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If what's past is prologue, Highway Trust Fund is in deep trouble

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Posted at 9:53 AM, Jun 19, 2015
and last updated 2015-06-19 10:07:31-04

For those who have been watching carefully, the latest plan to fund our transportation infrastructure shouldn’t be much of a surprise.

The Highway Trust Fund has been barreling down a hill toward insolvency for the past eight years, and there’s talk on Capitol Hill of — once again — tapping the breaks instead of stopping the fall.

Facing a hard deadline in May, Congress approved a two-month extension for the trust fund, which delivers about $50 billion of transportation spending annually. This extension was the latest short-term measure Congress has taken to help the fund, adding to the U.S. Department of Transportation’s count of 32 short-term measures in the last six years.

The next deadline is looming at the end of July, and according to a Politico article published Thursday, Congress has no clear idea of what a long-term plan could look like. With less than six weeks left to come up with something, the easiest route for lawmakers would be to pass a short-term extension through December, then use the next six months to form a multi-year spending plan.

That’s what House Ways and Means Committee Chair Rep. Paul Ryan, R-Wis., said he sees as the most likely possibility, according to Politico. There’s still a chance Senate Democrats could filibuster another short-term patch.

But what’s wrong with the trust fund now, and why do lawmakers have to tweak it so often?

It relies primarily on the federal gas tax, which has been set at 18.4 cents per gallon since 1993. Not only has inflation reduced the purchasing power of that flat tax, but fuel-efficient vehicles have also allowed people to buy less gas and therefore contribute less to the fund.

Take a look at this chart — and pay close attention to the larger spikes along its path — to see how Congress has dealt with this problem.

The trend here is obvious: There’s a continuing decline toward zero, delayed (temporarily) over and over again by those spikes. Each one of those spikes is a time Congress sent a one-time infusion of cash to the Highway Trust Fund. Each one of those spikes is why the fund is still alive today.

If the July 31 deadline results in another one-time transfer from the Treasury’s general fund to the Highway Trust Fund, we’ll see another spike on the graph, most likely followed by another decline toward zero. Only a long-term fix in Congress will stop the cycle.

To be sure, members of Congress are floating long-term ideas for how to reverse the trust fund’s decline. At a House Ways and Means Committee hearing Wednesday, members of the panel suggested raising the gas tax, increasing the use of tolls and a levying a one-time tax on American businesses operating overseas.

But those ideas have been presented before, and none of them have attracted enough support to be made law.

Periodic congressional scrambles aren’t the only problem with the cycle of short-term fixes.

Construction, being a long-term process, requires long-term planning from states’ departments of transportation — and it helps to know federal money won’t run dry part way through a multi-year project. Not knowing if support from Washington will be there down the road can make states hesitant about starting new projects.

Once the trust fund reaches a certain low point that is yet to be set, the Federal Highway Administration will begin delaying reimbursements to states.

“Based on the current financial circumstances, we’re definitely paying attention,” FHWA spokesman Doug Hecox said. “We are doing everything we can to keep our state partners apprised so there are no last-minute surprises.”

After the last extension in May, American Association of State Highway and Transportation Officials Executive Director Bud Wright said he was “frustrated” by the short-term solutions.

“State DOTs are already postponing construction projects this year because they can’t count on federal funds to be there,” Wright said in a release. “Millions of dollars that should be flowing into communities, creating jobs and paying for projects to improve safety and mobility, aren’t being funded. Congress must find the political will to pass a long-term bill and put these short-term patches aside.”

Reach reporter Sean McMinn at sean.mcminn@scripps.com or 202-408-1488. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire. Like the Scripps Howard Foundation Wire interns on Facebook and follow us on Twitter​.​