Save America's Infrastructure

 
 
 
 
 

10 Myths About the Highway Trust Fund

June 3, 2014

1. The Highway Trust Fund is Running Out of Money Because We Waste Money

Thanks to the Intermodal Surface Transportation Efficiency Act (ISTEA), first passed in 1991, transportation projects are planned, developed and executed efficiently while utilizing innovation. Grades in the Report Card prove that when we invest in infrastructure, we see results. The 2013 Report Card saw improvement in six infrastructure sectors that benefited from private investment, targeted efforts from cities and states, or a one-time federal funding boost.

Communities oftentimes know best where money will be best utilized, and the Highway Trust Fund allows many transportation project decisions to be made on the state and local levels. For example, federal funding eligibility for bicycle lanes is a concern in many places. Since there is a growing national share of bicycle and pedestrian fatalities that needs to be addressed through better road design and other proven countermeasures, the Highway Trust Fund allows a community to identify this need on its own roads and decide how to best design bike lanes for that community.

2. The Federal Government Should Get Out of the Infrastructure Business and Let States Make Their Own Decisions

The Highway Trust Fund is designed to assist states in paying (historically about 45 percent) for transportation projects for many reasons, and it is a system that has served the country well. The cost of transportation projects is a huge expense and states do not have the funding to go this alone.

The U.S. Constitution’s Commerce Clause (Article 1, Section 8, Clause 3) grants Congress the power to invest and maintain roads, bridges and transit.

From the Interstate Highway System (keyword: Interstate) to our ever-expanding electrical grid, infrastructure is indeed a national issue that must be addressed through a national vision.

3. The Current Gas Tax Rate is Perfect and Does Not Need to Be Changed

The Highway Trust Fund is how Congress provides federal funding for transportation projects. It was created in 1956 to be funded by the federal gas tax.

The U.S. Department of Transportation projects that the Highway Account of the Highway Trust Fund will run out of money for new projects as early as July. According to the Congressional Budget Office, to prevent insolvency of the Highway Trust Fund in 2015, federal surface transportation investment would have to be cut by 92 percent that year.

The gas tax is not tied to inflation and hasn’t been raised in more than 20 years. We are trying to run a 2014 transportation system on 1993 dollars. Consider that the cost of many items has doubled or tripled since 1993. For example, a new car cost $12,750 in 1993, whereas in 2013 a new car costs on average $31,252.

The purchasing power of the federal gas tax is not what it once was. This is obviously an untenable formula that must be addressed.

4. We Can Just Raise Enough Revenue Through Tolls and Public-Private Partnerships (P3s).

Tolls and P3s can be successful sources of revenue, and are a part of the overall solution, but neither is a silver bullet in finding a sustainable long-term funding source. Historically, federal highway funding has accounted for approximately 45 percent of what state DOTs spend on highway and bridge capital improvements. Quite simply, the federal government must lead on the issue of funding.

For the 10 year window, 2015-2024, the cumulative shortfall in the highway and mass transit accounts of the HTF will be over $170 billion. This is too large a figure for anyone to expect to be filled by tolling and P3s. While as House T&I Chairman Bill Shuster (R-PA) has said “the private sector continues to show significant, growing interest in investing in infrastructure,” they cannot be a substitute for federal investment and federal leadership.

The key is finding a long-term, sustainable funding source. P3s and tolls are pieces of the puzzle, and when partnered with a sustainable revenue stream, can help ensure reliable revenue for the Highway Trust Fund.

5. We Don’t Have Enough Revenue Because People Are Driving Less

Over the past two years, vehicle miles traveled (VMT) actually increased; in 2012 by 0.3 percent and in 2013 by 0.6 percent. While there was a downturn in vehicle miles traveled after 2007, this decrease coincided with the recession. As the economy continues to improve, more employees will return to work, increasing VMT. Furthermore, the U.S. population grows each year by just under three million people, and the number of licensed drivers also grows by two million people. It is estimated that this trend in population growth will lead to an increase of 25 billion VMT annually.

