Commentary: Congress Pulls a FAST One on Highway Funding
January 2016, TruckingInfo.com - Editorial
Editor in Chief, Deborah Lockridge
We finally have a long-term highway spending bill for the first time since 2005, which calls for spending approximately $305 billion for highway and transit projects over the next five years.
There’s much to like about the FAST Act (which stands for Fixing America’s Surface Transportation). Many provisions that were lobbied for by trucking were included, including one reining in the DOT’s Compliance, Safety, Accountability enforcement program. And there are several programs addressing freight transportation.
The simple fact that we finally have a long-term bill is good news. It gives states some level of stability to help them plan their highway programs going forward.
Yet for a bill that is supposed to be about funding the updating and upkeep of our nation’s highways and bridges, the “funding” portion is disappointing. Despite enjoying the lowest gasoline and diesel prices in years, Congress and the Obama Administration refused to raise fuel taxes, the most logical way to pay for highways.
Instead, in addition to an extension of the current fuel tax, we have a hodge-podge of funding sources and budgetary gimmicks.
If anything, deficit spending will increase under the FAST Act. To make up for the fact that highway revenues likely will not increase much over current levels, the new law transfers money from the General Fund to the Highway Trust Fund, and calls for making up the difference with “offsets” such as:
- Changing passport rules for applicants who owe back taxes
- Allowing the Internal Revenue Service to hire private tax collectors
- Selling crude oil from the Strategic Petroleum Reserve.
A couple of late additions to the bill call for drawing on the Federal Reserve’s capital. Ben Bernanke, former chairman of the Federal Reserve, has sharply criticized this tactic, noting in his blog that “‘paying’ for highway spending with Fed capital is not paying for it at all in any economically meaningful sense. Rather, this maneuver is a form of budgetary sleight-of-hand that would count funds that are already designated for the Treasury as ‘new’ revenue.”
In addition to these accounting games, the money allotted, while an increase, is still simply not enough.
The FAST Act is “cause for optimism,” says Marcia Hale, president of Building America’s Future, but “we are nevertheless concerned that the funding levels … will not sufficiently dig us out of the hole we’ve created by neglecting our infrastructure and transportation.”
Because of this, we can expect more states to take action on their own — raising their own fuel taxes, coming up with creative funding ideas of their own, or turning to public-private partnerships and implementing more tolls.
Perhaps most importantly, the FAST Act does not provide a long-term sustainable solution for fully funding the Highway Trust Fund once this law expires.
We need to raise the federal fuel tax — or better yet, implement a vehicle-miles traveled fee, which would help make it a true user fee. Back in 2009, a bipartisan, Congressionally created commission recommended that the U.S. shift to a mileage-based highway usage fee by 2020. The National Surface Transportation Infrastructure Financing Commission recommended a 10-cent-per-gallon increase in the federal gas tax (15 cents for diesel) and indexing the tax to inflation going forward. The fuel tax, which is not indexed to inflation, in 2009 had already lost a third of its purchasing power since 1993, the last time the tax was increased.
The American Trucking Associations opposed the commission’s recommendations and has pushed for an increase in the traditional fuel tax. Yet Congress couldn’t even manage that sensible solution, giving us fiscal gimmicks instead.