With No Highway Trust Fund Fix, What’s a State to Do?

'The FAST Act sends states a clear message: the federal government is gradually moving away from providing a dedicated source of funding to support state transportation programs'

While we all breathed a sigh of relief to have a highway bill signed into law last December, we can all be honest and say that the five-year, $305 billion FAST Act is far from perfect.

The FAST Act formally reauthorized the collection of the 18.4 cents per gallon gas tax, which is typically used to pay for transportation projects. It also includes $70 billion in “pay-fors” to close a $16 billion deficit in annual transportation funding. These offsets include changes to custom fees and passport rules for applicants who have delinquent taxes.

The federal gas tax has been frozen since 1993, and Congress has been struggling for years to come up with a way to pay for a long-term transportation funding extension without raising the gas tax. According to a recent report in The Hill, a pair of House Democrats is now pushing the Obama administration to allow states to search for alternatives to the 18.4 cents per gallon gas tax.

Rep. Peter DeFazio (D-OR) and Del. Eleanor Holmes Norton (D-DC) said in a letter to Transportation Secretary Anthony Foxx that states should begin experimenting with new infrastructure funding mechanisms now, despite the fact that Congress just passed a bill.

“The FAST Act … does not resolve the long-term solvency challenges of the Highway Trust Fund,” the lawmakers wrote. “To ensure that we are not in the same position four years from now, we must immediately begin to identify real, workable funding solutions to carry our surface transportation programs through the 21st century.”

So, really, what are you trying to say?

“Congress is sending the states a clear message,” says Patrick D. Jones, executive director of IBTTA (International Bridge, Tunnel, and Turnpike Assoociation). “The federal government is gradually moving away from providing a dedicated source of funding to support state transportation programs.”

Many state governments have already begun searching for other funding sources to keep their highway programs whole. Several states have raised their own gas taxes in the last year. Public private partnerships (PPPs) are being implemented in others.

Some states have raised the sales tax on fuel and cigarettes or have increased vehicle fees. California's Governor Jerry Brown is investigating a $65 annual vehicle fee that would raise about $2 billion a year for that state's crumbling roads.

Another alternative states can consider: tolling. One benefit of tolling is the money you pay goes directly to maintain and improve the highways on which you travel.

With less help from the federal government, it's going to be a challenge for states to find a dependable, sustainable stream of revenue to keep their highways and bridges modern, well-maintained, safe and efficient.

And it’s clear states will have to take this problem by the horns and solve it themselves. What is your state doing to maintain its transportation network? Drop me a line at LCleaver@acbusinessmedia.com to discuss.

Thanks for reading!

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