Bipartisan solution needed for Federal Highway Trust Fund
Last week, Secretary Foxx sent a letter to heads of State DOTs across the country advising that, with the Highway Trust Fund heading toward insolvency as early as August, we will soon be forced to implement cash management procedures —including delayed reimbursement for hundreds of road projects that employ thousands of workers.
To show readers how this funding crisis will touch their everyday lives, we’re turning over the Fast Lane to Mayors and Governors across the country this week, who are working on the frontlines to manage the possible consequences of a shortfall. Each morning this week, we're featuring guest-authored posts illustrating how all Americans will be affected if the Highway Trust Fund is allowed to dip below zero.
We hope you find them as compelling as we do.
The building, rebuilding, and repair of highways and bridges throughout the United States is heading toward a dramatic slowdown –perhaps even a complete halt– this summer. The Federal Highway Trust Fund, source of federal transportation funding for all the states, will run out of money in late August, and Congress has not figured out a way to save it.
To understand what this means --and why it is bad news for every American-- one needs to understand how we as a nation build and maintain the streets, roads, and bridges we depend on every day. Ours is a national system that carries the life blood we know as daily commerce, the moving of people and goods to homes, schools, work sites, and travel destinations.
Nowhere is it more important than in my home state, Kentucky, where motor-vehicle manufacturing, freight movement, agricultural exports, and tourism are pillars of our economy.
Simply put, this immensely valuable system would not be possible without the support of the Federal Highway Administration and funding through the Federal Highway Trust Fund.
The individual states, so varied in population, land area, and wealth, cannot reasonably be expected --on their own-- to build and maintain a national transportation system.
How critical is the Trust Fund? A typical federal-aid highway project is 80 percent federally funded.
But what relatively few people realize is that federal funding is a reimbursement process. Kentucky and other states first have to “front” the money, paying contractors’ invoices and then relying on reimbursement from FHWA through the Trust Fund.
But the Trust Fund’s revenues have been on a downward arc for several years because its main source of revenue is a federal tax on motor fuels.
The motor fuels tax has been a classic user fee. Whenever they gassed up at the pump, drivers were helping to pay for their roads and bridges.
But the user fee had two vulnerabilities: Motor vehicles have been made steadily more fuel efficient, meaning fewer gallons consumed, and the federal tax has not increased since 1993. Pump prices may have soared in the meantime, but for the last 21 years, the federal tax has been fixed at 18.4 cents per gallon of gasoline, 24.4 cents per gallon of diesel.
Consequently, Congress has been forced on multiple occasions to bail out the Trust Fund with a transfer of money from the General Fund, but always with great reluctance and always at the last minute.
The current surface transportation law, known as MAP-21 –Moving Ahead for Progress in the 21st Century– will expire on Sept. 30. But the U.S. Department of Transportation is projecting that the Trust Fund will run dry before then, by the end of August.
As a result, Secretary Anthony Foxx was forced earlier this month to inform transportation CEOs in all the states that reimbursements will be delayed if Congress does not act to replenish the Trust Fund.
For the states, this is not a theoretical issue. Uncertainty about what will happen with the Trust Fund is already having an effect on construction programs in Kentucky and elsewhere.
The Kentucky Transportation Cabinet has hundreds of millions of dollars worth of federal projects “shovel-ready,” meaning they could go to construction this summer. These projects run the gamut –safety measures, capacity improvement, pavement rehabilitation, replacement of old bridges, new construction.
But the cabinet is seriously considering delaying at least a portion of these projects because of the financial risk. We just cannot be sure we will be reimbursed.
This is not a partisan issue. It affects all Americans and will require a bipartisan solution.
Gov. Steve Beshear and Gov. Mitch Daniels (2nd and 3rd from left) with FHWA Administrator Mendez (2nd from right).
Today in my home state, construction is well underway on a $2.3 billion project to build two bridges, with modern, efficiently designed approaches, across the Ohio River to further connect Louisville and Southern Indiana.
It is a joint project of our two states. It's also a project that languished 40 years on the drawing board because of its scale and cost. It might still be on the drawing board today, had not then-Indiana Governor Mitch Daniels, a Republican, and I, a Democrat, together with Louisville Mayor Greg Fischer, decided to ignore party lines, reduce the project to a manageable scale, and get it to construction.
Bipartisanship saved the Louisville-Southern Indiana Ohio River Bridges Project. Bipartisanship is needed today to save the Federal Highway Trust Fund.