6. Raising the Gas Tax Would Hurt Economic Growth

In our Failure to Act economic studies, ASCE explored the consequences of continued underinvestment in infrastructure. Ultimately, the studies concluded that our deteriorating infrastructure will cost the American economy more than 867,000 jobs in 2020 and suppress the growth of our GDP by $897 billion by 2020. Per household, the cost of deficient surface transportation will cost $1060 per year. To simplify, a homeowner can either fix a leaky roof now or wait for his or her home to eventually cave. Clearly, the former is much more cost effective. Our nation’s infrastructure needs to be tended to and funded now, or we will all continue to pay for it in a multitude of ways at much higher costs.

7. The Gas Tax Isn’t Raising Enough Money Because Cars are More Fuel Efficient

Between 2012 and 2022, gas tax revenues will decrease by less than 1 percent, ($2.5 billion) the CBO estimates. The issue at hand is not really fuel efficiency, but rather that the gas tax has not been increased since 1993. In the 20 years since, it has lost more than a third of its value because of inflation. Fuel efficiency will become more of a problem as fuel efficiency technology continues to advance in the coming decades, but in the near term it is less of a problem than often stated.

8. We Can Afford to Do a Short-Term Bill and Maintain the Status Quo

Not this time. The 2012 surface transportation law, MAP-21, temporarily preserved levels of federal highway and public transportation investment by supplementing existing Highway Trust Fund revenues with other federal resources. Since 2008, over $52 billion has been transferred from the General Fund to the Highway Trust Fund to keep it solvent.

MAP-21’s funding will run out as the Highway Trust Fund becomes insolvent weeks, or more likely months, before the law intended the money to end. Attempting to “Band-Aid” the Trust Fund once again will only result in this becoming a recurring issue. States, planners, and engineers cannot plan needed infrastructure projects without committed funding. As the impending insolvency demonstrates, there is currently not enough revenue to support the system.

Furthermore, the 2013 Report Card for America’s Infrastructure graded our nation’s infrastructure at a D+. Clearly that status quo is not enough in helping the U.S. build a 21st century infrastructure capable of competing on a global scale.

9. Congress Cannot Get Big Things Done Because Everything Turns in to a Partisan Fight

In the words of Senate Minority Leader Mitch McConnell, “Infrastructure spending is popular on both sides.” In the past year transportation legislation and funding ideas have come from both Democrats and Republicans. Notably, Rep. John Delaney’s (D-MD) Infrastructure Bank bill was proposed with an equal number of Democrat and Republican co-sponsors. Sen. Vitter (R-LA) and Sen. Boxer (D-CA) have worked closely to craft a six-year highway bill, which passed out of committee with a unanimous bipartisan vote. And Rep. Dave Camp (R-MI) proposed a tax reform bill which included $126 billion for transportation projects in an effort to close the Highway Trust Fund shortfall. Efforts from both sides of the aisle, and the recent bipartisan support that led to the passage of the Water Resources Reform & Development Act (WRRDA), prove that there is support for infrastructure investment in both parties.

Furthermore, the U.S. Chamber of Commerce continues to support  raising the gas tax, stating it is the “simplest and most straightforward” option to fund a long-term highway bill.

Without question, infrastructure is a bipartisan issue that has seen encouraging proposals on both sides. Given that this is an area where Congress can agree, now is the time to work together and get something done.

10. We Don’t Have the Money to Fix The Problem

The Highway Trust Fund will become insolvent in only a couple months, meaning the federal government will slow or stop sending checks to state DOTs this summer. The economic consequences of not being able to pay contractors and employees will send shockwaves throughout our economy. This is going to happen.

The notion that we simply cannot find a long-term, sustainable revenue source is false. The costs of inaction and allowing the Highway Trust Fund to cease funding for needed repairs and maintenance are immense.

Americans are already paying for the cost of our nation’s D+ infrastructure. American families and businesses are losing money and time. Congested roads cost an estimated $101 billion per year in wasted time and fuel, and driving on roads in need of repair costs motorists an average of $324 per year in vehicle repair and operating costs.

We can either invest now or pay a whole lot more in the years ahead. The lesson is clear: We can’t afford not to act.

