In conjunction with the mid-June launch of a campaign-style website, www.fixthefund.org, and federal construction interests’ Rally for Roads on Capitol Hill, American Society of Civil Engineers’ Becky Moylan offered perspective on past, present and future of the federal transportation program.
The Highway Trust Fund is Running Out of Money Because We Waste Money. Thanks to the Intermodal Surface Transportation Efficiency Act (ISTEA), first passed in 1991, transportation projects are planned, developed and executed efficiently while utilizing innovation. Grades in the ASCE Report Card prove that when we invest in infrastructure, we see results. The 2013 Report Card saw improvement in six infrastructure sectors that benefited from private investment, targeted efforts from cities and states, or a one-time federal funding boost.
Communities oftentimes know where money will be best utilized, and the Highway Trust Fund (HTF) allows many transportation project decisions to be made on the state and local levels. For example, federal funding eligibility for bicycle lanes is a concern in many places. Since there is a growing national share of bicycle and pedestrian fatalities that needs to be addressed through better road design and other proven countermeasures, the Fund allows a community to identify this need on its own roads and decide how to best design bike lanes.
The Federal Government Should Get Out of the Infrastructure Business and Let States Make Their Own Decisions. The HTF is designed to assist states in paying (historically about 45 percent) for transportation projects for many reasons, and it is a system that has served the country well. The cost of transportation projects is a huge expense and states do not have the funding to go this alone. The U.S. Constitution’s Commerce Clause (Article 1, Section 8, Clause 3) grants Congress the power to invest and maintain roads, bridges and transit. From the Interstate Highway System (keyword: Interstate) to our ever-expanding electrical grid, infrastructure is indeed a national issue that must be addressed through a national vision.
The Current Gas Tax Rate is Perfect and Does Not Need to Be Changed. The HTF is how Congress provides federal funding for transportation projects. It was created in 1956 to be funded by the federal gas tax. The U.S. Department of Transportation projects that the HTF Highway Account will run out of money for new projects as early as July. According to the Congressional Budget Office, to prevent HTF insolvency in 2015, federal surface transportation investment would have to be cut by 92 percent that fiscal year. The gas tax is not tied to inflation and hasn’t been raised in more than 20 years. We are trying to run a 2014 transportation system on 1993 dollars. Consider that the cost of many items has doubled or tripled since 1993. For example, a new car cost $12,750 in 1993, whereas in 2013 a new car costs on average $31,252. The purchasing power of the federal gas tax dollar is not what it once was.
We Can Just Raise Enough Revenue Through Tolls and Public-Private Partnerships (P3s). Tolls and P3s can be successful sources of revenue, and are a part of the overall solution, but neither is a silver bullet in finding a sustainable long-term funding source. Historically, federal highway funding has accounted for approximately 45 percent of what state DOTs spend on highway and bridge capital improvements.
Quite simply, the federal government must lead on the issue of funding. For the 2015-2024 window, the cumulative shortfall in the HTF Highway and Mass Transit accounts will exceed $170 billion. This is too large a figure for anyone to expect to be filled by tolling and P3s. While as House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) has said, “the private sector continues to show significant, growing interest in investing in infrastructure,” it cannot be a substitute for federal investment and leadership.
The key is finding a long-term, sustainable funding source. P3s and tolls are pieces of the puzzle, and when partnered with a sustainable revenue stream, can help ensure reliable revenue for the HTF.
We Don’t Have Enough Revenue Because People Are Driving Less. Over the past two years, vehicle miles traveled (VMT) actually increased by 0.3 percent and 0.6 percent in 2012 and 2013, respectively. A VMT decrease after 2007 coincided with the recession. As the economy continues to improve, more employees will return to work, increasing VMT. Furthermore, the U.S. population grows each year by just under three million, and the number of licensed drivers also grows by two million. It is estimated this growth trend will lead to an increase of 25 billion VMT annually.
Raising the Gas Tax Would Hurt Economic Growth. In Failure to Act economic studies, ASCE explores the consequences of continued underinvestment in infrastructure. Ultimately, the studies conclude that our deteriorating infrastructure will cost the American economy more than 867,000 jobs in 2020 and suppress the growth of our GDP by $897 billion. Per household, the cost of deficient surface transportation will cost $1,060 per year. To simplify, a homeowner can either fix a leaky roof now or wait for his or her home to eventually cave. Clearly, the former is much more cost effective. Our nation’s infrastructure needs to be tended to and funded now, or we will all continue to pay for it in a multitude of ways at much higher costs.
