Keeping the Highway Trust Fund flush continues to be a challenge

Over the last few years, there have been more than a few challenges when assessing the current state of freight transportation and logistics markets, ranging from the widespread impact of the pandemic, economic issues, geopolitical instability, and labor, among others.

But one challenge that was intact a while back and still remains today is related to the Highway Trust Fund (HTF). As a primer, the Highway Trust Fund’s (HTF) revenues are allocated for highway repairs, construction, and maintenance, and are supported by the federal fuel tax of 23.4 cents for diesel, 18.4 cents for gasoline—has been unchanged since 1993. What’s more, because of inflation, the federal fuel tax does not provide enough funding into the Highway Trust Fund, which repeatedly has had to have an injection of funds from the general treasury the past few years in order to remain solvent.

To be clear, 1993 was a long time ago, and over that time many, many things have changed, but, as we all know the respective per-gallon tabs of 23.4 cents for diesel and 18.4 cents for gasoline is something that has not changed. Over that period, whenever the topic of increasing the HTF to get it in line with where it needs to, or should, be, to keep up with inflation and the ever-increasing need for even adequate infrastructure that our country needs (things have slowly gotten better on that front), there has been a bipartisan stance, but not the good kind. That stance has been, and still remains, political pushback.

Fast forward 30 years after to 2023, after the tax was initially levied and you will see that many of the same HTF challenges and issues remain: it is running out of money; what is the plan for the future? and what can be done now?

While I am not sure of the answers, maybe Congress is, which was the basis for a House Transportation and Infrastructure hearing, dubbed “Running on Empty: The Highway Trust Fund,” last week.

In his opening statement, Highways and Transit Subcommittee Chairman Rick Crawford (R-AR) laid out the current situation, as it relates to the current need for increased HTF funding, coupled with a look back, too.

Crawford observed that starting in 2008, the HTF has subsequently been dependent on $275 billion in transfers, primarily from the General Trust Fund of the Treasury, in order to remain solvent. That has been a necessary step, he explained, as since 2001, spending from the Trust Fund has exceeded revenue deposited into the fund.

“Although critical to the Highway Trust Fund’s short-term operations, government bailouts are not a long-term solution, nor do they address the underlying, multifaceted, and structural problem,” he said. “First, the purchasing power of fuel taxes, which have remained unchanged since 1993, has eroded by 55 percent over the last 30 years. At the same time, funding authorized from the Highway Trust Fund for federal-aid highway, highway safety, and federal transit programs has more than tripled. Additionally, more fuel-efficient vehicles and the use of alternative fuel sources have further eroded Trust Fund receipts. For example, electric vehicle drivers pay nothing at the federal level for their use of roadways.”

What’s more, Crawford laid out some stark numbers, with the movement of U.S. freight on roads and highways expected to increase by 50% in tonnage and double in value by 2050, with vehicle miles traveled expected to increase 22% by 2049.

And while there is some semblance of short-term relief with the Infrastructure Investment and Jobs Act authorizing $118 billion in transfers into the Highway Trust Fund so that the HTF can meet its obligations until the law expires. But he added beyond the expiration of IIJA in 2026, the Highway Trust Fund will again go broke, requiring additional congressional action to provide solvency for the fund.  

“We need a solution so that we can build a modern and efficient transportation system to meet the needs of our 21^st century economy,” explained Crawford. “Our nation demands, and deserves, a system that will move people and goods safely and efficiently, expand opportunities across all communities, enhance American prosperity, and ensure American industry and innovation continue to lead the world.”

A while back at an industry conference Ray LaHood, President Barack Obama’s first Department of Transportation said: “Transportation has always been bipartisan. There are no Republican or Democratic bridges. There are Democratic or Republican roads. There just aren’t. There’s Americans who know how to build infrastructure, who know how to build American infrastructure.”

While Lahood may no longer run USDOT, the same HTF pressures and challenges remain, he was not wrong, and neither is Rep. Crawford. Something needs to be done to address the long-term HTF shortfall. The time for kicking the can down the road on it is long gone. This has not gotten the attention it deserves and needs and cannot be put off forever. We are inching closer to another election year and we know that means even more political inactivity than ever so hoping for a real fix until the IIJA expires in 2026 may be wishful thinking, but that does not mean it cannot be addressed by Congress so that a plan is ready when the time comes.