Transportation news: Highway Trust Fund legislation made official
H.R. 6532 now headed to White House to keep highway funding solvent
Jeff Berman, Group News Editor -- Logistics Management, 9/16/2008
Editor’s note: This is an updated version to a story that appeared on September 11, 2008.
WASHINGTON-Days after Federal highway funding received a much-needed boost, when the US House of Representatives last week voted by a 376-29 margin to sign off on H.R. 6532, the Highway Trust fund Restoration Act, the bill was officially 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 Highway Trust Fund.
This vote paves the way for a transfer of more than $8 billion from the United States Treasury General Fund to the Highway Trust Fund. The legislation will now be sent to President Bush to be signed.
This news comes at a time when the future of the Highway Trust Fund was dire, as it was facing the prospect of running out of money entirely. At the end of July, the US House of Representatives approved H.R. 6532 to restore more than $8 billion to the Highway Trust Fund balance, which the White House said was soon to be facing a deficit of more than $4.3 billion. And earlier this week the US Senate approved the transfer of funds, too.
Last week, Department of Transportation Secretary Mary E. Peters called out Congress for the Highway Trust Fund’s financial situation, saying that President Bush has warned Congress of the pending shortfall and submitted budgets with fiscally prudent steps to close the gap. And she has called on Congress to go forward with passing “a fiscally responsible and effective transportation spending bill for the coming fiscal year—one that is free of waste and free of earmarks…and promotes solutions to our most pressing transportation challenges instead of ignoring them.
She added that that the situation has been exacerbated due to the oil and gas price spikes that have occurred this year and have resulted in vehicle miles traveled dropping by more than 50 billion miles in the last eight months. This is especially relevant, considering that the Highway Trust Fund is largely financed by the motor fuel federal tax, which is 18.4 cents per gallon for gasoline and 24.4 cents for diesel, and it has not been raised since 1993.
What’s more, vehicle miles traveled in the US have been down steadily year-over-year in recent months, due to high gas prices, reducing funding for highways and transportation infrastructure initiatives.
Various national transportation officials are pleased with the decision to transfer money into the Highway Trust Fund.
“State departments of transportation are breathing a collective sigh of relief across the country today,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials (AASHTO) in a statement. “The Highway Trust Fund supports transportation projects that keep America working, relieve congestion, and save lives. This was the right thing to do, and the states are grateful.”
DOT Secretary Peters commented that the Senate should be commended for acting swiftly to address the immediate needs of the trust fund, adding that it’s time to embrace a new approach to transportation that does not rely on high fuel consumption and instead directs funds where they are actually needed. And Congress, she said, must eliminate the billions in wasted spending, thousands of unneeded earmarks and hundreds of conflicting and contradictory special interest programs in order to make sure states don’t face this situation again.
“We must enact this critical legislation this week to avoid slowdowns or reduction in infrastructure investment, and the loss of American construction jobs,” said James L. Oberstar, D.-Minn., chairman of the House Transportation and Infrastructure Committee.
Larry Gross, President of Gross Transportation Consulting, told LM that while this situation was largely political to a degree, it is a positive that funds have been shifted for all industry stakeholders.
“I would say you have a situation with the [White House] and Democratic Congress were deadlocked on the philosophy of how highway improvements were going to be funded, and it was going to cause a deadlock and reach the point where it was going to cause a lot of collateral damage,” said Gross, “and the [White House] blinked.”
Regardless of the partisan issues, Gross explained that this is a good thing in the sense that it eliminates a potential disruption that would have been damaging, because multi-year state transportation programs would have been negatively impacted. 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.
“The base problems remain in the form of a heavily motor fuels tax-based system that is struggling in an era when fuel consumption is being driven down by high prices, and there are going to have to be some fundamental changes,” said Gross. “The gas tax may not necessarily be the best mechanism for raising money, and that is the DOT’s position. But I would say there needs to be a strong federal role in highway spending, because there is so much interstate commerce that is dependent on it, and a purely state-centric approach does not necessarily address that. It would be a mistake to hold our nation’s transportation system hostage for philosophical reasons, and that is what has occurred and is part of why we have gone a number of years without making significant progress.”
Gross also said that Presidential candidates Barack Obama and John McCain understand there is some urgency in addressing highway and overall transportation infrastructure issues.
From a transportation carrier’s perspective, while the more than $8 billion transfer is beneficial, it is also saving carriers additional taxes on toll roads that would have gone up again, according to Larry Ravinett, senior vice president Logistics and Supply Chain Solutions at National Retail Systems.
“The only thing the states can do is pass expenses directly on to users,” said Ravinett, “and when you get that relief from the federal government it is less of a hit. The truth is they are now wanting to fix up the roads aesthetically with things like toll booths, and everybody’s got their hands in their pockets, making it very difficult. It has been one of the toughest years for transportation, because there are so many areas we are getting hit. On top of that, the market is off by 10-15 percent.”
David L. Miller, Vice President, Global Policy and Economic Sustainability, Con-way Inc., said that the Senate’s decision has the potential to pave the way for myriad future improvements.
"We're extremely pleased that the Senate has taken this action to eliminate the shortfall in the Highway Trust Fund, and we look forward to the president's signature on this important legislation,” said Miller. “In the interest of supporting the United States' continued economic vitality, we are hopeful that Congress will bring its leadership to the next surface reauthorization bill to address the problems that led to the current shortfall. At the end of the day, you cannot decouple economic growth from the infrastructure necessary to support it."
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