A $326-billion question

April 1, 2011
Even in this age when we measure the Federal deficit in trillions of dollars, the difference between $556 billion and $230 billion is a lot of money

Even in this age when we measure the Federal deficit in trillions of dollars, the difference between $556 billion and $230 billion is a lot of money. The first number is the amount the Obama Administration has proposed spending over six years to rebuild our highways and other transportation infrastructure. The second is the amount of revenue expected from fuel taxes over those six years.

Every gallon of gasoline and diesel consumed by a motor vehicle in this country carries a Federal fuel tax that is earmarked for the Highway Trust Fund. The fund is meant to cover the cost of Federal spending on highway and other transportation construction projects. The tax rate hasn't changed in almost 20 years, but our constantly growing consumption of vehicle fuel has kept the trust fund in the black and even built a small surplus.

That changed in 2005 when Congress passed the last multiyear transportation construction authorization bill. Faced with serious problems caused by deferred maintenance of existing highways and growing traffic congestion requiring new roadway capacity, the 2005 bill set spending limits that exceeded forecasted tax revenues. Compounding the problem, the recession reduced gasoline consumption as people traveled fewer miles to fewer jobs, resulting in much slower growth to fuel-tax revenues than originally anticipated. The Congressional Budget Office projects that at the current rate of spending, the Highway Trust Fund will run through its surplus and enter deficit territory by the end of 2012.

The 2005 reauthorization has run its course, and the Obama Administration's proposal indicated its intention to significantly change the way we approach not just highway building, but our entire transportation network. It's an admirable goal, but it sidesteps the crucial question of how to pay for it.

Now we have both houses of Congress working on their versions of a six-year reauthorization bill, which both have indicated they will try to pass before the end of the year. The Senate committee responsible for crafting their bill has been mum on both its spending and revenue goals.

The corresponding House committee has been a bit more forthcoming. Led by the new Republican majority, the committee recently issued its “views and estimates” on the new funding bill: “The Committee is committed to writing a long-term surface transportation authorization bill that keeps the [Highway Trust Fund] solvent without additional transfers from the General Fund. …” In other words, they want to hold spending to $230 billion over the six-year span.

Not only is that half of the Obama Administration's proposal, but it's also about 6% lower than the amount authorized by the last bill in 2005. I guess if you don't spend much time on our highways that seems like a reasonable position.

Fortunately, interested observers from various lobbying groups expect the Senate to come somewhere in between the administration and house. But that still leaves the question of how to pay to fund our highway and transportation network construction at viable levels.

There are a lot of proposals floating around, raising fuel taxes being the simplest and easiest to implement. Others, like vehicle-mileage taxes and oil-production surcharges, sound more ominous. But as anyone involved in trucking well knows, ignoring our immediate transportation infrastructure needs will be far more costly in the long run. Let's not let our legislators lose sight of that in this no-new-tax environment.

About the Author

Jim Mele

Nationally recognized journalist, author and editor, Jim Mele joined Fleet Owner in 1986 with over a dozen years’ experience covering transportation as a newspaper reporter and magazine staff writer. Fleet Owner Magazine has won over 45 national editorial awards since his appointment as editor-in-chief in 1999.

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