WASHINGTON — The Highway Trust Fund is dangerously close to insolvency, leaving Congress with three options on how to prevent the main driver of federal surface infrastructure funding from reaching a shortfall, a budget analyst told Congress on Tuesday morning.
Congress could cut highway and mass transit spending by a quarter in fiscal 2015, increase the motor fuels tax by 10 cents or transfer billions of dollars from the general fund to the HTF, said Kim Cawley, unit chief of the natural and physical resources cost estimates units at the Congressional Budget Office. A combination of the various options is also possible. If the federal government isn’t able to reimburse states for their highway and bridge construction spending, the states will either halt or curb construction, or accelerate road work to try to get reimbursed faster, he told the House Highways and Transit subcommittee.
The CBO forecasts the HTF will be short of $8.7 billion in cash in fiscal 2015, and the shortfall will continue to expand, with a deficit of $132.6 billion projected in fiscal year 2023. That’s largely because light-duty vehicles have become 10 percent more fuel-efficient in the last 24 years, and per capita vehicle miles traveled peaked in 2005, as Baby Boomers and Millennials drive less, said Polly Trottenberg, undersecretary for policy at the Department of Transportation. The cost of materials used in surface transportation construction also increased 73 percent between 1993 and 2013, she added.
The CBO expects the trust fund to bring in about $33.8 billion from the highway account and $4.9 billion from the transit side, a total of $38.7 billion. But spending in that same year is expected to hit $35.2 billion, according to CBO estimates. Some House Republicans have expressed their reluctance to continue use budget fund injections to keep the highway trust fund afloat, adding another challenge to the passage of the next transportation bill. The two-year, $109 billion surface transportation bill, which passed last year, will expire at the end of September 2014.
“There is a significant federal role necessary in surface transport,” said House Transportation and Infrastructure Committee Ranking Member Nick Rahall, D-W.Va. “Unfortunately, over the last several years, we have neglected responsibilities in this regard.”
Despite the handwringing, Congress and the Obama administration have balked at raising the fuels tax, even as many states have raised their own fuels taxes to fund their transportation projects. The federal 18.4-cents-per-gallon gasoline tax and 24.4-cents-per-gallon diesel tax, which fuel about 90 percent of the Highway Trust Fund, haven’t increased since 1993, and inflation has cut about 7 cents from the taxes’ buying power.
House T&I Committee Chair Bill Shuster, R-Pa., who has repeatedly said he is open to various ways to gaining new revenue, said boosting the HTF coffers is only part of the solution. Streamlining construction so that major highway projects take five years, not 10 years, is also key, and he pointed to how the last surface transportation bill, known as MAP-21, will further that goal.
Trottenberg reiterated President Obama’s proposal to use money saved through the winding down of the wars in Iraq and Afghanistan for infrastructure construction. The proposal, first floated in the White House’s fiscal 2013 budget proposals, hasn’t gone anywhere in Congress, and even Democratic leader Rahall said the idea was a “Band-Aid” to funding issues.
The idea of charging highway users by how far they drive hasn’t gotten much farther in Washington either. Trottenberg said a federal vehicle mileage tax isn’t under serious consideration, and many members of Congress have raised privacy concerns since vehicles would be tracked via GPS.