Fixing the Funding Problem

I've just returned from CONEXPO-CON/AGG 2011 in Las Vegas, and while the swelling of my feet has diminished, the excitement the show generated has not. The mood from both exhibiting manufacturers and attendees was very positive. (Be sure to check out the many new product introductions from the show on page 8).

During the show, several senior-level executives from companies like Caterpillar and Terex were optimistic about the chances of highway reauthorization being passed by the end of the year. However, the big question remains - where will the funding for the bill come from?

Jack Basso, chief operating officer with the American Association of State Highway and Transportation Officials (AASHTO), told Rhode Island officials in early April that the Highway Trust Fund (HTF) – the backbone of the federal transportation financing system – is "broke." With its revenues mostly derived from federal gas and diesel taxes, there is no support in Washington to raise gas taxes, especially with gas prices hitting near record levels again this spring and many Americans still feeling the aftershocks of the recession and unwilling to pay more at the pump.

 

While writing this column, House Budget Committee Chairman Paul Ryan (R-Wis.) released his blueprint for a budget resolution for FY 2012 and beyond. Titled, “Path to Prosperity, Restoring America’s Promise,” the proposal called for significant reductions in spending for transportation with total budget authority decreasing by 31% from current levels.

Ryan's budget proposal also suggests that Congress can keep the HTF solvent without additional general-fund transfers or increases in the gasoline tax by consolidating dozens of separate highway programs identified by the General Accountability Office as duplicative.

Consolidating programs makes sense. As a matter of fact, the Obama administration proposed doing just that in the president’s 2012 budget by consolidating 55 highway programs into five streamlined programs and consolidating transit programs as well. But I'm not sure that will solve the HTF's solvency problems.

In Mid-April, members of the House Transportation & Infrastructure Committee shared proposals for ways to fund a highway reauthorization bill without exceeding HTF revenues.  Committee Chairman John Mica (R-Fla.) told members that Congress must “do more with less” in framing the debate since the cash balance in the federal highway account continues to fall steadily. According to committee documents, current projections show that the cash balance in the account will be depleted sometime in 2013.

With the HTF in trouble, there will have to be alternative ways to fund highway reauthorization. Other ideas for revenue sources include public/private partnerships, an infrastructure bank, or taxes on oil or vehicle miles traveled (VMT). It's time to get creative and figure this funding problem out. We've been waiting far too long for a highway reauthorization bill.

 

 

 

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