen many more of them because of the weather this year — those actually have costs,” Foxx said.
“Then you add time, which in some cases is an invaluable asset. The time people are stuck in traffic, the time it takes to get to the doctor’s office or to pick your kids up from school.”
“The thing that is hardest to quantify and explain to people but is very real is the fact that our transportation systems always have to be built thirty years ahead of where we are. We have to be thinking about that as we build new assets today. We are going to experience massive population growth over the next thirty years, so whatever congestion is out there today it is going to get worse tomorrow if we don't build for it,” he added.