Highway Trust Fund Depletion

There is a disturbing trend in federal transportation funding, a quickly depleting Highway Trust Fund. Currently the fund is paying out more than it is collecting, and as a result, is depleting at alarming rates. In 2008 the Highway Trust Fund, which provides funding for all federal highway projects, required an emergency $8 Billion action from Congress to keep it from going bankrupt. The same dilemma repeated itself this summer, with Congress passing emergency funding in the amount of $7 Billion to prevent it from going bankrupt again. Conservative estimates have the same problem repeating itself in 2010.

There are a number of contributing factors to the rapid depletion of the Highway Trust Fund, which is funded primarily through an eighteen cent tax on motor vehicle fuel. During the past two years, vehicle miles travelled have declined for the first time since the automobile become prominent in US society, which translates into less fuel sales. Also contributing to fewer fuel sales is the improvement in vehicle fuel efficiency, so although cars are still being driven, they require less fuel than in the past. Other factors that have depleted the Highway Trust Fund are the rapidly increasing costs of construction materials. Since 2006 the cost of asphalt, steel and concrete, the primary components in road construction has increased an average of 40%. Having declining revenue, with increasing costs is a guaranteed formula for a deficit.

This is a serious problem, one that cannot continually be addressed with additional funds from the general fund. With the Transportation Equity Act, the federal law that funds transportation projects set to expire in 2009, the problem can only get worse. Congress has been working on drafting a new Transportation Equity Act; however it will not take priority to other issues of national concern. With the Congress dealing with other issues, our nation’s infrastructure will continue to worsen. Even when the bill becomes top priority, there is still disagreement over how to fund future transportation investments. Some want to raise the fuel tax and index it to grow with inflation, others want to implement a tax vehicle miles traveled, another recommendation is to increase the number of toll roads, and of course privatization has also been discussed.

All the methods being discussed for raising transportation funds have unique benefits and detractors. Until transportation takes the forefront of the national debate, the problem will not be resolved. As much help as the American Reinvestment and Recovery Act provided, it is no substitute for a Transportation Equity Act. The longer the Congress waits to act on transportation, the longer we will have to wait to start rebuilding our infrastructure.