Transportation news: DOT says Highway Trust Fund Revenue for FY 2008 is down $3 billion
Industry expert, DOT Secretary call for alternative funding sources to help pay for transportation infrastructure projects
Jeff Berman, Group News Editor -- Logistics Management, 11/20/2008
WASHINGTON—At a time when transportation infrastructure initiatives and efforts are receiving a lot of attention, the Department of Transportation (DOT) reported that revenue for the Highway Trust Fund (HTF) had dipped by $3 billion in Fiscal Year 2008.
A major reason for the HTF revenue decline, according to the DOT, is that Americans drove 90 million miles less in FY 2008. This decline is exacerbated by the fact that the HTF is largely financed by the motor fuel federal tax, which is 18.4 cents per gallon for gasoline and 24.4 percent for diesel, and has not been raised since 1993.
The HTF is the federal government’s primary source for financing highway, bridge, and transit projects, according to the DOT. And Mary E. Peters, DOT secretary said that the fact that Americans are driving fewer miles—which have been down year over year in recent months, with Americans driving 4.4 percent less or 10.7 vehicle miles traveled (VMT) in September 2008 for the eleventh straight month of declining driving—underscores the need to find new way to finance transportation projects in America.
Between October 2007 and September 2008, the HTF collected $31 billion in revenue, said DOT officials. This represents a $3 billion decline from the previous year at a time when federal transportation spending increased by $2 billion.
“Our current approach has us encouraging Americans to change their driving habits and burn less fuel while secretly hoping they drive more so we can finance new bridges, repair interstates and expand transit systems,” said Peters in a statement. “We need a new approach that compliments, instead of contradicts, our energy policies and infrastructure needs.”
This view was shared by Michael A. Regan, CEO of transportation rate analysts TranzAct Technologies, in an interview with LM.
Regan explained that it is obvious the funding formula for the HTF is “broken” in that it relies upon a revenue stream that the government—through its efforts—is attacking.
“As you move towards more fuel-efficient vehicles, less fuel is being used, so less revenue is coming in,” explained Regan. “And because the gas tax issue is so toxic, you are going to see a huge portion of the next Congress pushing for alternative funding sources, and I am predicting you will see a huge push for consumption-driven pricing such as a vehicle mile tax.”
While there are technologies and alternatives for consumption-driven pricing being bandied out, Regan said there has not been an official standard agreed upon at this point, and determining such a standard is likely to be a major challenge for Congress. He added that another possibility for new HTF funding sources are significant increases in user fees and variable tolling and increased tolling on existing interstate highways.
Despite the various funding challenges for the HTF, federal highway funding received a much-needed shot in the arm in September, when the U.S. House of Representatives voted to sign off on H.R. 6532, the Highway Trust Fund Restoration Act, which was signed into law by President George W. Bush.
This bill calls for a transfer of more than $8 billion from the United States Treasury General Fund to the HTF. This news comes at a time when the future of the HTF was dire, as it was facing the prospect of running out of money entirely. At the end of July, the U.S. House of Representatives approved H.R. 6532 to restore more than $8 billion to the HTF balance, which the White House said was soon to be facing a deficit of more than $4.3 billion.
National transportation officials were pleased with the decision to transfer money into the Highway Trust Fund. “The American public trusts us to keep the highways, bridges, and transit systems safe and usable,” said Pete Rahn, president of the American Association of State Highway and Transportation Officials (AASHTO). “Restoring the Highway Trust Fund is a short-term solution. It’s time to face up to the reality that America must rebuild and renew its aging system. We should use this to focus on how we will meet our future transportation needs.”
Larry Gross, President of Gross Transportation Consulting, said that while this situation was largely political, it is a positive that funds have been shifted for all transportation industry stakeholders. But in terms of fundamentally changing the Highway Trust Fund landscape, he said it does not really change anything, because the transferring of funds is more of a “stop gap” than anything else.
View All On-Demand Webcasts