OUR OPINION: Highway Trust Fund faces insolvency in a few weeks

Highway and transportation officials nationwide face white-knuckle time in coming weeks as Congress and the Obama administration try to find a way to keep the Federal Highway Trust Fund solvent.

The fund, which is fed by an 18.4 cents- per-gallon federal fuel tax, faces insolvency in mid-to-late summer because demands of construction and maintenance from states like Mississippi outstrip revenue.

If there’s blame to assign, it is fuel efficiency of the cars and trucks using highways, which means the tax revenue is either flat or declining.

At the same time, costs to build and maintain highways for an ever-increasing number of vehicles go up.

A bipartisan Senate proposal emerged Wednesday to rescue federal transportation funding, and by reimbursement formula, all states. It would raise the tax on gasoline and diesel by 12 cents a gallon.

The proposal to raise the 18.4-cents federal tax for the first time since 1993 came from Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) and won quick endorsement from an array of advocates ranging from road builders to AAA.

The proposal, it should be noted, is bipartisan in large measure because highways are a non-partisan necessity nationwide.

The two senators’ plan would increase the tax by 6 cents in each of the next two years, and importantly index the rate to inflation. Failure to keep pace with inflation over the past 20 years, along with steadily increasing fuel economy, is the cause of the trust fund’s dangerously low balance.

It is always popular in both parties to look somewhere besides taxation when money is needed for necessities, but sometimes additional taxation that is fair, essential and carefully crafted is the best choice. As with all other government programs of similar magnitude, whether state or federal, nothing is free.

The Hill reported that the fuel levy has been outpaced by infrastructure expenses by as much as $20 billion per year as cars get better gas mileage and U.S. residents drive less frequently than previous generations.

It has projected a loss of 700,000 jobs if the trust fund dries up – and the vast majority of those jobs will be in the private sector and considered local because the money in salaries flows directly into a community and state economy.

On this issue we hope the Mississippi delegation – both senators and all four representatives – find a unified voice to prevent a policy-budget-work disaster affecting everybody in short order.

  • Lee814

    First, I do not buy the claim that better fuel efficient cars are to blame for the insolvency in the highway fund. But for the sake of argument, let’s say I do. Does anyone remember a few years ago when the administration talked about the need for more fuel efficient cars? While many were bringing up the fact that these cars were going to cost more to produce. The administration argued that this cost would be made up by the consumer in fuel savings. Now, the administration, along with some in congress want to raise the fuel tax. If this happens, not only does the consumer pay more for the car, but they also have to pay more for the fuel. It is the consumer, who already pays high taxes, suffering even more.

    As I said at the beginning, I do not buy the lie that more fuel efficient cars are to blame for the insolvency. The insolvency in the highway trust fund, much like the coming insolvency in the SS fund, is caused by our great leaders using this money to pay for their huge spending habits. They run up large deficits and “borrow” (steal would be more like it) money from these special funds so they can spend more. Now they want to raise taxes again. Imagine that! They have been SO GOOD at managing our tax dollars. Don’t you just want to send them more?

    Enough is enough!

    • MidTennDog

      Actually, Lee, Congress has been dipping into the general treasury to help fund the Federal Highway Trust Fund for many years. I don’t think they’ve ever dipped out of the trust fund. My first reaction was that raising the gas tax was a bad idea because the number of gallons of gas purchased in this country would just keep going down in the future as fuel efficiency goes up and it would be a wash, with the fund still in danger in the future. That may still be true. However, the tax (which is based on a set cents per gallon) hasn’t been raised in twenty years and currently cannot be adjusted for inflation. Construction costs a lot more than it did twenty years ago. Gas was around $1.10 per gallon in 1994 (twenty years ago). I can’t find how much that would be in today’s dollars but I’m guessing it wouldn’t be $3.45 like today’s gas. A lot of that has to do with China, India and the like and their emerging middle classes now driving. Unfortunately, we can find all of our oil here in the States and still have to pay what it’s trading for on the global market. Maybe THAT needs to be addressed more than anything.

    • FrereJocques

      This issue is the classic case of a mountain being made out of a molehill.

      I happen to agree with the arguments that are put forth regarding the need for a fuel tax increase. Our vehicles ARE burning much less fuel; Highway construction costs HAVE gone up (WAY up); and existing infrastructure has deteriorated since it was first built, much of it over a half-century ago.

      The Mountain/Molehill claim? Today, we pay ~$3.50 a gallon for gas, here in MS anyway. Adding 6 cents to that is an increase of 1.7%. That amount is not worth arguing about. The price of gas varies by at least that much, and sometimes a lot more, over the course of every month.

      Even when the second increase occurs in two years, we’re talking about 3.4%. Still not much to complain about. And if this will solve the problem of funding for infrastructure repair, this is cheap and money well spent.

      There are issues worth arguing about, and then there is this issue. Folks, fight for things that are worth fighting about. This isn’t.

      Just my 6 cents’ worth. :/

      • Lee814

        The problem is that raising taxes has never solved the spending problem in Congress. As with other proposed taxes for specific purposes, they money does not solve the funding problem. It just gives them another excuse to spend more. As with past increases in anything, they will divert the money previously spent on highways to other pet projects. They will say something like this, “since we have more money coming in for highways, we can take the money that was previously spent on this and move it to _______.” In the long run we will be taxed more and about the same amount of funds will be spent on infrastructure. Until the spending problem is solved, no tax is going to solve funding problems. CUT SPENDING in other areas before raising taxes!! None of us can continue to run up a huge debt and not expect bad consequences to follow.