PCA finds more liquidity to Highway Trust Fund shoring than meets the eye

Sources: Portland Cement Association, Washington, D.C.; CP staff

Initial reports find Sen. Bob Corker (R-TN) and Sen. Chris Murphy’s (D-CT) call for an increase in federal gasoline and diesel taxes—aimed at shoring up the Highway Trust Fund (HTF) longer term while preventing potential road construction work stoppages this season—will spur a $164 billion increase in HTF revenues.

A PCA analysis, however, shows the Corker-Murphy proposal would result in nearly $50 billion above that level for transportation infrastructure investment. Factoring growth in total vehicle miles traveled (VMT), composition of travel between diesel and gasoline users, plus fuel efficiency and inflation assumptions, PCA sees the Corker-Murphy plan generating $209,840,000 for the HTF over a 10-year window. The estimate reflects fuel tax increases; projected 2.5 percent growth in VMT from 2014-2017, 0.9 percent thereafter; and, 1.2 percent fuel efficiency gains annually. PCA pegs inflation at 2 percent throughout the forecast.

“[Our] estimates tend to agree with estimates from the Joint Committee on Taxation (JCT),” says PCA Chief Economist Ed Sullivan. “JCT estimates that a one-cent increase in taxes on motor fuels would raise about $1.5 billion each year for the trust fund. A 12-cent increase equates to $18 billion and compares to PCA’s 2016 estimate of $18.7 billion.” The difference between JCT estimates and PCA projections is due to assumed 2014–2016 VMT increases, he adds.

The Corker-Murphy proposal adheres to funding principles PCA and other Highway Materials Group stakeholders have presented to lawmakers, including maintaining user-fee based funding mechanism integrity and ensuring long-term HTF stability.