22 Comments
  • Wow, thanks for debunking these myths.

  • Re point number two: The feds can stay in the infrastructure business, but they should turn the federal gas tax subvention directly over to the states without touching it. They should simply audit the use of the funds and drop all other federal requirements on the funds. Eliminating compliance with federal requirements will allow more of the funds to go into the actual construction and maintenance projects. Also, separate funding should be established for rail, bicycle, and other non-core highway projects.

  • Joe Gaffney PE MASCE

    I agree with Mr. Carr above. Other than funding the interstate system and transportation research, the federal government should not be in the highway business. Federal involvement results in mandated shares for transit and bicycle projects, whether the local community wants them or not. California has an adequate environmental law in CEQA, but utilizing federal funds for a street overlay project stretches the environmental review period out to at least 6 months. Why am I certifying that there are no wild and scenic rivers within the limits of a street overlay project in an urban core?

  • James R. Carr PE FASCE

    Lets cancel, both Federal and State, the fuel tax and have a User Fee, both Federal and State, as a percent of the wholesale price of all commodities carried over the transportation system. There would be the initial euphoria because the fuel price would decrease. The fee would apply to everything that is carried on the transportation system and would then be a cost to only those that purchase the commodities.

  • The (Federal and State) gas tax concept is not a perfect way to provide income for transportation investments, National or otherwise. However, it certainly needs to be raised AND indexed for inflation. Until we can accurately find out who truly uses the “transportation system” (is Big Brother raising his ugly head ?) and, thereby, assess the appropriate “user fee” for doing so, it’s the best mechanism we’ve got.

    Even though the Constitution ALLOWS the Federal Government to tax and spend on the Nation’s transportation system, it actually returns the vast majority of those taxes to the States, but with a huge set of strings attached – a ridiculous situation. In addition, effectively, the States make most of the decisions regarding where the money goes anyway, except for the vaunted Congressional “earmarks”.

    Why not cut out the middle man ? The Federal gasoline tax rate should be severely cut (at least in half) to provide sufficient funds for overseeing maintenance and expansion of the Interstate System (no, it will NEVER be truly “finished” – can you spell I-11 ?). Further, funding for an adequate National Defense Network and some level of nationwide research should remain, BUT THAT’S IT. Transit is NOT a National concern, although rail lines that connect States certainly need some Federal oversight – maybe an Interstate Rail system ? Finally, safety on roads that are NOT on the National Highway System is NOT the Federal Government’s business, so don’t presume to tell the States how to spend transportation funds.

    States should be encouraged to increase their gasoline tax rates to the appropriate level to make up for any decrease in the Federal rate (some States have already done this). They should also be encouraged to increase the rate further to make up for the decrease experienced over the past 20-plus years. Finally, they (and the Federal Government) should also add the aforementioned inflation-link proviso.

    Then leave the States to do the job themselves. OK, I’ll add a trust (but verify) condition.

  • In the past there has been two magnificent funding programs created by congress that has helped to grow the status of our Great Country, the first being the Highway Trust Fund and the second being the Aviation Trust Fund. Both of these programs have led the growth and prosperity of this country for over the past half of a century, while being funded primarily by the users of the Highways and Airports. It is time that Congress comes together and take the proper steps to keep both of these programs solvent and moving forward, before, we are so far behind in this portion of our National Infrustructure that it Creates HAVOC with our overall National ECONOMY and makes us a real second rate country. ” IT IS TIME TO ACT”

  • Yes, our infrastructure needs work. But the way it is being done is wasteful. STOP building bridges and overpasses that are eye appealing with fancy artwork. Build them functionally.

    Lets take a look at some recent work in Texarkana, AR, and TX. All of the overpasses over I-35 have relief designs on them, then they are painted and or stained. That part of the project increased the cost of construction by 15 -25%. Then there are the future maintenance costs of the paint and or stain that will need to be done again and again over the years.

    STOP building noise barriers for neighborhoods that were built along existing highways. The people that built or bought homes in these locations knew what they were doing. “There is a highway in my back yard”. If they buy with that knowledge, should we pay for it because they were able to get a “decent price” for a home with a noise problem. Either the Developer should flip the bill for it or the “home owners association” should. Not the fuel taxes. Why should we pay for their stupidity or greed.