The Gas Tax Isn’t Raising Enough Money Because Cars are More Fuel Efficient. Between 2012 and 2022 gas tax revenues will decrease by less than 1 percent ($2.5 billion), the Congressional Budge Office estimates. The issue at hand is not really fuel efficiency, but rather that the gas tax has not been increased since 1993. In the 20 years since, it has lost more than a third of its value because of inflation. Fuel efficiency will become more of a problem as related technology continues to advance in the coming decades, but in the near term it is less of a problem than often stated.
We Can Afford to Do a Short-Term Bill and Maintain the Status Quo. Not this time. The 2012 surface transportation law, MAP-21, temporarily preserved levels of federal highway and public transportation investment by supplementing existing HTF revenues with other federal resources. Since 2008, over $52 billion has been transferred from the General Fund to keep the HTF solvent.
MAP-21’s funding will run out as the HTF becomes insolvent weeks, or more likely months, before the law intended the money to end. Attempting to “Band-Aid” the Fund once again will only result in this becoming a recurring issue. States cannot plan needed infrastructure projects without committed funding. As the impending insolvency demonstrates, there is currently not enough revenue to support the system.
Furthermore, the ASCE 2013 Report Card for America’s Infrastructure graded our nation’s infrastructure at a D+. Clearly that status quo is not enough in helping the U.S. build a 21st century infrastructure capable of competing on a global scale.
Congress Cannot Get Big Things Done Because Everything Turns in to a Partisan Fight. In the words of Senate Minority Leader Mitch McConnell, “Infrastructure spending is popular on both sides.” In the past year transportation legislation and funding ideas have come from both Democrats and Republicans. Notably, Rep. John Delaney’s (D-Md.) Infrastructure Bank bill was proposed with an equal number of Democrat and Republican co-sponsors.
We Don’t Have the Money to Fix The Problem. The notion that we simply cannot find a long-term, sustainable revenue source is false. The costs of inaction and allowing the HTF to cease funding for needed repairs and maintenance are immense. For instance, congested roads cost an estimated $101 billion per year in wasted time and fuel.
We can either invest now or pay a whole lot more in the years ahead.
Chamber outlines Business Plan for Infrastructure
U.S. Chamber of Commerce CEO Thomas Donohue weighs in on the group’s proposed transportation and environmental infrastructure business plan:
“For too long our nation has been locked in the same stale debates over how to fix the infrastructure system that is crumbling beneath us because of chronic underinvestment. We all know the system has become outdated, inefficient, and unsafe. We know that letting the physical platform of our economy continue to decay will further weaken our recovery and threaten our global competitiveness. A comprehensive, forward-looking business plan for infrastructure that meets the needs of a competitive 21st century is based on five pillars:
“The first is transparency and accountability, especially how transportation and infrastructure projects are selected, executed, and paid for. Reforms will not only improve the efficiency of our system, deliver better benefits, and lower costs, but they will instill badly needed public confidence and trust.
“The second is a streamlined regulatory process. The public needs to know that once Congress commits the money, it will be put to work quickly and efficiently for jobs, growth, and opportunity. We cannot allow vital projects to get suspended in endless permitting processes or tangled up in red tape.
“The third is a more strategic, multimodal approach. We need a seamless, nationally connected system that links all the physical assets and all the transportation modes together. This is where many of the greatest bottlenecks in freight transportation occur—that last mile that connects one mode to another.
“The fourth is technology. It’s time to ensure that our roads and bridges, our air traffic control system, and our water pipes and other infrastructure are ‘smart.’ Infusing more technology into planning, construction, and maintenance has the potential to be a game changer for our infrastructure.
“The fifth is a predictable, stable, and growing source of funding. We need to seize every opportunity to tap every possible source of capital so that important projects can get done—and quickly. The simplest, most straightforward way to secure the investments we need is by raising the gas tax, which hasn’t been increased in 20 years. We must also leverage private investment, particularly innovative funding mechanisms like public-private partnerships.
“The Chamber is going to take this plan on the road through a series of events to galvanize support among policymakers and the public. We’re going to continue to press the case that investing in infrastructure is not just a worthy use of our time and resources—it’s critical to our growth, competitiveness, and safety.”