Will Congress fiddle as Highway Trust Fund runs dry? Congress must act or Highway Trust Fund will bleed red by next year

Will Congress fiddle as Highway Trust Fund runs dry?

A hike in the fuel tax may wind up on the table...

During testimony at a U.S. House of Representatives hearing yesterday, alarm bells about the Highway Trust Fund were rung loud and clear that Congress must act soon to ensure the infrastructure-funding mechanism remains solvent.  

According to the Congressional Budget Office (CBO), its estimates indicate “the revenues derived from existing excise [fuel] taxes will fall far short of covering the spending that would result from continuing to obligate funds in the amounts provided for 2013, as adjusted for inflation.

“The current trajectory of the Highway Trust Fund is unsustainable,” CBO also stated. “Starting in fiscal year 2015, the trust fund will have insufficient resources to meet all of its obligations, resulting in steadily accumulating shortfalls.”

Despite the urgency—  the Highway Trust Fund is headed back into the red by next fall if Congress does not act in time— remarks made Tuesday by members of the House Transportation and Infrastructure Committee revealed they haven’t yet reached consensus on how to deal with the issue. And that means the Committee is nowhere near ready to send the necessary enabling legislation on to the full House.

Committee chair Rep. Tom Petri (R-WI) stressed that Congress had to come to terms with the Highway Trust Fund before they have to start in on the next surface-transportation bill.

"MAP-21 [Moving Ahead for Progress in the 21st Century Act] is set to expire on September 30, 2014, and current projections show that the Trust Fund will once again become insolvent and unable to meet its obligations starting in fiscal year 2015," Petri stated, per a news story posted by The Hill."Without changes in spending levels or additional revenue, the trust fund will continue to be unable to meet its obligations over the 10-year budget window."

Noting that the committee’s makeup has changed since the last time such funding shortfalls were tackled, Petri also pointed out that "it is important that members understand the fiscal reality we face and the measures the U.S. DOT would need to take."

Representatives from both sides of the aisle did debate the wisdom of possibly upping the federal fuel tax for, which has been held at 18.4 cents per gallon since 1993. The so-called “gas” tax, according to The Hill posting,brings in some $35 billion per year— but the last surface transportation bill passed by Congress spent $54 billion per year.

A post on Politico.com relayed that Rep. Janice Hahn (D-CA ) suggested looking beyond the “gas tax box as we move forward” while Rep. Richard Hanna (R-NY ) remarked that "the elephant in the room is that somebody's taxes are going up if we do what we need to do."  The news post noted that only Rep.  Donna Edwards (D-MD) “directly suggested raising the tax.”

Another possible funding option was shot down in testimony by Dept. of Transportation Undersecretary for Policy Polly Trottenberg. Politico.com reported she asserted that "There's no movement for a VMT [vehicle miles traveled tax] in Washington.”

No matter the solution, Trottenberg urged the committee to act, per The Hill post:  “Trottenberg said the use of diesel fuel has been increasing in recent years as businesses rebound from the 2008 economic recession, but she said there has not been a similar boost in passenger traffic. ‘The growth of passengers is kind of flat, so what you see in terms of revenue when you look at the trust fund, it only goes up a little bit,’ Trottenberg said.”

In his testimony, Kim P. Cawley, the CBO’s Chief, Natural and Physical Resources Cost Estimates Unit, laid out what the budgetary-analysis agency proposes could be done to ensure the Highway Trust Fund is in the black in 2015.

He pointed out that Congress could yet again avoid a shortfall by transferring funds from Treasury’s General Fund to the Highway Trust Fund.

Cawley also advised that Congress could also choose to solve the solvency issue by:

  • Substantially cutting spending for surface transportation programs
  • Boosting revenues
  • Adopting some combination of spending cuts and revenue enhancements

“Bringing the [highway] trust fund into balance in [fiscal year] 2015 would require entirely eliminating the authority in that year to obligate funds (projected to be about $51 billion), raising the taxes on motor fuels by about 10 cents per gallon, or undertaking some combination of those approaches,” CBO asserted.


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