    Hold contractors liable for their “BAD” work. An example of this is in Tennessee. West of Nashville within a year of having a “veneer coat” placed upon the surface of I-40, there were many areas of the veneer that were de-laminating. Some of these areas were miles long. An inherent problem throughout Tennessee and several other states is that where the layers overlap between the lanes is not filled in properly and there are voids that end up being mini potholes that the States later fill in with “cold patch”.

    It should be put into every contract where Federal Dollars are used on highways that the contractor is liable to repair “ALL” failures. The minimum stipulation for liability should be 18 months.

    If we are to pay from fuel taxes for bicycle trails then we should require bicycles to have license plates to use these trails.

    Fast rail service is a money pit, unless it will be self sustaining on the fares charged, NO Federal Highway dollars.

  • I seems that ASCE is strongly in the corner of the liberal cause of “big government”. There is no reason to send all the money to Washington, to have it turned around and sent back to the states. We pay dearly by having Washington making controlling decisions and taking there cut. The Highway Trust Fund is is a boondoggle. Support limited centralized, i.e. federal government.
    Viva states rights!

  • I am glad to see ASCE’s involvement in helping to craft legislature that will shore-up the funds required to repair our intentionally neglected infrastructure. It is a shame, however, that the urgency comes at a time when our infrastructure is already failing due to our complacency over many years of misappropriating federal monies for wasteful programs that do not benefit the taxpayers.

    I feel that the representatives from ASCE that engaged with legislators may be very short sighted in that the only apparent solution stated in the articles printed by ASCE focus on simply raising taxes for those already paying taxes. This country and our system of government will fail if we continue to avoid addressing the real issue of wasteful spending of taxpayer dollars on special interest projects, entitlements, and irresponsible government agencies.

    I am disgusted by the analogy printed in the “10 Myths About the Highway Trust Fund” item # 6 (below):

    6. Raising the Gas Tax Would Hurt Economic Growth: In our Failure to Act economic studies, ASCE explored the consequences of continued underinvestment in infrastructure. Ultimately, the studies concluded that our deteriorating infrastructure will cost the American economy more than 867,000 jobs in 2020 and suppress the growth of our GDP by $897 billion by 2020. Per household, the cost of deficient surface transportation will cost $1060 per year. To simplify, a homeowner can either fix a leaky roof now or wait for his or her home to eventually cave. Clearly, the former is much more cost effective. Our nation’s infrastructure needs to be tended to and funded now, or we will all continue to pay for it in a multitude of ways at much higher costs.

    The stupidity of this response and the reasoning is unexcusable for engineers and politicians. I would like to offer a more realsitic analogy that ASCE and engineers of all disciplines should truly consider. We are of course obligated to protect the safety and welfare of the public. Should we not also be ethically bound to the correct sourcing of funds to accomplish this fundamental cannon? It appears that we merely turn away from the true conflict, choose not to engage with correcting the underlying problem, and allow corrupt government and devious special interest groups to misappropriate U.S. tax revenue.

    Your item #6 should more closely follow:

