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The Highway Trust Fund is Bankrupt

There’s a transportation crisis looming in America, even though you probably haven’t heard much about it.

The problem is that there’s plenty of flashier news – from unrest in the Middle East to the Hobby Lobby case in the Supreme Court.

But even if it sounds boring, the Highway Trust Fund’s (HTF) looming insolvency is a huge deal – and so far, Congress doesn’t have a solution.

You see, the Highway Trust Fund was established in 1956 to help construct and maintain the nation’s highway systems. To put money into the fund, Congress decided to enact a gas tax.

Originally, the tax was set at $0.03 per gallon. By 1993 – the last time the tax was raised – it reached its current level at just over $0.18 per gallon.

Today, though, the fund has a problem. Inflation has easily outpaced the fund’s tax revenue, stripping roughly 40% of the HTF’s income right off the bat. On top of that, the push for fuel-efficient vehicles in recent years has decreased gas tax revenue significantly. Finally, people are simply driving less these days.

A Rapidly Expanding Infrastructure Crisis

For a few years now, Congress has buoyed the HTF by providing cash infusions from the General Fund – the pool into which all income tax dollars go. However, it’s very apparent that a more sustainable answer is needed.

So what are legislators doing to resolve the issue before the fund is depleted in late August?

Unfortunately, not much. Last week, Congress was busy taking its Fourth of July holiday… and going forward, they’ll be scrambling to address the issue before their month-long August recess.

To say the least, it’s disappointing that the Highway Trust Fund issue has come down to the 11th hour. Congress now has just 16 days left to come up with a solution to this critical problem.

You see, the consequences of allowing the fund to be depleted are grave… Last Tuesday, Transportation Secretary Anthony Foxx predicted that as many as 700,000 Americans could lose their jobs if the fund is allowed to go bankrupt.

Summer is normally peak construction season, but state transportation departments are holding back dozens of projects in anticipation of the fund’s insolvency.

For example, USA Today reports that Arkansas, which receives 45% of its funding from the federal government, has chosen not to bid on upwards of $120-million worth of projects. That means hundreds, if not thousands, of construction workers will be left without work during prime earning season.

On top of that, the number of roads and bridges in critical need of repair will grow rapidly without federal funding. In Rhode Island, 40% of the state’s bridges would be structurally deficient by 2024 without federal aid.

Conflicting Interests in Congress

Senate Finance Committee Chairman Ron Wyden has proposed a short-term solution to raise $7.5 billion through a series of tax compliance changes… but the proposal provides no long-term solution other than “language affirming that a longer-term resolution of the HTF funding crisis through 2020 should be of the highest priority,” according to DLA Piper.

So what should Congress do to refill the HTF coffers?

Well, the Congressional Budget Office estimates that a $0.10-per-gallon gas tax increase “would solve the problem without eliminating funding for any current transportation programs,” according to Tracy Hadden Loh, who holds a Ph.D. in city and regional planning.

Unfortunately, a tax hike is an unpopular move during election season. Raising the fuel tax (especially during the summer, when prices are already reaching their peak) is a tough sell for House conservatives and most other Congressmen up for re-election.

Election season or not, though, inaction will only lead to insolvency… which means Congress must devise a comprehensive solution now, before it’s too late.

In Pursuit of the Truth,

Christopher Eutaw

Christopher Eutaw

, Staff Writer, Politics

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