Let's face reality on the Highway Trust Fund, not rush comprehensive legislation

Yesterday and today, I briefed members of Congress on the Highway Trust Fund situation and proposed an immediate 18-month highway reauthorization that will replenish the Fund.

This is an unusual step, I know. But, with the Fund likely to run out of money by late August, it's a little too late to worry about business as usual.

Beyond keeping the Highway Trust Fund solvent, an immediate 18-month reauthorization provides Congress the time it needs to fully deliberate the direction of America's transportation priorities. That's the kind of thoughtful decision-making America deserves.

Passing transportation legislation in Congress is a complicated process. How the Highway Trust Fund went south? Not so complicated.

Here's how it works...

Highways are built, repaired, and maintained with payments from the Highway Trust Fund. The Fund is replenished by revenue collected from motor fuel taxes when Americans buy gas. When Fund spending in a given period is more than the gas tax collected in the same period, the Fund declines. When the decline persists over months or years, the Fund runs out of money and limits the ability of the Federal government to help states.

As the chart below shows, even in years of relative economic security and gas-price stability, the Highway Trust Fund ended the fiscal year with less money than it started.

Roadwork is not a simple undertaking. Our road-building and road-maintaining commitments must be planned years and years ahead. But, when times are uncertain, Americans are making gas-pump decisions month-to-month, some even day-to-day.

I hope you can see the mismatch that can lead to. In years of combined economic insecurity and gas-price volatility, like 2008, people buy less gas and the Fund's revenue source drops off.

You can see from the chart above where that led us in 2008. Congress had to kick in an extra $8 billion to the Fund.

You can also see where it has brought us so far in 2009. The Fund is likely to run out of money once again, and soon. Expenditures will stop; states will be in danger of losing the vital transportation funding they need and expect; projects will shut down; jobs will be lost.

That's the road we're on right now. Once again, the Highway Trust Fund will need a massive cash infusion.

Can we really go through this every year? Is that really the best this Nation can do?

I don't think so. That's why I went to the Hill yesterday and why I'll be there today.

That's why I proposed a quick, but brief, reauthorization that will free Congress and this Administration to better address long-term transportation policy.

Time is running out, and the Highway Trust Fund must be made solvent. Then, and only then, can this country get the kind of thorough transportation discussion needed to address our infrastructure investments in a smarter, more focused way, a way that best meets the real demands of the country.

That's a discussion President Obama and I look forward to. But, first we need to take care of business.

Comments

[Larry Hagemann]

A great approach to a real issue facing us this at this very moment. Get it done, Mr. Secretary. And thank you.

[John Thacker]

I agree that we can't and shouldn't go through this every year. But why does that mean that we have to have yet another "emergency cash infusion" this year? Isn't there still time to do something easy and long-term, like increase the gas tax, which hasn't been raised to keep pace with inflation for years?

I don't see another cash infusion as leading towards a long term solution. I see it as a recipe for yet another cash infusion next year, just like with the AMT "patch" every year.

[Richard Campbell]

I understand the concern about raising gas taxes in a recession but a good case can be made why this is the idea time to raise gas taxes.

As a result of high gas prices last summer and the recession, vehicle miles travelled have already started decreasing. People have already proven they can adapt quickly to high gas prices so the impact of an increase in the gas tax will be minimal.

By decreasing gas use, a rise in the gas tax will mean that more of the money that people spend will stay in the US economy. This will speed the recovery. Reducing gas use could also help prevent larger price increases during the recovery which could stop the recovery in its tracks.

An increase in the tax will send a strong signal to both consumers and the auto industry that smaller, more fuel efficient cars are the wave of the future. Consumers will be more likely to purchase smaller cars during the recovery and manufacturers will feel more confident in spending the billions of dollars required to develop fuel efficient cars.

Higher gas taxes will also encourage developers to build denser walkable mixed communities that are closer to city centres and people will be more likely to purchase such housing. This will help further reduce gas usage.

The recent reduction in driving has led to lower traffic fatalities and I assume fewer injuries as well. This reduces both suffering and health care costs. At a time when the President is trying to find health care solutions, this seems like an ideal time to make the link between driving and health care.

The other risk of delay is that this will move the debate too close to the mid term elections making raising gas taxes more problematic. If the decision is delayed until after the mid terms, there may no longer be the political support in Congress for higher gas taxes and transportation reform.

[Jamie Kendrick]

we dont have 18 months -- the need is now and real.

[Daniel Krause]

I think it is very risky to delay the tranportation bill for 18 months. We need real reform and we need the proposed $50B to truly implement high speed rail. In 2011, if republican even pick up a couple senate seats, the political will for change may be gone or seriously diminished. I just am always dumfounded how little priority transportation is given in this country. It is always at the bottom of the list. It would be a terrible shame if we blow the chance to really start to construct a high speed rail system (13B is really not enough to do even one line).

[Carter Lavin]

Mr. Secretary,

While I support raising the gas tax to help keep this fund solvent and discourage excessive driving, I think it is possible that the general shift to more efficient vehicles and less driving will mean that higher gas taxes will not bring much higher tax revenue so the fund should seek other means of revenue generation. I would suggest increasing taxing heavier vehicles.

[Glen]

The CAHSR project is going to need
some real big Federal funds by 2012..so an 18month delay may hurt our projects timelines.

[Randy]

I hope that USDOT will re-examine the environmental review process.
The intent is well founded, but its execution on projects of all scales needs to be significantly improved & streamlined. When funding is so tight, we can't afford these inefficiencies in project delivery.

[Bob]

I understand the huge undertaking of road construction, but it always seems to take so long for anything to get done. I know it already is a huge expenditure but I wish it could be done faster. It ends up just hurting the citizens by taking up huge amounts of time.

[Cory S.]

I'm concerned that people are thinking of macro solutions when the circumstances of the revenue inflow are on a micro-level. Roads have a specified shelf life. (generally 20 years) This shelf like can be related to what the industry calls ESAL's (Equivalent Single Axle Loads). Roads today are designed based on ESAL's, we can also gauge what the cost to repair a road will be after a specified number of ESAL's. What is needed is a way to uniformly equate ESAL's per individual to a monetary value per user. In short, a mileage tax as opposed to a gas tax which is different based on the vehicle driven.
The solution I am investigating involves regulating our current tire industry to monitor and tax customers on a mileage basis. Some may find this to be invasive or just plain too hard. However, the facts are:
1. Like gas, tires are consumables.
2. Many people already have private companies monitoring their mileage for warranty purposes.
3. Fuel efficiency ratings are going up.
4. The gas tax has failed in the past, and without a serious overhaul will fail in the future.

I don't propose this as the only solution, or even a comprehensive plan. I'm only one industry professional. But I do take the issue seriously, I'm a pavement engineer, without an HTF I'm out of work.

We need solutions that are going to reach outside of the box.

[Abi R.]

What was the revenue of the gas and deisel taxes in 2009? I can't find the answer anywhere...

[dengxixian]

ESAL's (Equivalent Single Axle Loads). Roads today are designed based on ESAL's, we can also gauge what the cost to repair a road will be after a specified number of ESAL's. What is needed is a way to uniformly equate ESAL's per individual to a monetary value per user. In short, a mileage tax as opposed to a gas tax which is different based on the vehicle driven.
The solution I am investigating involves regulating our current tire

[create a free blog]

I continue to be encouraged by your support for bicycle transportation. I am a fair weather bike commuter (once or twice a week) in Cincinnati plus riding a thousand or so recreational miles a year. I find the motorists here reasonably tolerant of cyclists, but education is needed for both motorists and cyclists.