    …..To simplify, a homeowner can either fix a leaky roof now or wait for his or her home to eventually cave. Fixing the roof will cost approximately $1,000 dollars that will have to come from the monthly budget. Part of the household budget has historically been set aside for alcohol, illegal drugs, activity at the local social clubs, cable TV, movies, internet, new gadgets for the car, smart phones, the lastest clothes fashions, and a multitude of other items that an unemployed person must have to impress his/her peers. By eliminating any of these necessities, the homeowner may not be satisfied with his/her lifestyle so clearly these budgetary items are fixed and cannot be reallocated to home repair. The homeowner then decides that the sole reason that the roof is leaking is because he/she is not receiving adequate funding that would allow for a one-time home repair project to occur. The homeowner therefore chooses to lobby for additional monies due to hardship and basic entitlement clauses that others in the same situation have successfully petitioned. The generous government agency, completely unaware of how funds are raised and what the true purpose of these funds was supposed to be, grants the homeowner an increase in funding but only at a rate of $650 per month. The homeowner recognizes that this will be insufficient to repair the roof during the initial payout and since the regular monthly income is already in a well deserved budget, the additional payment of $650 will be better spent on entertainment and items that make the homeowner more appealing at social gatherings. The homeowner weighs this decision for many seconds and and ultimately chooses not to fix the roof. While the homeowner and all of his/her freinds are very impressed with his/her collection of new entertainment and fashion items, the home caves during the night while the homeowner was away at a social gathering. When the homeowner discovers his/her home in an unsuitable state, it is decided that new accommodations are required and since it is certainly not the homeowner’s fault that the structure collapsed, those living in sound structures should foot the bill. The solution again is to apply for additional funding for living quaters yet it would be better to upgrade homes so the homeowner can entertain guests and have sufficient room to store new items that will come from the original budget plus the enhanced budget of $650 per month. The government agency again grants funding because the homeowner clearly needs much upgraded accommodations. The agency recognizes that the homeowner’s budget is stretched thin and grants additional monthly payments to assist in home maintenance. The homeowner arrives at the new home and immediately deems the new home as not requiring maintenance during the first month. This revelation is very convenient since all of the money provided to the homeowner is consumed by a rigid budget. The latest monthly allotment will therefore be used to upgrade the items that were purchased during the previous budget arrangement to again impress the homeowner’s peers. The following month, the homeowner holds a social gathering at his/her new home, inviting many friends, associates, and peers to attend. During the engagement, a storm passes through the area and dislodges a few roof shingles allowing a water leak into the home interior. The homeowner is mildly concerned about the leak and plans to visit the very generous government agency again at the beginning of the week to discuss the inadequate living conditions and the need for additional funding for home maintenance.

    If we as a nation and our current corrupt administration do not stop handing out taxpayer money for purposes other than supporting the taxpayer, we will cease to live with our freedom. ASCE should not posture for the easy and obvious as it has done during this infrastructure campaign, but fight to bring our goverment under control and use tax monies to improve and maintain the nation for the taxpayers.

  • Congress continues to authorize funds above the revenue stream. Cars don’t ruin our roads, trucks do and they should pay accordingly to either build better roads to start with or to fix the ones they destroy. Fuel efficient and electric cars as well as CNG vehicles need to pay their share too. Here in Colorado almost 29% of each dollar goes to support CDOT project overhead.

  • Jack Reinhard, P.E.

    No doubt the highway trust fund needs higher revenues. ASCE must consider that electric vehicles and hybrid vehicles use the roads as much or more than hydrocarbon fueled vehicles. Higher revenues can be obtained by including a tax on electric charges for vehicles. The tax on hydrocarbon fuels (gasoline, diesel, and natural gas/LNG) can be raised, but there must also be included a tax on electricity used for vehicle fuels for electric and hybrid vehicles. Please support increased fuel taxes on both hydrocarbon and electric energy used by vehicles on the nation’s highways.

  • Michael A. Brown

    Why not leave the gas tax where it is and just increase the deficit spending of the US Gov’t?

    We are already spending about a $1.2 TRILLION a year under President Obama. Let’s step on the gas and just increase the deficit spending!!!! If you disagree with that approach how do you balance our books? Bottom line the US Gov’t spends to much then and actions need to be taken by the gov’t to reduce the gov’t spending. Shutting down the EPA might be an excellent start!

    So who cares?? If the US Gov’t can just PRINT MONEY out of thin air? Why can’t we build more roads and bridges with that MONEY??? It’s free and doesn’t come out of anyone’s pocket. A GAS TAX will have a negative effect on the price of everything economically! Can we afford the increase in the cost of everything because just about 100% of everything consumed in this country is moved by something that USES gas and or diesel fuel.

    SO how much can we pay for gas until it becomes a complete drag on the economy? It’s not like gas is nearly $4 a gallon now . . . oh wait it is. Well $5 a gallon gas is a good thing right??

    My name is Michael Brown and I approve this message.

