Highway Funding: Past, Present and Future
As reported earlier this week, the Senate is currently considering a spending bill for the Departments of Transportation (U.S. DOT) and Housing and Urban Development (HUD).
In a prepared opening statement before the Committee on Transportation and Infrastructure, Tom Petri (R-Wis.), chairman of the Subcommittee on Highways and Transit, noted that the federal share of U.S. DOT funds is based “almost entirely from user fees collected and deposited into the Highway Trust Fund.” That funding mechanism, established through the Federal-Aid Highway Act of 1956, set a tax rate of 3 cents per gallon at the time.
While the current tax rate is 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel, these user fee levels don’t keep pace with inflation. According to the Bureau of Labor Statistic’s CPI inflation calculator, the value of that 3 cents per gallon in 1956 would be 26 cents per gallon in current dollars. Essentially, the value of gasoline tax is 29 percent lower today than in 1956, while the value of diesel fuel tax is more than 6 percent lower.
As the value of user fees drops, fuel efficiency standards continue to climb. The combination has had a devastating effect on the Highway Trust Fund. During the last five years, it would have been unable to meet its obligations without transfers from the General Fund. Petri noted that by the end of 2014, $54 billion will have been transferred from the General Fund into the Highway Trust Fund to keep it solvent.
“Without changes in spending levels or additional revenues,” Petri said, “the Trust Fund will continue to be unable to meet its obligations over the 10-year budget window.
While the Highway Trust Fund served the nation’s transportation needs well for 50 years, a new funding mechanism, or combination of funding measures, is needed to sustain the nation’s infrastructure into future decades.
The multi-billion dollar question is:
With MAP-21 set to expire in September 2014, can the 2013 Congress demonstrate the insight and determination of their 1956 counterparts?