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Lack of progress is status quo when it comes to prospects of raising federal gasoline tax

By Jeff Berman, Group News Editor
April 03, 2014

In the time I have covered the freight transportation, logistics, and supply chain sectors, it is fair to say I have seen clear signs of progress in multiple areas, whether it be the advent of the e-commerce-based supply chain or the potential for natural gas to serve as a primary fuel to name a few.

One area where progress clearly has not been made, though, is when it comes to our elected leaders in Washington, D.C. coming up with some much needed and overdue moxie to get the Highway Trust Fund (HTF) the funding it truly and desperately needs, rather than employing the unacceptable, but business as usual, Congressional practice of bailouts from the United States general treasury to keep the Highway Trust Fund financially afloat.

As we have written about extensively, having sufficient capital in the HTF is critical as its revenues are allocated for federal highway, transit, and highway safety programs. But as we also know the main funding source for the HTF, the federal gasoline tax, has not increased from its current levels of 23.4 cents for diesel and 18.4 cents per gallon of gasoline since 1994. What’s more, diesel taxes represent about 90 percent of Highway Trust Fund (HTF) net revenues.

So where does that leave us when it comes to the current state of the HTF?

In short, it is not a pretty picture based on data from the United States Department of Transportation (DOT). According to the DOT’s weekly online Highway Trust Fund Tracker, the HTF could fall below $4 billion by late July. While $4 billion seems like a massive sum to be sure, it is the minimum amount DOT “prefers to keep…in order to properly manage day-to-day financial transactions,” according to the American Association of State Highway and Transportation Officials (AASHTO).

AASHTO noted in a member bulletin that based on DOT data the HTF kicked off fiscal year 2014 on October 1, 2013 with a balance of $1.6 billion and after the beginning of the fiscal year it received a $9.7 billion transfer from the United States General Fund (sounds familiar). But even with this bridge loan of sorts, DOT said “the surface transportation program continues to outlay at a greater pace than receipts are coming in.” In other words, it is functioning as a model of insolvency.

Need more proof of that? If so, consider this: the House Transportation and Infrastructure (T&I) Committee recently said that by the end of 2014, a total of $54 billion will have been transferred from the General Fund into the HTF in order to remain solvent, including an $18.8 billion transfer signed off on by Congress as part of the federal transportation bill, MAP-21, which is set to expire in this September.

And the Congressional Budget Office said last year that the HTF will have a $15 billion shortfall in 2015.

One would think these numbers would grab the attention of at least a few lawmakers in Congress, but given the political disharmony at work these days, think again, but at least they are full of lame excuses-be sure of that.

And here is a real morale booster from former DOT Secretary Ray LaHood from the National Journal: “When September 30 comes and the highway trust fund is broke—it’ll even be broke before the 30th, but [definitely] by the end of the fiscal year, it’ll be broke—they’ll pass an extension of MAP-21. They’ll take some money out of the general fund. They’ll limp through the election, and then I don’t know what will happen after that.”

So much for long-term vision on the transportation front.

No longer in the President’s cabinet, LaHood does not really have to be rigid in his remarks but during his time as DOT Secretary he made it clear numerous times that raising the gasoline tax was not even close to likely, because of the slow pace of the economic recovery and relatively high unemployment, which has come down over the last year somewhat.

But it is not like those still in Congress are primed to raise taxes at the gas pumps either.

A February report in The Hill quoted Rep. Bill Shuster, Chairman of the House T&I Committee, as saying he has ruled out a gas tax increase, explaining that “economically, it’s not the time,” adding that he was unsure there was enough support from lawmakers or the public to move forward with such a proposal.”

That last part seems odd, considering no less an influential organization like the American Trucking Associations soundly endorses raising the tax, provided the proceeds are allocated for reinvestment in highway projects.

Until something actually happens, the HTF deficit grows and we will all wonder why nothing gets done, when it comes to raising the federal gasoline tax. Not raising it has been status quo for more than 20 years. Why would anything change now?

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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