  • Richard J Ruane

    I think many of us in the USA no longer trust our federal government. I think “federal leadership and ‘investment’” is a huge concern to many of us…these are now political terms having very little meaning. This lack of trust also applies to special interest groups like ASCE. Other important considerations are unit costs for highways and bridges over the past several decades…has innovation decreased these costs? Have we done our part in being cost-effective?

    I think ASCE should address these kinds of issues if we are to rise above the fray. I think much of the information presented above is interesting and beneficial, but ASCE needs to address these bigger issues if we hope to reach the “money conscious” citizens of the USA. If we don’t provide more thoughtful answers like I know engineers can do, we will just be another voice with opinions. To clarify my comments along these lines, we need to be more like Dr. Ben Carson than President Obama. Politics will always take care of itself, but we can offer engineered solutions for the citizens. ASCE has a choice: join the political fray and be seen as part of politics, or go for solutions that rise above the fray and exude authority that the citizens trust.

  • Stephen Mueller

    In this article, you say “The U.S. Constitution’s Commerce Clause (Article 1, Section 8, Clause 3) grants Congress the power to invest and maintain roads, bridges and transit. ”

    Really??? I challenge you to show me where transit is mentioned in the Constitution. Roads are indeed mentioned, but the Federal investment was extremely limited until 1956 when the Interstate Highway System was approved… essentially for defense purposes… which is also mentioned as a Federal responsibility in the Constitution. There are many books about the creation of the IHS, so I’m sure you are aware of the issues that had to be overcome to create it.

    Transit wasn’t in the minds of the founders and even railroads were in completely in private hands for generations. There are some credible analysis that demonstrate how separating the transit funding from the gas tax could resolve most of the trust fund problems. The diversion of trust fund revenues to benefit things not directly related to the roadway users that pay into the fund doesn’t maintain my trust in the HTF.

    Your including the mention of transit in the Constitution is a myth in itself. I know you are trying to cater to all of the members of ASCE, but I expect honest and ethical presentation of the facts from my society.

    • Constitution doesn’t mention fighter jets, missiles, tanks, or cancer research, but I’m glad we have those.

    • chill dude!
      author semantics… “to invest and maintain roads, bridges and transit ” infers interstate (transit) commerce “among the several states.”

      “To establish post offices and post roads.” <= includes the maintenance and improvement of roads and obviously the safe transit between those PO's.

  • I would support an increase in the gas tax on two conditions:

    1. The money would be used for roads and bridges for automobiles and trucks.

    2. The provisions of the Davis-Bacon Act would not apply to infrastructure projects.

  • Robert O'Neill

    The root of the problem is that the American people are tired of tax increases. No matter how much money the Feds collect, they will always spend more. The answer is to divert money from other less essential programs and feed those dollars into the infrastructure. The other part of the problem is the time and expense dealing with environmental regulations and lawsuits. That adds time and unnecesary expense to most projects. Congress and the EPA could fix that with no new taxes. Can you imagine what it would take to build the Alaskan Highway today? What the Corp of Engineers accomplished in months would take that many years now.

  • I find it interesting that miles and miles of old railroad bed have been paved over for bicyles who pay no gas tax while streets and alleys go to pot for lack of money. Am I missing something here?

  • Norman Radford

    Somewhere in the message you should state the amount of the current federal gasoline tax. You should also directly state that the federal gasoline tax should be raised and suggest a new amount for the tax. I believe a good argument in favor of a higher gasoline tax is the percentage it was of the cost of a gallon of gasoline in 1993 and the much lower percentage it is today. Just keeping the same percentage of tax would result in a significant increase in revenue. People understand that state sales taxes raise more revenue as prices increase.

  • We need to get rid of the gas tax and replace it with a tare weight/milage tax. The type of fuel doesn’t affect the damage to or wearing out of roads, weight and milage does. The states can collect the tax when vehicles are registered each year. You register the vehicle with tare weight and the yearly milage can be collected at the same time. This is far more equitable. Alternative fuel and electric vehicles do the same damage to roadways as gasoline fueled vehicles. They should pay their fair share.

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