Crumbling Roads: A Highway Bill primer

Crumbling Roads: A Highway Bill primer

Funding shortfall continues to put nation’s roads – and drivers - at risk

It seems there's a news story weekly about a bridge collapse or a sinkhole suddenly appearing in the lanes of a major highway. Don't forget the shaking, rattling and bouncing of nearly every truck traveling any highway, interstate and city street as it rolls across America.


And what’s the government doing to rectify the crumbling of our infrastructure? Congress just keeps kicking the funding bills two and three months down the road. On July 31, headlines read “President Signs an Extension of the Highway Funding Bill.” Signing another three-month extension of the mass transit and highway funding bill is not even a Band-Aid to the infrastructure needs of our nation.


This isn’t a new crisis. The Highway Trust Fund (HTF) has been in trouble for years. From 2008 through fiscal year 2010, Congress passed funding legislation which transferred money from the General Fund to fill a revenue gap created by the Great Recession when personal travel and truck traffic was down considerably.


To finance the "Moving Ahead for Progress in the 21st Century Act” or MAP-21, Congress infused another $18.8 billion from General Fund revenues for 2013-14, plus $2.4 billion in gas tax revenues which previously were credited to the Liquid Underground Storage Tax Trust Fund. This added revenue was designed to make sure the HTF would be able to pay all of its bills through the end of FY 2014 and into the early part of FY 2015.


Uh-oh. Problem. The '2013 budget rescission' authorization cut all federal discretionary spending and reduced the amount transferred into the HTF. The cut was so severe the HTF wouldn’t have enough money to pay all its bills into fiscal year 2014, much less 2015 and beyond.
According to the U.S. DOT’s Highway Trust Fund Ticker, both the Highway Account and the Mass Transit Account of the Highway Trust Fund are now nearing insolvency.


The Highway Account was expected to be insolvent by the end of the summer; however, Congress in its wisdom passed the three-month funding bill to avert this situation. If it had failed to pass the funding bill, the DOT would have had to consider starting cash management procedures to distribute the flow of federal dollars.


If the DOT implements cash management procedures, reimbursements to states for infrastructure work would be limited to the available cash in the trust fund. Additionally, the department would distribute incoming funds in proportion to each state’s federal formula apportionment in the fiscal year. Projects across the country would be shut down.


Based on spending and revenue trends prior to the July 31 extension of the highway funding bill, the DOT estimated the Highway Account would have a shortfall before the end of fiscal year 2015. (The federal budget for fiscal year 2015 runs from Oct. 1, 2014, through Sept. 30.)
Yep, there’s a problem. But where does the funding for our roads and bridges come from originally?


We know the major source of money for federal highway and transit investment is the HTF, created by Congress in 1956 to build the Interstate Highway System and fund other federal investments in highway improvements. In 1982, Congress included a Mass Transit Account (MTA) for federal investment in subway and public transportation systems. Fuel taxes are collected from highway users for each gallon of gasoline or diesel they purchase. These tax revenues are credited to the HTF and pay for highway and mass transit improvements across the nation. Current tax levels include an 18.3 cent per gallon federal excise tax on gasoline and gasohol, a 24.3 cent per gallon tax on diesel fuel and equivalent taxes on other motor fuels such as compressed natural gas. Three additional taxes are assessed on heavy trucks and the purchase of truck tires.


Monies from these fuel taxes are divided between the Highway Account and the Mass Transit Account, with all taxes levied on heavy trucks credited to the Highway Account. Currently, all these taxes total from $38 to $40 billion per year, with approximately $5 billion being credited to the Mass Transit Account and the remainder to the Highway Account. The Congressional Budget Office expects HTF annual revenue to increase by approximately half a billion dollars per year, for the foreseeable future.


So that’s still being collected. How much money do our roads and bridges need?


From 2012, the latest data available, the Federal Highway Administration found 182,872 mi. (or 20.5%) of our highways were in poor or mediocre condition and needed repaving or even more substantive repairs.


The FHWA’s 2013 National Bridge Inventory shows 146,598 (24.2%) of the nation’s 605,471 bridges are either structurally deficient or functionally obsolete. This includes 63,207 structurally deficient bridges which are safe to use but need significant maintenance or repair to remain in service, and 83,391 functionally obsolete bridges which may be in good repair but fail to meet current design standards, such as lane width, shoulder width or overhead clearance.


What’s the solution? There’s the $95.6 billion question, as that’s the estimate of the necessary funds to just maintain current physical and performance conditions on the nation’s highways and bridges. The amount increases to $109 billion by 2020 (as long as highway construction costs grow at the same rate as the inflation rate).


What about going beyond just maintaining by actually improving our nation’s highways, making all necessary improvements? The tab would have been $161.7 billion in FY 2014, increasing to $184.2 billion by 2020. Remember we’re only collecting $38 billion to $40 billion a year from fuel taxes. So how do we cover the shortfall of $125 billion per year?


Something we all need to think about.

(EDITOR’S NOTE: As the October issue of American Trucker went to press, the Transportation and Infrastructure Committee of the U.S. House of Representatives was scheduled to present its version of the next surface transportation reauthorization, or highway bill ahead of the Oct. 28 expiration of MAP-21. Look for coverage in next month’s magazine.)

To contact Brady go to www.timothybrady.com. For information on Trucking Business Courses go to: www.truckersu.com

 

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