Congress goes on vacation with Highway Trust Fund in jeopardy

John D. Schulz, Contributing Editor -- Logistics Management, 8/18/2008

WASHINGTON—Congress left town for its five-week August recess with one big IOU looming. The Highway Trust Fund, which as recently as five years was billions of dollars in the black, has gone broke.

On the eve of their annual summer break, Senate Republicans blocked a plan that would have shifted as much as $8 billion from the nation’s general fund into Highway Trust Fund. That fund is estimated to have a deficit of as much as $6 billion in the 2009 fiscal year that begins Oct. 1.

Legislation introduced in the House by Rep. Charles Rangel, D-N.Y., effectively was rejected by Senate even though the vote actually passed 51-43. But that was short of the “veto-proof” majority of 60 votes that was necessary to override a threatened veto by President Bush. The White House called the $8 billion transfer “a gimmick.”

Instead, when Congress returns after Labor Day, it will consider another type of gimmick. Senate Republicans want to transfer billions from the mass transit portion of the Highway Trust Fund to help shore up the fund. This comes at a time when mass transit ridership is setting records as people abandon their cars to avoid record-high fuel prices. Democrats and Republicans agree that as many as 400,000 construction-related jobs are at stake if the Highway Trust Fund is allowed to go into “negative spending” for any period of time.

The reasons for the HTF’s declining balance are numerous. First and foremost, the federal tax on fuel (24.4 cents on diesel, 18.4 cents on gasoline) has been unchanged since 1993. Considering inflation, that has caused that amount to effectively buy about 50 percent less than 15 years ago. Secondly, there have been rampant increases in raw materials for highway and bridge construction (prices of steel and concrete have more than doubled just in the last five years). Thirdly, Americans are driving about 3 percent fewer miles today than a year ago as $4 gasoline takes its toll, and that conservation has affected the amount paid into the HTF.

Transportation Secretary Mary E. Peters is using her final few months of the lame-duck Bush administration to push for radical new means—other than the fuel tax—to finance the nation's transportation infrastructure. Peters calls the current system “broken.” She says “no amount of tweaking, adjusting or adding new layers on top of things” will fix it.

"We must embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways such as congestion pricing and private activity bonds," Peters said in issuing a new federal transportation plan that effectively calls for unlimited tolling on interstates and more privatization of highways.

That is strongly opposed by the American Trucking Associations. Some ATA members, including FedEx Freight and other large carriers, would prefer an increase in the fuel tax as long as that money were inserted in the Highway Trust Fund for roads and bridges.

ATA wants the government to abandon this push for more privatization and tolls, which it says generates revenue at great expense to the trucking industry and taxpayers while hurting highway safety, security and the motoring public.

The United States cannot maintain a national highway network if key segments are leased to the highest bidder, ATA says of privatization. The leasing of America’s roadways allows states to postpone their budget problems without protecting national interests and without a clear understanding of the long-term implications, it added

Since its inception in 1956, the Interstate System has been paid for with fuel taxes. Trucking pays nearly $15 billion, or 43 percent, in highway user fee revenues annually toward the $35 billion Federal Highway Trust Fund.

ATA says the current fuel tax system has worked effectively for decades. It says fuel taxes can be uniformly administered, are based on verifiable measures of highway and vehicle use, are relatively simple to collect, not readily evaded, and, most importantly, do not create impediments to interstate commerce.

“Through privatization, we effectively are witnessing the piecemeal dismantling of the nation’s interstate highway network,” ATA President and CEO Bill Graves said recently.

No question that some monies need to be inserted into system. “If we fail to invest in our infrastructure, America’s pre-eminence as an economic superpower will begin to wane,” U.S. Chamber of Commerce President and CEO Thomas J. Donohue warned.

Clearly, the government has a short attention span when it comes to infrastructure. One year after the worse bridge collapse in U.S. history (the I-35 collapse in Minneapolis), the nation has spent little on bridge repairs other than routine maintenance.

A survey by the Associated Press of repairs on the 20 most-traveled bridges in all the states found that just 12 percent have been fixed. Some 64 percent of all bridges received no work other than regular maintenance, though most were targeted for overhaul. Some 12 percent of bridges were structurally deficit.

Only one in four bridges had undergone even a partial improvement, mostly through short-term fixes.

In that aspect, the repair of our nation’s bridges much reflects the funding mechanism used to pay for those critical repairs

Vehicle miles traveled on all public roads for May fell 3.7 percent as compared with May 2007 travel, government data show. That’s a decline of 29.8 billion miles traveled in the first five months of 2008 than the same period a year earlier. This continues a seven-month trend that amounts to 40.5 billion fewer miles traveled between November 2007 and May 2008 than the same period a year before.

Secretary Peters said that Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007, according to the Federal Highway Administration data. This is the largest drop in VMT for any May, which typically reflects increased traffic due to Memorial Day vacations and the beginning of summer, and is the third-largest monthly drop in the 66 years such data have been recorded. Three of the largest single-month declines—each topping 9 billion miles - have occurred since December.