Trust Fund Shortfall Underscores Highway Crisis

Time is running out for Congress on two critical highway issues. The most immediate problem is that the Highway Trust Fund will burn through its cash balance perhaps as soon as August.

The Trust Fund uses fuel taxes and other levies to pay for highway upkeep and new projects.

The second problem is that the trust fund shortfall is likely to occur before Congress can replace the current federal highway program with a new one. The current program expires at the end of the September and, while work on a new bill is under way, the chances of getting it done on time are not good.

Running Out of Cash

Sen. Barbara Boxer, D-Calif., took note of the trust fund shortfall at a hearing this week on the nomination of Victor Mendez to run the Federal Highway Administration. "According to the Department of Transportation and other Obama administration officials, the Highway Trust Fund is estimated to have insufficient cash by August," she said. "Therefore an additional $5 to $7 billion will be needed to keep the (fund) solvent through (October)."

Congress faced the same problem last year and solved it by transferring $8 billion from the general treasury, which will be the likely solution this year. But the timing of the trust fund running out of cash just as the highway program is ending creates an additional problem.

In the past, when confronted with difficulty passing a highway authorization bill, Congress has tended to postpone the vote by simply extending the existing program and funding levels as they are. It took 11 extensions before Congress could pass the current program.

Kicking The Can

"To continue the highway program at current rates you'd have to have a reduced level of funding until work on reauthorization is completed, which is contrary to what we need to do, which is increase investment," said Jack Schenendorf, a veteran transportation legislation expert.

Schenendorf, who was speaking this week at the ITS America annual meeting, said the situation puts the concept of a user-paid highway system in jeopardy.

"The easiest thing for Congress to do is kick the can down the road, which is what it has done in the past," he said. "The problem is that because of the trust fund situation they really can't do that if they they're going to keep this user-financed program. Even to keep services levels of funding, you've got to find more revenue for the trust fund. Shifting over to some sort of general fund funding would be inconsistent with the user fund principle, would jeopardize the trust fund basis for the program. They've got a tough issue to face."

Time Crunch

Schenendorf and most other observers believe that there is only a slim chance that Congress can pass a highway bill with new, higher funding levels by the end of September, when the current program expires.

Hope for action rests on a concerted campaign by transportation leaders to get the word out to the public that the national transportation infrastructure is in crisis, and that fuel tax increases can be justified if the highway program is reformed.

For more details, see the next issue of Heavy Duty Trucking magazine.