Changes in Transportation Funding

The new rules adopted by the United States Congress do not bode well for transportation funding. A dramatic change in how transportation funds are managed have been approved by House of Representatives; no longer are transportation funds kept in a separate lock box, but rather deposited to the general fund. The change essentially allows taxes collected from the sale of motor vehicle fuel to be used to balance the federal budget. To understand the significance of this change, it is important to understand how our highway and transportation infrastructure is funded. The federal government collects a fee in the amount of $0.184 per gallon. That rate was set in 1991, and hasn’t changes since. The taxes collected are then deposited into the Highway Trust Fund. This fund has been the sole source for federal transportation funding, and was previously separate from the general budget of the United States. The separation of funds guaranteed that the money paid by drivers at the pump was used by the Department of Transportation to build highways and transit.

In 2008 the Highway Trust Fund was drained completely of all funds. Congress acted quickly by depositing $8 Billion from the general fund into the trust fund so that projects underway and planned to begin could continue to receive funding. In 2009 the cycle repeated with the trust fund once more requiring $7 Billion in emergency funds deposited. Since then the trust fund has remained solvent. The primary reason this occurred is that Americans were driving less and driving more fuel efficient vehicles. Purchasing less fuel and paying less in taxes along with the continually rising cost of construction has made many transportation officials nervous that funding will not always be a constant.

The recent rule change is dramatic. Shifting funding for transportation projects from a dedicated fund to the appropriations committee exposes our infrastructure to the game of politics. The money paid by drivers is no longer guaranteed to be spent on the infrastructure needed to continue to support our nation’s growth. Funding levels are now subject to the game of politics, with our infrastructure being treated as bargaining chip in a political game of poker. Infrastructure will now be competing for funding against all other federal program, with the unique distinction that transportation has the ability to generate its own funds.

As our nation’s economy begins its recovery, our infrastructure is going to be crucial to providing industry the ability to move goods to market. The condition of infrastructure will be a determining factor in the growth of the new American economy. As highways and bridges continue to age, it becomes doubly important to make solid investments that benefit all Americans.

The change in house rules has weakened the confidence of transportation professionals. The certainty of continued funding is no longer certain; the likelihood of increased funding is even less probable. The change in rules is not being taken lightly by transportation officials. If one thing is certain, areas with alternative infrastructure funding programs will come out ahead. Local and state funding dedicated for transportation will buttress federal funding, and ensure that the region will continue to move forward, regardless of what Washington D.C. decides.

Posted in: policy,Shayne Trimbell,transit