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Steve Bell, Shai Akabas and Emil Frankel: How to fix the Highway Trust Fund

The Hill

Tuesday, August 12, 2014

De ja vu all over again. That’s what we saw recently on transportation spending. The latest $11 billion “patch” to the Highway Trust Fund continues a trend that has now gone on for several years. Each time the fund comes within days of being unable to make obligated payments to states or transit agencies, Congress bails it out with another cash infusion. This pattern of behavior maximizes uncertainty – reducing the economic value of the very investments we are making – and raises fundamental questions about how federal surface transportation programs should and will be funded in the future.

Historically, federal transportation spending has largely been financed by user fees – primarily taxes on gasoline and diesel fuel that have financed the fund since it was passed under President Dwight Eisenhower in 1956. The past few years, however, have marked a significant departure from this trend, with a greater share of the federal role being supported by general revenues.

The last surface transportation authorization law – Moving Ahead for Progress in the 21st Century (MAP-21), which became law in 2012 – set program spending levels significantly above dedicated revenues, perpetuating what has recently become a structural gap between the two. This gap developed as the gas tax’s value has diminished since it was last raised in 1993, and the average American has been driving fewer miles than what trends foretold at the end of the last century. Moreover, gas tax revenues are likely to be further eroded by future improvements in fuel efficiency.

Bell is a senior director at the Bipartisan Policy Center, Akabas is an associate director and Frankel is a visiting scholar at the center.

KEYWORDS: HIGHWAY TRUST FUND, BPC OP-EDS