(RNN) - The program that supports the building and repair of interstate highways and bridges could go bankrupt in a matter of months due to a monetary shortfall directly tied to gas consumption.
The Highway Trust Fund was created in 1956 to build roads across the country, and its primary money source is the federal gas tax.
According to most experts, including Transportation Secretary Anthony Foxx, funding at current levels would devoid it of cash by August at the latest. The fund could be completely defunct by 2015.
The current 18.4 cents tax on regular gasoline has not been raised since 1993 when the average price of gasoline was about $1.05. The current tax on diesel fuel stands at 24.4 cents per gallon.
In the meantime, inflation has hit every sector of society, and the types of projects the Highway Trust Fund supports has expanded.
This is not a new problem. As far back as 1997, Congress has moved money from the general fund into the Highway Trust Fund to keep it solvent, and $54 billion has been moved since 2008.
The 2010 Simpson-Bowles deficit commission report recommended a 15-cent increase on the gas tax, an idea the U.S. Chamber of Commerce, American Trucking Associations and AAA support.
But with Congressional midterm elections coming in November, lawmakers might be even more reluctant to tell Americans they are adding more taxes to their gas.
According to AAA Director of Federal Relations Avery Ash, few other logical solutions exist.
"The gas tax is very easy to collect, it's low-cost, it's proven, we know it works," Ash said. "The Highway Trust Fund has been built on it for decades, and there is a very low incidence of being able to avoid it. There are opportunities to gain the system, so we think it's the fairest, most reliable and best option we have right now."
A worst-case scenario is the delay or complete halt of road construction projects in virtually every state, which would mean loss of jobs and bottlenecks on roadways and mass transit lines.
The Congressional Budget Office estimates it will take $15 billion to keep the program solvent for the 2015 fiscal year and $172 billion during the next 10 years to operate at its current level.
Otherwise, nearly 187,000 transit-related jobs could be lost, according to the nonpartisan Center for American Progress.
The Department of Transportation sent a proposal to Congress on April 29 calling for $302 billion for the HTF in the next four years. More than half of that would come from sources other than the federal gas tax, including revenue from changes to business taxes and allowances for states to impose more highway tolls. The National Highway Safety Administration could also raise its fine for automaker safety violations from $35 million to $300 million.
Why the money is drying up
Driver behavior is another factor that has taken a chunk out of the Highway Trust Fund. Statistics from the U.S. Department of Transportation show fuel consumption in every classification of light-duty passenger vehicle has decreased in the past 20 years. The average brand new car got 28.4 miles per gallon in 1993. In 2012, the most recent year reported, a new car got 35.6. With more emphasis on green technology, that number is expected to improve even more.
Estimates from the Federal Highway Administration show total miles driven in the U.S. increased every year from 2000 to 2007, when they peaked at 3.03 trillion.
However, when adjusted for population changes, the per capita driving distance has dropped for nine consecutive years.
"Evidence suggests that the decline is likely due to changing demographics, saturated highways, and a rising preference for compact, mixed-use neighborhoods, which reduce the need for driving," the State Smart Transportation Initiative wrote in an analysis of FHWA numbers. "Some key factors that pushed VMT (vehicle miles traveled) upward for decades – including a growing workforce and rising automobile ownership – have also slowed considerably."
Transportation planning has operated on the assumption that automobile use would increase, according to the SSTI, but recent trends have forced several states to rethink their strategies.
Who shoulders the load
That brings into play a virtually ageless argument - how much of this issue belongs in the hands of the federal government as opposed to the states.
"The time is long overdue for Congress to define what role, if any, the federal government should play in the renewal, expansion, and operation of the nation's surface transportation networks and facilities," wrote Emil H. Frankel, a transportation consultant at the Bipartisan Policy Center. "Until the federal role has been redefined (and almost certainly drawn more narrowly than it was in the last half of the 20th century), no reasonable and productive discussion can occur about how we should fund federal transportation programs."
Though state departments of transportation bear the bulk of responsibility for building and maintaining roads, they receive an average federal reimbursement of 45 percent, according to the American Society of Civil Engineers.
Those reimbursement checks could come at a reduced rate on the dollar or not at all if Congress does not shore up money in the HTF.
The timing could not be worse, as the ASCE recently gave American roads a "D" grade in a report it releases every four years. It added that poor conditions on 42 percent of major roadways costs the country $101 billion in wasted fuel and time.
And that was an improvement from the previous report card.
"It is clear that we have a significant backlog of overdue maintenance across our infrastructure systems, a pressing need for modernization, and an immense opportunity to create reliable, long-term funding sources to avoid wiping out our recent gains," the ASCE said.
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Funding for major highways, bridges and other transit projects is in danger if the federal Highway Trust Fund is not replenished. (Source: GNU/MGN)
