• A Highway Trust Fund fix: Align dedicated revenues with transpo spending

    New report argues for long-term highway bill aligning dedicated revenues with transportation spending
    June 19, 2014
    3 min read
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    In a report released yesterday, a bipartisan, non-profit group of budget experts has identified a number of spending cuts and revenue increases that could help close a $15 billion annual gap between the dedicated revenue coming into the Highway Trust Fund (HTF) and the spending from it.

    The HTF once again is running out of cash; the Dept. of Transportation (DOT) estimates that the fund will run out of cash by September.

    The report by the Committee for a Responsible Federal Budget (CRFB) the same day that two U.S. Senators proposed a 12-cent increase in federal gas and diesel taxes over two years and an indexing of that tax to inflation thereafter.

    Members of CRFB include many past Chairmen and Directors of Congressional budget committees, the Congressional Budget Office, the Office of Management and Budget, the Government Accountability Office and the Federal Reserve Board.

    CRFB stated that since 2007, Congress has used $54 billion in general revenue transfers to keep the HTF functioning without addressing the fund’s structural funding gap. It estimates that the highway program will spend $170 billion more than it raises over the next decade.

    As CRFB sees it, the best solution to the HTF’s structural funding problem would be a long-term highway bill that aligns dedicated revenues with transportation spending through spending cuts, revenue increases or a combination.

    Some options that CRFB identified include:

    • A 35% cut in highway spending, which would close the shortfall
    • A 15-cent fuel tax increase or an 11-cent increase indexed to inflation, which would close the shortfall
    • A freezing of spending at 2014 levels, which would close one-quarter of the shortfall
    • A $1 per barrel oil tax, which would close more than one=quarter of the shortfall

    If Congress is unwilling to deal with the HTF’s funding problem through a structural fix, “transferring funds from general revenue into the HTF would be an acceptable alternative if and only if those funds were fully offset with real spending cuts and/or tax increases elsewhere in the budget,” CRFB said. “Under no circumstance should lawmakers rely on a deficit-financed (or gimmick-financed) general revenue transfer to fund the HTF.”

    The CRFB report addresses not just the funding shortfall but also the need for better prioritization of projects for funding as well as reform of the budgetary treatment of highway spending.

    “The HTF has a unique treatment in the budget, making it immune to the normal forms of budget discipline that ensure policymakers account for the full costs of legislation they pass,” CRFB observed.

    About the Author

    Avery Vise

    Contributing editor

    Avery Vise was a FleetOwner editor from 2013 to 2015.

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